DUKE 

UNIVERSITY 


LIBRARY 


REPORT  AND  PROCEEDINGS 


OF  THE 


JOINT  COMMITTEE 


OF  THE 

Senate  and  Assembly 

APPOINTED  TO 

\ 

INVESTIGATE  TRUSTS. 


TRANSMITTED  TO  THE  LEGISLATURE  MARCH  9,  1897. 


■ +<  '4  S 

y 


WYNKOOP  HALLENBECK  CRAWFORD  CO., 
STATE  PRINTERS, 

ALBANY  AND  NEW  YORK. 

1897. 


Digitized  by  the  Internet  Archive 
in  2017  with  funding  from 
Duke  University  Libraries 


https://archive.org/details/reportproceeding01  newy 


State  of  New  York 


I N 


NO.  4:0. 


SENATE), 


March  9,  1897. 


REPORT 

OF  THE 


JOINT  COMMITTEE  OF  THE  SENATE  AND  ASSEMBLY 
APPOINTED  TO  INVESTIGATE  TRUSTS. 


To  the  Legislature  of  the  State  of  New  York: 

The  joint  legislative  committee  appointed  pursuant  to  a certain 
concurrent  resolution,  dated  January  the  20th,  1897,  as  follows: 

“ Whereas,  Combinations  of  capital  in  the  form  of  trusts  or  other- 
wise appear  to  exist  and  to  be  increasing  in  number  and  influence 
in  this  commonwealth,  resulting  in  concentrating  in  the  hands  of  a 
few,  various  important  branches  of  industry,  creating  monopolies, 
shutting  out  competition,  displacing  labor  and  driving  the  citizen 
■of  moderate  means  out  of  business,  with  the  effect  that  production 
and  price  are  regulated  not  by  the  natural  laws  of  supply  and 


4 [Senate, 

demand,  or  the  rules  of  normal  and  healthy  competition,  but  by  the 
arbitrary  decision  of  combinations  operating  together  to  destroy 
competition  and  exact  unreasonable  charges  from  the  people;  and, 

“ Whereas,  It  is  charged  that  combinations  of  capital  enjoy  special 
and  peculiar  privileges  and  advantages  detrimental  to  public  inter- 
ests, and  that  the  laws  hitherto  enacted  are  inadequate  to  furnish 
relief;  therefore, 

“ Resolved,  (if  the  Assembly  concur),  That  a joint  committee  of 
the  Legislature,  consisting  of  three  Senators  and  four  members  of  the 
Assembly,  be  appointed  to  draft  such  remedial  acts  as  may  be  neces- 
sary, and  in  order  that  this  may  be  intelligently  done  the  said  com- 
mittee shall  have  full  power  and  authority  to  institute  and  conduct  an 
investigation  for  that  purpose;  and  the  said  committee  is  empowered 
to  hold  sessions  wherever  necessary,  to  employ  counsel,  a stenog- 
rapher and  such  other  assistants  as  may  be  necessary,  to  send  for 
persons  and  papers,  issue  subpoenas,  and  exercise  and  enjoy  all  the 
powers,  privileges  and  authority  of  a legislative  committee;  and  it  is 
further, 

“ Resolved,  That  the  committee  make  a report  accompanied  by  a 
bill  or  bills  on  or  before  the  first  day  of  March  next.” 

— hereby  reports: 

In  obedience  to  the  direction  of  said  resolution,  your  committee 
met,  and  thereupon  decided  that  in  order  to  draft  remedial  acts 
designed  to  correct  existing  abuses  of  the  character  described  in  the 
preamble  of  said  resolution,  a more  accurate  understanding  of  the 
system  and  methods  pursued  by  combinations  in  the  nature  of  trusts 
was  v idispensable,  and  that  such  information  as  might  be  obtained 
from  :orrespondence  and  public  hearings  would  aid  in  securing 
intelh  j-ent  legislation  upon  the  subject. 


No.  30.]  . 


5 


A general  request  was  issued,  which  was  published  throughout 
the  State,  inviting  the  fullest  and  freest  communication  of  facts  and 
propositions,  and  steps  were  immediately  taken  looking  to  the  hold- 
ing of  public  sessions  of  the  committee  in  the  city  of  New  York. 
These  began  on  the  5th  day  of  February,  and  were  continued  with 
such  interruptions  only  as  the  legislative  duties  of  the  members  of 
the  committee  required,  until  the  25th  day  of  February,  1897,  when 
by  resolution  of  the  committee  public  hearings  were  discontinued. 

The  period  of  time  limited  by  said  resolution  was  so  unequal  to 
the  task  that  careful  preparation  was  impossible,  and  examinations 
were  necessarilv  confined  to  a few  conspicuous  examples  of  combina- 
tions operating  within  this  State  that  promised  to  develop  distinctive 
features,  and  proof  was  taken  in  respect  of  plan  and  details  of  organ- 
ization, and  of  the  business  methods  pursued,  first,  by  the  constituent 
companies  when  existing  independently,  and  then  by  the  combination 
after  it  went  into  full  operation. 

In  the  record  which  we  submit  concurrently  with  this  report,  we 
have  succeeded  in  presenting  a comprehensive  disclosure  of  the 
origin,  development,  aims  and  methods  of  that  so-called  modern 
commercial  evolution  popularly  denominated  “ Trust.” 

In  this  connection  it  will  be  useful  to  direct  attention  to  the  fact 
that  a trust  in  the  sense  in  which  it  is  popularly  taken  is  a misnomer. 
Trust  agreements  no  longer  form  the  basis  for  the  union  of  the  con- 
stituent elements  of  a combination,  whether  of  corporations  or  of 
individuals,  which  has  for  its  purpose  the  repression  of  competition 
or  the  control  of  product  or  market.  When  in  1890  the  Court  of 
Appeals  in  this  State  pronounced  its  final  judgment  against  the 
system  of  trust  organization  then  in  vogue,  the  “ trust  ” became  a 
thing  of  the  past,  existing  trust  agreements  were  dissolved  and 
under  the  permission  of  existing  laws  the  constituent  elements  held 


6 [Senate, 

together  under  such  agreements,  became  incorporated  in  the  State 
of  New  Jersey  and  in  other  jurisdictions,  where,  either  by  accident 
or  design,  the  law  of  incorporation  was  so  adjusted  that  by  the  sim- 
plest formality  a trust  declared  unlawful  and  a conspiracy  against 
public  welfare  might  continue  its  career,  operating  through  the  same 
agencies,  pursuing  the  same  methods  and  actuated  by  the  same  aims 
and  purposes  as  before,  but  within  the  permission  of  the  local  law 
based  on  a mere  change  in  form  of  organization. 

The  corporation  laws  of  the  State  of  New  York  at  that  time  dif- 
fered essentially  from  the  laws  of  the  State  of  New  Jersey  in  that 
they  did  not,  as  did  the  latter,  permit  the  acquisition  by  one  cor- 
poration of  the  capital  stock  of  another,  and  consequently  there  fol- 
lowed an  immediate  migration  of  trusts  to  the  State  of  New  Jersey 
to  secure  corporate  charters  there  and  thus  avoid  complications  in 
which  the  decision  of  the  Court  of  Appeals  threatened  to  involve 
them.  Wherever  during  the  subsequent  consideration  of  this  ques- 
tion we  speak  of  trusts,  we  mean  an  incorporation  created  by  the 
laws  of  this  and  other  States  which  manifests  the  purposes,  methods 
and  characteristics  of  the  original  “ trust.”  We  include  the  State 
of  New  York,  because  in  1892,  due  probably  to  the  migrations  before 
mentioned,  the  corporation  laws  of  this  State  were  radically  revised 
and  amended,  so  that  for  all  practical  purposes  of  this  discussion 
they  coincide  with  corresponding  laws  of  the  State  of  New  Jersey. 

It  will  avoid  confusion  of  terms  and  ideas  to  define  a combination 
in  the  nature  of  a trust.  A witness  of  marked  intelligence,  and  pos- 
sessing all  the  qualifications  of  an  expert  in  commercial  affairs, 
defined  a trust  to  be  any  combination  or  concentration  of  capital. 
He  claimed  that  all  aggregations  of  capital  were  in  popular  estima- 
tion “ trusts,”  and  thereupon  dissented  from  that  interpretation  by 
insisting  that  no  trusts  exist  in  fact,  because  aggregations  of  capital 


No.  40.]  7 

were  now  operating  in  the  form  of  legally  organized  corporations. 
He  was  thus  merely  epitomizing  the  history  of  the  past  decade  and 
the  adaptation  of  “trusts”  to  judicial  decision  and  legal  enactment. 

It  is  sufficient  for  the  purposes  of  this  report  to  say  that  we  do 
not  concede  the  generalization  he  insists  upon,  but  maintain  that 
the  true  definition  is  of  much  smaller  compass.  If  all  aggregations 
or  combinations  of  capital  were  trusts,  it  would  be  unnecessary  for 
us  to  continue  the  discussion,  because  that  would  imply  that  all 
combinations  are  harmful  or  prejudicial  to  the  interests  of  the  State, 
and  that  all  alike  would  come  properly  under  the  ban  of  the  Legis- 
lature. The  mere  statement  of  this  proposition  is  its  sufficient 
answer.  Any  association  of  partners,  whether  two  or  more,  being 
an  aggregation  of  capital,  however  small,  would  be  a trust.  Any 
joint  stock  association  or  limited  liability  business  corporation,  in 
fact  any  form  whereby,  under  the  permission  of  the  law  and  of  the 
constitutional  privilege  of  contract,  man  endeavors  to  escape  the 
limitations  of  isolation  and  seeks  the  pursuit  of  lawful  gain  by  means 
of  combined  effort,  combined  intelligence,  combined  skill  and 
combined  resources,  operating  together  to  secure  greater  perfec- 
tion, larger  results  and  higher  progress,  would  be  a trust.  Genius 
which  resolves  successfully  the  most  difficult  problems  of  the  natural 
forces  and  by  dint  of  brains  and  originality  adapts  them  to  the  service 
of  man,  and,  in  order  to  make  them  practical  and  useful,  calls  to  his 
aid  the  intelligence  of  the  business  man  and  the  resources  of  the 
financier,  would  fall  under  the  weight  of  criticism. 

Results  achieved  within  the  last  century  in  every  department  of 
invention,  in  every  field  of  intellectual  conflict,  in  every  phase  of 
commercial  progress,  whereby  the  human  race  has  been  enabled  to 
cast  aside  limitations  and  proceed  with  mighty  strides  along  the 
path  of  a higher  and  broader  development,  whereby  the  ocean  has 


8 [Senate, 

become  peopled  with  a vast  merchant  marine,  obstructions  of 
nature  have  been  turned  into  channels  of  intercommunication  and 
the  land  has  been  covered  with  a net  work  of  railroads,  distributing 
the  conveniences  and  comforts  of  life  more  largely  and  generally 
among  the  people,  would  be  terms  of  reproach.  These  are  the  results 
not  of  individual  effort,  not  of  isolated  action,  but  of  that  proper 
combination  of  skill  and  capital  which  has  gathered  together  the 
different  elements  necessary  to  commercial  success  and  utilized  their 
united  forces  to  accomplish  the  largest  results.  Combinations  of 
capital  starting  with  small  partnerships  and  terminating  with  large 
aggregations,  based  on  corporate  organizations  representing  the 
contributions  of  innumerable  stockholders  to  a common  fund,  thus 
investing  for  the  purpose  of  reaping  the  reward  arising  from  econo- 
mies growing  out  of  the  concentration  of  resources  and  the  employ- 
ment of  the  best  skill,  the  highest  intellect,  the  most  approved  ma- 
chinery and  the  most  qualified  labor,  are  not  in  themselves,  in  our 
judgment,  reprehensible  or  against  any  known  principle  of  public 
policy.  , 

That  the  latter  have  been  increasing  in  size,  in  wealth  and  rela- 
tively in  influence  within  recent  years,  is  a sign  of  the  times  which 
naturally  gives  rise  to  discussion,  to  conjecture  and  in  some  cases  to 
apprehension  as  to  the  future.  But  it  is  a situation  which  seems  to 
be  the  natural  evolution  growing  out  of  the  fierce  contest  for  su- 
premacy in  the  fields  of  commerce  and  finding  a reflection  in  almost 
every  department  of  human  activity.  That  it  is  a natural  evolution 
seems  clear  from  the  fact  that  it  is  the  universal  concomitant  of  pro- 
gress, marking  in  fact,  to  a very  large  extent,  the  progressive  stages 
of  commercial  development  created  by  the  natural  impulse  toward 
better  conditions,  and  in  its  turn  creating  that  complex  system  upon 
the  proper  adjustment  of  which  the  welfare,  comfort  and  prosperity 
of  the  people  so  largely  depend. 


No.  30.] 


9 


The  present  agitation  against  all  forms  of  combination  is,  we 
believe,  attributable  to  a confusion  of  the  relative  meaning  of  com- 
binations of  capital  and  trusts,  as  we  define  them,  in  that,  whether 
accidentally  or  by  design,  all  forms  of  combined  human  effort  are 
sought  to  be  brought  within  the  proscription  of  trusts.  Capital  and 
labor  operate  and  should  continue  to  exist  under  the  laws  of  mutual 
dependence.  The  one  is  essential  to  the  other.  There  should  be 
no  irreconcilable  conflict  between  them.  The  safety  of  the  State  and 
the  welfare  of  the  people  depend  upon  their  harmonious  and  unin- 
terrupted co-operation.  The  relation  between  the  two  is  so  delicately 
and  inextricably  interwoven,  that  injury  to  the  one  necessarily  in- 
volves harm  to  the  other.  Unemployed  or  illrequited  labor  signifies 

a precisely  similar  condition  with  regard  to  capital;  and  it  is  only 

{ 

when  the  two  are  fully  employed  that  the  largest  results  are  obtain- 
able and  the  greatest  benefits  accrue  to  the  State  and  to  the  people. 

While  the  State  should  not  exercise  parental  authority  or  unduly 
interfere  with  the  operations  of  the  natural  law,  it  is  its  obvious  duty 
on  broad  principles  of  self-preservation  and  under  constitutional 
mandate  to  protect  every  citizen  in  the  pursuit  of  happiness,  which 
means  the  protection  of  property  on  the  one  hand,  and  of  work,  that 
is,  the  ability  to  acquire  property,  on  the  other.  Both  labor  and 
capital  should  be  permitted  the  utmost  freedom  of  liberty  and  action, 
limited  only  by  regard  for  the  other  and  for  the  safety  and  welfare  of 
the  State.  But  while  the  State  should  not  impose  any  undue  re- 
straints upon  its  people  or  their  opportunities,  it  should  not  permit 
others  to  impose  any  undue  restraints  upon  its  citizens.  Liberty  does 
not  imply  license.  It  cannot  co-exist  with  license.  And  it  is  just  at 
this  point  where  combinations  of  capital,  as  ordinarily  understood, 
differentiate  from  trusts  as  we  define  them. 


10  [Senate, 

Interpreting  combinations  of  capital  to  be  the  gathering  together 
under  one  management  of  the  collective  contributions  of  many  for 
strictly  business  purposes,  involving  economy  in  the  several  stages 
which  result  in  the  final  distribution  of  the  product  to  the  consumer, 
we  define  the  trust  to  be  an  aggregation  brought  about  for  the  pur- 
pose of  operating  against  the  natural  law  of  supply  and  demand, 
destroying  competition  by  combination  and  unfair  methods  in  order 
to  secure  control  of  both  product  and  market,  or  permitting  compe- 
tition to  exist  only  colorably  and  to  the  extent  of  refuting  the  charge 
of  absolute  monopoly.  The  one  moves  with  the  natural  law;  the 
other  is  designed  to  and  does  operate  against  the  natural  law. 

It  is  unnecessary,  however,  that  absolute  monopoly  exist  or  be  the 
objective  point  in  order  to  create  a combination  in  the  nature  of  a 
trust.  In  United  States  against  Knight  (156  U.  S.  16),  Chief  Justice 
Fuller  says:  1 ; 

“All  the  authorities  agree  that  in  order  to  vitiate  the  contract  or 
combination  it  is  not  essential  that  its  result  should  be  a complete 
monopoly;  it  is  sufficient  if  it  really  tends  to  that  end,  and  to  deprive 
the  public  of  the  advantages  which  flow  from  free  competition.” 

Conceding  the  definition  we  have  indicated  to  be  accurate,  we 
deem  it  timely  to  ask  attention  to  another  distinction  in  order  that 
no  confusion  may  arise.  Monopolies  may  for  convenience  be  sub- 
divided into  three  classes: 

First.  Those  that  are  natural,  depending  upon  the  use  of  a public 
franchise,  in  a sense  exclusive,  such  as  railroads,  telegraphs  and 
kindred  organizations  performing  quasi-public  functions  and  in  re- 
spect of  which  the  State  has  long  exercised  a general  right  of 
regulation;  or  depending  upon  the  ownership  of  the  source  of  supply 
of  some  article  or  product. 


No.  40.] 


11 


\ 

Second.  Those  that  are  legal,  depending  upon  some  special  privi- 
lege conferred  by  law,  such  as  patents,  trade-marks  and  so  forth. 

Third.  Those  that  depend  wholly  upon  the  use  of  capital  and 
where  the  monopolies  exist  not  naturally  or  by  legal  permission,  but 
by  reason  of  the  acquisition  of  control  by  capital.  The  latter  has 
been  aptly  described  as  “ capitalistic  monopolies,”  and  defined  to  be 
such,  as 

“ So  control  the  business,  whatever  it  may  be,  as  practically  to 
regulate  competition  and  to  fix  the  price  of  their  products  on  the 
whole  with  little  reference  to  competitors  or  to  the  cost  of  production, 
but  mainly  in  reference  to  securing  the  greatest  net  results.” 

And  it  is  this  class  of  monopoly  only  which  is  here  considered. 

It  was  the  aim  of  your  committee  to  pursue  its  investigation  with 
the  strictest  impartiality  and  fairness,  but  with  the  determination  to 
elicit  all  the  facts  necessary  to  secure  a complete  disclosure  of  the 
economic  systems  which  came  under  our  observation.  It  should 
be  borne  in  mind,  that  those  whom  we  examined  were,  almost  without 
exception,  officers  in  the  control  and  management  of  the  respective 
combinations;  that  consequently  they  proved  to  be  reluctant  wit- 
nesses, desirous  of  evading  direct  answer,  solicitous  to  conceal  all  the 
facts  which  might  injuriously  affect  their  interests,  and  anxious 
always  to  disclose  only  the  best  side  of  the  systems  which  they  repre- 
sented. Being  in  the  nature  of  cross-examinations  it  became  neces- 
sary at  times  to  proceed  with  unusual  severity. 

But  we  conceive  that  the  State  owes  no  duty  of  delicate  or  sym- 
pathetic treatment  of  interests  which  are  designed  to  operate  against 
the  natural  law,  and  seeking  the  protection  and  shelter  of  charters  of 
other  States,  develop  under  their  permission  systems  within  our  bor- 
ders which  cause  the  dissatisfaction  and  resentment  of  our  people. 


12  [Senate, 

It  is  rather  in  the  interest  of  the  industries  and  the  capital  of  the 
people  of  our  State,  that  effective  legislation  ag'ainst  trusts,  as  we 
define  them,  should  be  had.  A system  which  permits  of  the  creation 
of  monopolies  among  us,  operating  under  foreign  charters,  arro- 
gating practically  undisputed  control  over  the  sources  of  supply,  the 
volume  of  product  and  the  price  to  the  consumer  based  upon  an 
aggregation  of  capital  so  large  and  powerful  as  to  defy  assault,  dis- 
courage competition  and  impose  an  insuperable  barrier  to  the  en- 
trance of  lesser  capital  on  terms  of  fair  and  equal  competition,  is,  in 
our  judgment,  indefensible  on  any  grounds  of  public  policy. 

We  are  not  unmindful  of  the  importance  of  the  interests,  both 
public  and  private,  which  are  here  concerned.  We  recognize  as  a 
fundamental  principle  that  no  restraint  should  be  imposed  by  legis- 
lative action  upon  the  unrestricted  use  and  enjoyment  of  vested  rights 
and  property;  that  no  limitation  should  be  placed  upon  relations  of 
trade  and  commerce  not  absolutely  indispensable  to  public  welfare. 
The  commanding  position  of  this  State  in  the  financial  and  commer- 
cial affairs  of  the  Union,  the  causes  that  have  contributed  to  her 
undisputed  supremacy  and  the  responsibility  resting  upon  the  Legis- 
lature to  conform  its  conclusions  to  the  demands  of  justice  and  con- 
servatism, are  all  considerations  which  have  been  duly  weighed. 
Neither  progress  nor  prosperity  will  be  permanent  unless  accom- 
panied by  confidence,  and  the  latter  will  not  abide  with  us  in  the 
absence  of  an  inviolable  guarantee  that  every  person,  natural  or  arti- 
ficial, shall  have  the  enduring  protection  of  just  and  equal  laws. 

Genius,  capital  and  labor  are  each  and  all  alike  entitled  to  the  fullest 
opportunity  of  employment  and  expansion  and  the  law,  which  pro- 
fesses to  protect  their  immunities  in  this  regard,  defeats  itself  and 
becomes  a hollow  mockery  when  it  permits  the  absolute  control  of 
an  industrial  pursuit  to  become  monopolized  by  an  aggregation. 


No.  30.]  \ 13 

which  has  for  its  fundamental  object  the  destruction  of  all  then  exist- 
ing competition  by  combination  or  coercion,  coupled  with  a control 
so  strongly  entrenched  as  to  be  impregnable  against  the  assaults  of 
any  capital  of  lesser  magnitude.  It  is  because  the  policy  of  this  State 
requires  that  skill  and  genius  shall  have  full  play;  that  the  capital  and 
resources  of  its  citizens  shall  have  the  freest  opportunity  of  employ- 
ment, and  that  labor  shall  retain  the  privilege  of  offering  its  services 
to  a multitude  of  employers,  that  here,  as  elsewhere  throughout  the 
Union,  the  expansion  of  capitalistic  monopolies  is  condemned.  A 
field  of  industry,  controlled  by  the  irresistible  power  of  a gigantic 
combination,  possesses  no  attractions  for  the  capital  of  the  people.  And 
any  system,  which  complacently  suffers  such  combinations  to  con- 
quer and  hold  field  after  field  of  industrial  activity,  offers  no  guar- 
antee of  security  in  the  employment  of  the  resources  of  our  citizens; 
and  in  proportion  as  the  capital  of  our  own  people,  or  the  resources 
•of  those  who  would  invest  here  under  conditions  of  fair  competition, 
find  entrance  to  the  field  of  industry  attended  with  greater  difficulties 
and  graver  peril,  the  investment  of  competing  capital  will  become 
smaller  and  the  opportunities  for  the  employment  of  labor  will  shrink 
accordingly. 

Without  going  into  unnecessary  detail  as  to  the  origin  and  devel- 
opment of  particidar  combinations,  we  may  generalize  the  situation 
in  this  way:  In  every  case  of  combination  which  presented  itself  to 
your  committee,  independent  concerns  represented  either  by  part- 
nerships or  by  corporate  organizations,  or  both,  had  been  competing 
against  each  other  in  the  markets  of  this  State  and  nation,  when,  by 
promotion  or  otherwise,  they  combined  together,  generally  under  the 
laws  of  the  State  of  New  Jersey,  into  one  large  corporation  controll- 
ing approximately  80  per  cent,  of  the  production  of  a particular 
product  of  common  use.  Every  combination  thus  made  was  accom- 


14  [Senate, 

panied  by  an  enormous  capitalization  and  was  generally  followed  by 
a successful  effort  to  distribute  its  stock  to  the  public  through  the 
channels  of  speculation.  Every  such  combination  was  followed  by 
the  closing  and  dismantlement  of  factories,  the  discharge-of  labor, 
and  the  concentration  of  the  business  of  many  separate  organizations 
into  a few  of  the  many  factories  controlled  by  the  combination. 
Every  such  combination  was  followed  by  the  substantial  control  of 
product  and  by  the  ability  of  the  combination  to  fix  a price  upon  its 
own  product  as  well  as  on  that  of  ostensible  competitors.  Every 
such  combination  was  followed  by  a system  of  factor’s  agreements, 
which  enabled  it  to  control  the  means  of  distribution  and  maintain 
a fixed  price  without  regard  to  ostensible  competition  or  to  the 
normal  rules  of  supply  and  demand.  Finally,  every  such  combina- 
tion was  followed  by  increasing  difficulties  of  new  competition  by 
lesser  capital  and  increased  ability  to  destroy  or  absorb  any  existing 
competition  or  new  competition  that  might  arise. 

Thus,  where  previously  a large  number  of  independent  concerns, 
competing  among  themselves  freely  and  fairly,  where  moderate 
capital  could  find  entrance  into  the  particular  field  of  industry  and 
compete  on  equal  terms;  where  a multitude  of  concerns  employed 
each  its  separate  staff  of  officers,  clerks,  salesmen  and  employes,  we 
find  now  great  combinations  of  these  under  one  management,  with 
one  staff  of  officials  and  subordinates,  presenting  a concentration  of 
power  and  resource  that  defies  present  competition  and  discourages 
any  attempt  by  moderate  capital  to  embark  in  a competitive  enter- 
prise. 

It  is  a fact  which  should  be  referred  to  in  this  connection,  that 
the  pioneers  in  this  method  of  concentration  have  proved  financially 
so  successful  that  a great  impetus  has  been  given  to  this  method  of 
business  development.  One  after  another,  industrial  pursuits  are 


No.  40.] 


15 


surrendering  to  similar  combinations,  and  it  is  safe  to  predict,  that 
unless  this  movement  subsides,  most,  if  not  all,  of  our  industrial  pur- 
suits will  reach  a similar  concentration  and  will  be  followed  by  results 
similar  to  those  indicated  in  this  report. 

If  these  capitalistic  monopolies  are  defensible  on  the  ground,  that 
they  are  in  line  with  modern  progressive  evolution,  that  they  are  a 
distinct  advance  in  the  right  direction,  that  their  advantages  outweigh 
any  weaknesses  that  they  exhibit;  that  their  methods,  whether  coer- 
cive or  restrictive,  are  but  a means  to  an  end  justified  by  benefits  to 
the  people,  then  it  must  be  conceded  that  every  industrial  pursuit 
except  such,  if  there  are  any,  as  possess  characteristics  which  render 
absolute  combinations  impracticable,  will  become  gradually  absorbed 
by  capitalistic  monopolies,  competition  will  become  a matter  of  his- 
tory, and  the  affairs  of  the  people  will  be  regulated  and  controlled 
by  a few.  What  the  result  of  such  a situation  would  be  may  best  be 
left  to  conjecture.  Certain  it  is,  that  in  the  consideration  of  this  sub- 
ject now  it  becomes  our  duty  to  view  it  in  the  light  of  its  probable 
and  logical  results.  If  the  system  is  lawful  and  beneficial  with  respect 
to  the  industrial  pursuits  now  under  monopolistic  control,  it  must  be 
equally  lawful  and  beneficial  when  applied  to  all  industrial  pursuits 
without  discrimination,  and  if  not  hostile  to  public  interests  and  bene- 
ficial to  the  people  it  would  become  the  duty  of  the  Legislature  to 
foster  this  movement  rather  than  retard  it.  It  behooves  us,  therefore, 
to  consider  this  question  not  only  with  respect  to  the  present,  but 
with  particular  reference  to  future  results. 

Let  us  consider  some  of  the  chief  advantages  that  are  claimed  to 
exist  in  favor  of  these  combinations  so  far  as  they  affect  the  public. 

The  main  advantage  is  stated  to  be  that  of  economy  in  production 
reflected  in  lower  prices  to  the  consumer.  The  fact  that  large  econo- 
mies must  of  necessity  accrue,  admits  of  no  denial.  But  are  these 


16  [Senate, 

followed  by  lower  prices  to  the  consumer?  We  find  nothing  upon 
the  record  to  justify  any  such  conclusion.  It  is  true  that  sugar,  for 
example,  costs  less  to-day  than  it  did  prior  to  the  time  when  the 
competing  companies  combined.  But  it  is  equally  true  that  the  cost 
of  the  raw  material  has  declined  to  a greater  extent  than  has  the 
price  of  the  refined  article.  Hence  the  consumer  has  not  received 
the  full  benefit  of  the  decline  in  the  raw  material,  while  he  has  had  no 
share  whatever  in  the  diminished  cost  of  production.  In  other  cases 
combination  was  immediately  followed  by  an  advance  in  the  price  of 
the  product.  In  fact  there  is  nothing  upon  the  record  which  indicates 
that  combination  itself  effected  any  reduction  in  the  price  to  the  con- 
sumer, or  that  the  latter  was  considered  with  reference  to  any  share 
in  the  profit,  all  elements  of  economy  being  credited  rather  to  the 
upbuilding  of  the  earning  capacity  of  the  capital  stock. 

The  record  does  show,  on  the  other  hand,  that  a combination  con- 
trolling 80  per  cent,  of  a staple  product,  hence  a purchaser  of  80  per 
cent,  of  the  raw  material,  could  and  did  exert  substantial  influence  on 
the  price  of  raw  material,  and  could,  by  dint  of  that  influence  force 
down  the  price  of  raw  material  to  a point  which  enabled  it  to  appear  as 
having  decreased  the  price  of  the  finished  product  to  the  consumer. 
We  point  to  this  as  a noteworthy  incident  indicating  the  power  of  a 
combination  thus  organized,  and  illustrating  the  influence  of  all  simi- 
lar aggregations  on  the  price  of  raw  material  wherever  the  effect  of 
combined  resources  can  not,  from  the  nature  of  conditions,  be  offset 
by  similar  combinations  between  widely  distributed  producers. 

Another  advantage  which  is  said  to  flow  from  combination,  is  that 
of  a more  perfect  product.  There  is  nothing  upon  the  record  to 
justify  this  conclusion.  While  it  may  be  that  the  normal  tendency 
of  business  is  to  secure  the  largest  market,  and  with  that  end  in  view 
to  give  the  greatest  satisfaction  to  the  buyer,  it  is  quite  clear  that 


No.  30.]  IT 

substantially  undisputed  control  of  both  product  and  market  enables 
a combination  to  economize  in  quality  without  fear  of  pernicious 
results. 

Another  advantage  is  alleged  to  be  that  of  better  wages  and  more 
constant  employment  of  labor.  We  are  equally  unable  to  reach  this 
conclusion.  No  part  of  the  profit  arising  from  admitted  economies, 
and  resulting  in  large  dividends  on  inflated  stocks,  has  reached  labor 
in  the  form  of  increased  wages,  while  the  claim  of  constancy  of  em- 
ployment is  negatived  by  the  fact  that  factories  in  operation  for  a 
generation  have  been  closed,  and  that  workingmen,  more  or  less 
continually  employed  for  years  in  a factory  independently  operated, 
have  been  discharged  upon  its  absorption  by  the  combination.  Com- 
binations owning  factories  located  in  different  States  are  thereby 
enabled  to  and  do  at  will,  here  and  there,  close  factories  perma- 
nently or  for  long  periods  of  time;  possessing  factories  of  a capacity 
sufficient  to  supply  all  demands,  with  a surplus  of  40  per  cent.,  they 
may  at  any  time  cause  factories  in  many  localities  to  remain  tem- 
porarily or  permanently  idle  and  thus  reduce  the  worker  to  a con- 
dition of  absolute  uncertainty. 

Still  another  alleged  advantage  is  that  of  stability  of  price  to  the 
consumer.  This  must  be  admitted.  But  the  question  is  whether  the 
fixing  of  a stable  price  operates  to  his  advantage.  It  is  an  abnormal 
and  not  a natural  condition  — a price  fixed  at  the  maximum  that  the 
consumer  will  pay  consistent  with  the  marketing  of  the  largest  volume 
of  product  practicable.  The  fixing  of  the  price,  whereby  the  producer 
is  able  to  retain  all  the  benefits  of  economy  and  concentration  for 
himself,  is  not  that  kind  of  stability  in  values  which  appeals  with 
special  force  to  the  consuming  public.  The  kind  of  stability  which 
revolutionizes  the  law  of  supply  and  demand  and  enables  the  com- 
bination to  hold  its  products  at  a fixed  price  without  regard  to  the 
2 


IS  [Senate, 

tendency  of  prices  and  through  times  of  depression  such  as  have 
been  experienced  for  the  past  four  years,  when  commodities  generally 
have  fallen  ratably  in  the  markets,  to  maintain  prices  fixed  by  its 
arbitrary  decision,  produces  an  inequality  among  the  people  which 
may  scarcely  be  described  as  an  advantage  except  to  the  combination 
itself.  i. 

OVER-CAPITALIZATION. 

Another  incident  worthy  of  mention  relates  to  the  system  of  capi- 
talization which  seems  to  lie  at  the  foundation  of  this  class  of  com- 
binations. Sufficient  appears  upon  the  record  to  justify  the  conclu- 
sion that,  of  at  least  co-ordinate  importance  with  the  plan  of  industrial 
concentration,  was  the  scheme  of  the  issue  of  stock  certificates  of 
greatly  inflated  nominal  values.  That  this  was  a purpose  definitely 
formed  and  not  merely  incidental  to  industrial  development  is  sub- 
stantially admitted  by  the  spokesmen  for  at  least  two  of  the  principal 
combinations  of  the  five  which  were  examined. 

In  one  case  corporate  assets  acquired  by  an  officer  of  the  combina- 
tion for  the  sum  of  $350,000  were  capitalized  over  night  in  the  new 
combination  by  the  issue  of  certificates  of  a nominal  value  of  twice 
that  amount,  less  15  per  cent.  Other  corporations,  organized  for  the 
distinct  purpose  of  absorption  by  the  combination  on  the  basis  of  a 
stock  issue  of  a nominal  value  of  $800,000,  were  simultaneously  re- 
capitalized in  the  combination  by  an  issue  of  a nominal  share  value  of 
about  $14,000,000.  Corporations  representing  in  the  aggregate  share 
issues  of  less  than  $7,000,000  were  recapitalized  in  the  combination  by 
a nominal  share  issue  of  $50,000,000,  less  a rebate  of  1 5 per  cent.  In 
another  case  live  assets  were  valued  at  about  $5,000,000,  and  made 
the  basis  of  an  issue  of  about  $25,000,000  of  stock,  the  difference 
being  made  up  in  the  assumed  value  of  “ good  will,”  “ brands,” 


No.  40.] 


19 


“ trade-marks,”  etc.  In  another  instance  the  live  assets  were  capital' 
ized  in  so-called  debenture  stock,  while  the  common  stock  was  issued 
upon  the  basis  of  computing  the  average  percentage  of  profits  over 
a period  of  years  and  multiplying  these  by  16.  In  another  instance 
both  common  and  preferred  stock  were  issued  in  bulk  for  the  several 
properties  acquired,  studious  care  being  exercised  to  conceal  the 
details  of  payments  for  particular  properties  and  to  avoid  the  dis- 
closure of  the  processes  whereby  values  represented. by  stock  issues 
were  computed. 

The  net  result  of  each  of  these  methods  of  capitalization  was,  that 
large  over-issue  of  capital  stock  was  the  important,  if  not  the  main, 

V 

purpose  of  consolidation.  One'  of  the  witnesses,  whose  experience 
and  intelligence  were  especially  marked,  when  interrogated  upon  this 
question,  stated  that  the  stock  issued  represented  the  “ prospective 
earning  capacity”  of  the  combination,  that  is  to  say,  its  earning  capac- 
ity considered  from  the  viewpoint  of  all  those  advantages  attributable 
to  a perfected  consolidation,  the  control  of  product,  the  ability  to  fix 
its  price,  and  the  economies  so  eloquently  described  by  all  the  witnesses 
flowing  from  concentration  of  production,  management  and  dis- 
tribution. 

It  is  worthy  of  note,  that  while  these  properties  were  separately 
competing  with  each  other  their  stock  issues  wTere  small  and  in  a few 
hands,  and  that  as  soon  as  the  combination  was  effected  and  the 
nominal  values  were  inflated,  the  shares  were  listed  on  the  stock  ex- 
change and  distributed  among  the  public.  In  one  case  properties 
controlled  by  not  to  exceed  ioo  owners  and  stockholders  became  at 
once  speculatively  active  and  their  shares  were  distributed  in  a short 
time  among  upwards  of  9,000  distinct  stockholders;  in  another,  the 
holdings  of  not  to  exceed  35  people  became  subdivided  among  about 
6,000  stockholders,  while  in  a third  the  properties  of  a few  men  were 


20  [Senate, 

finally  represented  by  share  certificates  held  by  upwards  of  2,000 
people. 

This  has  been  pointed  to  as  one  of  the  beneficent  results  of  large 
combinations;  namely,  the  diffusion  of  ownership  whereby  the  con- 
trol of  a few  has  been  subdivided  among  many.  This  argument 
would  have  some  force  were  it  not  for  the  methods  adopted  in  the 
capitalization  of  the  properties  before  indicated.  The  diffusion  of 
shares  does  not  necessarily  carry  with  it  the  control  by  many  of  the 
properties  thus  represented.  Stockholders  satisfied  with  the  profits 
they  receive  are  willing  to  leave  the  original  management  in  perma- 
nent control.  Realization  of  dividends  is  the  father  of  contentment; 
and  the  supreme  effort  of  management  must  be  directed  toward  main- 
taining earnings  proportionate  to  the  amount  of  stock  issued 
whether  for  live  assets  or  for  properties  closed,  abandoned  or 
dismantled. 

All  this  tends  to  indicate  that  the  net  profits  of  a corporation 
thus  organized  must  be  held  at  an  abnormally  high  figure  in  order  to 
justify  the  payment  of  dividends  upon  live,  dead  and  inflated  capital; 
and  that  correspondingly,  labor  on  the  one  hand  and  the  consumer 
on  the  other  must  relatively  bear  their  proportion.  And  this  without 
reference  to  the  fact  that  the  change  from  a strictly  industrial  pursuit 
to  one  intimately  coupled  with  speculation  in  the  certificates  repre- 
senting that  industry,  must  naturally  have  some  effect;  and  volume 
of  product,  price  and  all  the  incidents  of  a purely  industrial  manage- 
ment must  be  affected  by  the  requirements  of  fluctuating  stock  values 
on  the  exchange.  What  should  be  purely  industrial  becomes  the 
tender  of  speculation,  and  the  law  of  supply  and  demand  instead  of 
remaining  the  constant  regulator  of  output  and  price,  finds  itself  de- 
termined and  disturbed  by  the  exigencies  of  speculation. 


No.  30.] 


21 


It  is  claimed  that  shares  represent  only  the  proportionate  owner- 
ship of  the  holders  in  the  assets  of  a corporation,  whatever  they  may 
be,  and  while  this  is  true  in  a strictly  legal  sense,  still  they  are  not 
so  held  in  the  estimation  of  the  public.  It  seems  to  us  that  this  is 
one  of  the  evils  to  which,  in  a large  measure,  this  tendency  towards 
combinations  in  the  nature  of  trusts  is  due. 

The  owners  of  property,  who  see  in  this  method  a medium  for  the 
capitalization  of  their  interests  on  an  inflated  basis  of  value,  and  recog- 
nize availability  for  sale  and  transfer,  avail  themselves  in  the  pursuit 
of  easily  and  rapidly  acquired  wealth  of  this  method  rather  than  wait 
the  longer  processes  and  greater  delays  of  returns  from  a purely  in- 
dustrial pursuit.  Combinations  thus  effected  are  not  the  result  of 
normal  evolution,  but  arise  from  greed  and  the  desire  for  rapid 
accumulation  of  wealth. 

We  cannot  at  this  time  suggest  a remedy.  The  placing  of  restric- 
tions upon  the  issue  of  capital  stock  by  limiting  the  amount  of  issue 
or  requiring,  as  in  the  case  of  moneyed  institutions,  its  absolute  pay- 
ment in  cash,  may  be  altogether  too  radical.  While  other  States 
permit  the  latitude  they  now  do  such  a change  would  probably  result 
in  driving  capital  from  this  State  and  interfere  with  its  commercial 
development. 


FOREIGN  INCORPORATION. 

A point  of  interest  which  came  to  light  incidentally  is  the  practice 
of  foreign  incorporation.  The  most  extreme  example  furnished  by 
the  record  is  one  where  a combination  owning  factories  in  several 
States,  including  this,  but  without  the  semblance  of  any  interest  in 
the  State  of  New  Jersey,  secured  a charter  there  and  assumes  to 
carry  on  its  business  in  this  State,  free  from  compliance  with  the 
beneficial  restrictions  of  our  laws. 


22  [Senate, 

It  appeared  from  the  testimony  that  in  one  case  lower  rates  of  taxa- 
tion was  the  moving  cause ; in  another,  the  desire  to  avoid  legislative 
inquiry  or  the  visitorial  powers  of  the  State;  in  a third,  the  absence 
of  all  requirements  as  to  annual  reports.  But  whatever  the  grounds, 
real  or  pretended,  the  fact  remains,  that  the  mere  incorporation  in  a 
foreign  jurisdiction  is  supposed  to  operate  so  as  to  relieve  the  cor- 
poration so  formed  of  some  duty  or  obligation  which  would  have 
rested  upon  it  had  it  been  organized  under  the  laws  of  this  State. 
Hence,  although  for  all  practical  purposes  a corporation  of  this 
State,  operating  here,  receiving  the  protection  of  our  laws,  and  the 
opportunities  of  our  markets,  it  is  permitted  by  a mere  fiction  to 
escape  duties  and  obligations  imposed  on  corporations  similarly  situ- 
ated but  created  in  our  own  State. 

That  any  State  in  the  Union  should  permit  its  system  to  be  thus 
abused  is  due  probably  to  the  fact  that  it  is  in  ignorance  of  the  uses 
to  which  its  laws  are  put.  We  do  not  believe  that  the  State  of  New 
York,  for  the  mere  purpose  of  securing  colorable  incorporations  here 
and  receiving  annually  a pittance  for  permission  to  avoid  those  rea- 
sonable and  salutary  requirements  which  our  laws  impose,  should 
alter  its  system  so  as  to  meet  the  competition  of  any  other  State  for 
this  kind  of  corporate  organization.  We  cannot  afford  to  offer  our 
corporate  charters  to  be  trafficked  in  by  those  who  refuse  to  submit 
to  reasonable  restraints  and  search  the  land  over  for  the  most  com- 
placent jurisdiction  which  holds  its  corporate  franchises  so  cheaply 
that  they  may  be  had  for  the  asking  on  the  payment  of  a trifling  tax 
by  those  who  shun  regulations  devised  to  secure  honesty  of  manage- 
ment, resent  visitorial  powers  exercised  by  the  State  for  the  benefit 
of  the  people,  and  avoid  provisions  designed  for  the  safety  of  the 
investing  public  and  the  security  of  creditors. 


No.  40.] 


23 


The  laws  of  this  State  are  as  liberal  in  the  treatment  of  corporate 
interests  as  they  should  be  made  consistently  with  the  rights  of  the 
public  and  the  ordinary  requirements  of  honest  management,  and  it 
seems  to  us  to  be  far  better  for  this  State  to  continue  its  policy  of 
reasonable  regulation  and  proper  scrutiny  of  the  affairs  of  corpora- 
tions, trusting  that,  with  such  light  upon  the  subject  as  experience 
may  shed,  all  other  States  will  impose  the  same  salutary  restrictions 
and  refuse  to  permit  their  laws  to  be  used  as  a shield  and  cover  for 
the  organization  of  alien  corporations. 

FACTORS’  AGREEMENTS. 

One  of  the  methods  adopted  to  maintain  fixity  of  price  and  per- 
manently establish  a monopoly  by  control  of  every  economical  chan- 
nel of  distribution,  is  the  plan  or  system  of  “ factors’  agreements,” 
according  to  which,  in  lieu  of  direct  sales,  the  fiction  of  consignment 
is  adopted  to  support  a transaction,  which,  in  every  essential  element, 
is  an  absolute  sale. 

Time  did  not  permit  of  an  extended  inquiry  into  this  subject.  But 
the  light  that  has  been  shed  upon  it  justifies  the  conviction,  that  the 
system  thus  established  places  convenient  agencies  at  the  disposal 
of  combinations  with  monopolistic  tendencies  to  secure  just  that  con- 
trol over  the  distribution  of  product,  which,  coupled  with  a practically 
exclusive  control  of  the  producing  capacity  of  the  nation,  enables  it 
arbitrarily  to  fix  and  maintain  the  price  of  the  product  to  the  people. 
This  is  the  last  link  in  the  completed  chain  and  an  integral  part  of 
the  whole  scheme,  which  in  some  respects,  clinches  the  system  and 
makes  monopoly  permanent  by  rendering  competition  impossible. 

An  interesting  feature  was  the  almost  painful  effort  of  the  Whole- 
sale Grocers’  Association  on  the  one  hand  to  claim  absolute  respon- 
sibility for  the  system,  and  of  the  combinations,  on  the  other  hand  to 


24  [Senate,. 

disavow  any  responsibility  for  it.  That  the  effect  of  the  system  was, 
and  was  intended  to  be,  the  extinction  of  competition,  was  admitted 
with  refreshing  candor.  In  fact,  the  president  of  the  association  de- 
nounced competition  as  tantamount  to  ruin,  yet,  could  give  no  logical 
reason  why  normal  competition  should  govern  the  great  bulk  of 
human  transactions  and  be  ruinous  only  as  to  products  controlled  by 
capitalistic  monopolies. 

The  fact  that  the  association  existed  only  in  name,  and  for  the 
purpose  of  holding  annual  dinners;  that  its  president  knew  naught 
of  its  concerns;  had  called  no  meetings;  appointed  no  committees; 
had  no  knowledge  of  repeated  changes  made  in  the  system,  the 
phraseology  of  agreements,  the  punishment  of  violations;  while  the 
combination  itself  phrased  the  agreements,  established  the  terms  and 
conditions,  invited  by  circular  the  execution  of  the  contract,  estab- 
lished the  relation  of  factor,  provided  discounts  and  rebates  in  order 
to  make  that  relation  attractive,  punished  violations  by  withholding 
rebates,  withdrawing  contracts  and  consequently  destroying  the  busi- 
ness of  the  violator;  clinching  the  business  by  requiring  formal  affi- 
davits of  non-violation  before  allowing  the  rebate  which  represents 
the  only  profit  to  the  factor,  proves  beyond  reasonable  peradventure 
that  the  combination  is  responsible  for  the  system  directly,  and  not 
merely  indirectly,  as  was  pretended.  Certain  it  is,  that  its  effects 
destroy  competition  at  the  only  point  where  a capitalistic  monopoly 
would  be  powerless  to  prevent  competition,  and  supplement  the  con- 
trol of  production  by  another  combination  which  controls  the 
methods  of  distribution,  and  fixes  the  price  without  regard  to  com- 
petitors or  to  the  law  of  supply,  and  demand. 

We  have  in  evidence  factors’  agreements  in  use  by  each  of  the 
combinations  investigated,  which  may  be  classified  under  three  dis- 
tinct heads: 


No.  30.] 


25 


First.  That  adopted  by  the  American  Sugar  Refining  Company, 
which,  in  its  third  clause,  provides  as  follows: 

“ None  of  the  sugar  shall  be  sold  or  disposed  of  by  you,  either 
directly  or  indirectly,  for  less  than  our  daily  quotations,  with  freight 
added  from  refining  point  to  point  of  sale  (as  per  equality  rate  book), 
nor  on  more  liberal  terms  as  to  credit  or  cash  discounts.” 

The  “Equality  Rate  Book,”  subdivision  3,  provides:  “ Changes 
in  price  of  sugar  shall  take  effect  as  follows:  In  that  district  known 
as  the  eastern  time  district,  the  price  shall  take  effect  at  the  same 
moment  that  the  American  Sugar  Refining  Company  makes  the 
change  in  price.  Factors  in  the  central  division  of  time  shall  make 
change  of  price  30  minutes  later  than  that  of  points  in  the  eastern 
division.  Factors  in  the  western  division  shall  make  change  one 
hour  later  than  that  of  points  in  the  eastern  division.” 

Upon  compliance  with  this  and  other  conditions  relative  to  dis- 
counts and  payments  of  invoice  within  thirty  days,  the  factor  at  the 
end  of  three  months  becomes  entitled  to  a rebate  of  three-sixteenths 
of  a cent  per  pound.  It  should  be  remembered  in  this  connection 
that  the  ostensible  competitors  of  that  company  operate  under  the 
same  system,  the  agreements  being  alike  in  phraseology,  and  that  it 
was  the  representative  of  the  competing  concerns  who  produced  the 
“ Equality  Rate  Book  ” as  part  of  the  system  under  which  they  oper- 
ated, which  contains  the  clause  above  quoted. 

Second.  That  in  use  by  the  Soda  Combination  which  provides  for 
the  sale  of  its  particular  brand  on  a basis  of  five  cents  per  pound  for 
pounds  and  three  and  one-half  cents  per  pound  for  “ kegs  in  bulk;  ” 
and  then  provides: 

“ It  is  also  understood  that  we  are  not  to  sell  any  soda  or  saleratus 
in  boxes  under  our  private  or  other  brands  at  less  price  than  ‘Arm 
and  Hammer.’  If  we  are  compelled  to  purchase  cheap  bulk  soda  in 


26  [Senate, 

kegs,  barrels  or  casks,  we  agree  not  to  push  the  sale  of  such  goods, 
but  to  sell  as  limited  a quantity  as  possible,  and  that  only  because 
required  by  our  trade.” 

“Arm  and  Hammer  ” is  the  designation  of  a brand  prepared  by  that 
combination.  Failure  to  perform  these  conditions  results  in  the 
forfeiture  of  all  rebates. 

Third.  That  of  the  American  Tobacco  Company,  which  provides 
in  clause  7,  as  follows: 

“ If  you  do  not  discriminate  against  our  cigarettes  in  favor  of  those 
of  other  manufacture,  and  if  you  do  not  sell  or  dispose  of  any  of  our 
cigarettes  at  less  than  the  list  price,  and  if,  in  all  respects,  you  comply 
with  the  terms  of  this  agreement,  we  will  pay  you  a commission  of 
two  and  one-half  per  cent,  on  the  amount  realized  by  you  from  the 
sale  of  the  cigarettes  which  we  may  consign  to  you.” 

And  in  the  eighth  clause: 

“ If,  however,  you  handle  the  cigarettes  of  our  manufacture  ex- 
clusively, and  do  not  sell  or  distribute,  or  in  any  way  aid  in  the  sale 
or  distribution  of  cigarettes  of  other  manufacture,  and  if  you  in  all 
respects  fully  comply  with  the  terms  and  conditions  of  this  agree- 
ment, we  will  pay  you  an  additional  commission  of  per  cent,  on 
the  amount  realized  by  you  from  the  sale  of  cigarettes  which  we 
may  consign  to  you.” 

It  should  be  borne  in  mind  that  in  each  of  these  three  classes  the 
rebate  allowed  is  the  only  profit  accruing  to  the  supposed  consignee. 
Moreover,  that  the  particular  brand  or  brands  considered,  have  by 
combination  been  gathered  together  into  one  control,  so  that  the 
combination  has  absorbed  products  in  common  use  by  the  people, 
the  sale  of  which  has  become  indispensable  to  the  successful  opera- 
tion of  the  business  of  a wholesale  grocer,  who,  in  association  with 
others,  thus  controls  every  available  channel  of  economical  distribu- 


No.  40.]  27 

tion  to  the  retailer.  The  evidence  shows  that  the  wholesale  grocer 
who  refuses  to  join  the  association  and  submit  to  the  terms  and 
conditions  of  that  agreement,  is  completely  shut  out  from  the  pur- 
chase of  commodities  in  such  general  use  that  his  failure  to  deal  in 
them  means  business  extinction. 

It  will  be  remarked  that  while  the  phraseology  of  the  three  classes 
differs,  the  purpose  and  motive  are  substantially  identical.  The  first 
class,  coupled  with  the  “ Equality  Rate  Plan,”  permits  the  combina- 
tion to  fix  the  price  not  only  of  its  own  product  but  of  all  refined 
sugars  of  every  manufacture  absolutely  and  with  mathematical  cer- 
tainty; and  the  system  is  refined  to  such  a nicety  that  prices  on  the 
Mississippi  must,  within  one  hour,  respond  to  the  arbitrary  decision 
of  the  combination  here. 

The  second  class  is  less  guarded  in  terms.  And  upon  the  face  of 
one  document  definitely  fixes  the  price  of  the  product  of  the  com- 
bination at  a permanent  arbitrary  figure,  and  establishes  at  that 
point  the  minimum  price  of  every  competitor,  whether  the  article 
be  of  inferior  quality  or  not;  hence  closes  the  market  completely  to 
lower-priced  products  and  prevents  their  competition.  With  perfect 
frankness  it  imposes  upon  the  contractee  the  duty  of  discriminating 
against  all  other  producers. 

The  third  class  is  more  candid  in  its  expression  of  purpose.  The 
additional  commission  of  per  cent,  provided  for,  and  which,  for  all 
business  purposes,  constitutes  the  profit  of  the  so-called  consignee,  is 
payable  only  if  he  handles  the  product  of  the  combination  exclusively, 
and  does  not  sell  or  distribute,  or  in  any  way  aid  in  the  sale  or  dis- 
tribution of  similar  products  of  other  manufacture. 

It  is  unnecessary  to  argue  at  length  that  combinations  which  have 
been  formed  for  the  express  purpose  of  controlling  within  a fraction 
of  the  entire  product  represented  by  brands  which  the  original  com- 


28  [Senate, 

peting  companies  have,  under  conditions  of  free  competition,  pushed 
into  the  market  and  popularized  with  the  people  until  they  have, 
under  one  name  or  another,  become  necessary  to  public  comfort, 
convenience  and  enjoyment,  destroying  by  combination  that  compe- 
tition and  operating  through  channels  necessary  for  the  ultimate 
distribution  of  any  product  to  the  people  under  such  systems  as  are 
here  disclosed,  not  only  arbitrarily  fix  the  price  of  their  product,  but 
assume  to,  and  do  fix  the  price  of  the  competing  product  and  assume 
to,  and  do  compel  the  retailer  and  the  consumer  to  buy  their  pro- 
ducts at  the  price  thus  fixed.  They,  moreover,  establish  a commercial 
system  clearly  in  restraint  of  trade;  one  which  if  permanently  per- 
mitted to  exist,  must  be  followed  by  absolute  monopoly  and  the  ex- 
clusion of  moderate  capital  and  lesser  means  from  all  opportunity 
of  practical  competition. 

REMEDIES. 

In  determining  the  nature  and  scope  of  the  remedies  to  be  applied, 
we  are  met  at  the  outset  by  the  difficulty  that  combinations  such  as 
those  considered  here,  operate  from  their  very  nature  over  the  whole 
or  a very  large  portion  of  the  territory  of  the  Union.  Distinct  acts 
of  oppression  or  repression  committed  in  other  jurisdictions,  cannot 
be  successfully  attacked  by  local  authority.  No  State  law  will  operate 
extra-territorially,  nor  may  we  bring  within  the  scope  of  our  punitive 
power  any  acts  committed  in  other  jurisdictions.  Chief  Justice 
Taney,  in  United  States  against  Booth  (21  Howard,  524),  says: 

“ No  judicial  process,  whatever  form  it  may  assume,  can  have  any 
lawful  authority  outside  of  the  limits  of  the  jurisdiction  of  the  court 
or  judge  by  whom  it  is  issued;  and  an  attempt  to  enforce  it  beyond 
these  boundaries  is  nothing  less  than  lawless  violence.”  Combina- 
tions existing  in  this  State  and  exercising  all  the  attributes  of  a 


No.  30.]  129 

monopoly  here,  may  commit  every  assailable  act  in  other  States. 
There  seems  to  be  no  remedy  here  for  the  closing  of  factories  in 
Philadelphia,  New  Brunswick,  Camden,  Naugatuck  or  Baltimore  as 
part  of  an  original  plan  of  combination  designed  to  secure  a mo- 
nopoly. There  seems  to  be  no  remedy  against  the  acquisition  of 
competing  factories  by  an  established  monopoly  for  the  distinct 
purpose  of  dismantling  them  and  thus  destroying  competition  and 
limiting  production;  and  yet  each  of  these  acts  is  one  step  further 
either  in  creating  or  maintaining  that  control  of  price  and  product 
which  results  in  fastening  a monopoly  upon  this  State.  The  con- 
trol of  product,  the  fixing  of  prices,  the  shutting  out  of  competition, 
resulting  in  a situation  whereby  lesser  capital  is  powerless  to  enter, 
is  driven  from  the  field,  or  is  absorbed,  and  an  area  of  contracted 
opportunities  for  the  many  is  produced,  is  in  some  part  attributable 
to  or  strengthened  by  acts  of  oppression  or  repression  committed 
elsewhere,  which  by  local  law  we  are  unable  to  reach. 

It  is  unfortunate  in  this  aspect  of  the  case  that  the  limitations  upon 
the  federal  power  as  determined  by  the  United  States  Supreme  Court 
practically  annul  the  force  of  the  so-called  “ Sherman  Anti-trust 
Law,”  because  it  is  clear  that  federal  authority,  in  view  of  the  con- 
siderations above  stated,  would  be  the  only  jurisdiction  with  adequate 
power  to  afford  a complete  remedy.  In  the  case  of  United  States 
against  Knight  Co.  (156  U.  S.),  after  holding  that  acts  whereby 
several  Philadelphia  refineries  were  acquired  were  purely  those  of  a 
local  nature  committed  in  the  capacity  of  transacting  business  as  a 
manufacturer  and  not  necessarily  appertaining  to  interstate  com- 
merce, the  court  says: 

“ Commerce  succeeds  to  manufacture  and  is  not  a part  of  it.  The 
power  to  regulate  commerce  is  the  power  to  prescribe  the  rule  by 
which  commerce  shall  be  governed,  and  is  a power  independent  of 


30  [Senate, 

the  power  to  suppress  monopoly.  But  it  may  operate  in  repression 
of  monopoly  whenever  that  comes  within  the  rules  by  which  com- 
merce is  governed  or  whenever  the  transaction  is  itself  a monopoly 
of  commerce.  * * * The  fact  that  an  article  is  manufactured 

for  export  to  another  State  does  not  of  itself  make  it  an  article  of 
interstate  commerce  and  the  intent  of  the  manufacturer  does  not 
determine  the  time  when  the  article  or  product  passes  from  the  con- 
trol of  the  State  and  belongs  to  commerce.  * * * The  object 

in  purchasing  the  Philadelphia  refineries  was  to  obtain  a greater 
influence  or  more  perfect  control  over  the  business  of  refining  sugars 
in  this  country.  * * * But  the  contracts  and  acts  of  the 

defendants  relate  exclusively  to  the  acquisition  of  the  Philadelphia 
refineries  and  the  business  of  sugar  refining  in  Pennsylvania  and 
bear  no  direct  relation  to  commerce  between  the  States  or  with 
foreign  nations.  The  object  was  manifestly  private  gain  in  the 
manufacture  of  the  commodity,  but  not  through  the  control  of  inter- 
state or  foreign  commerce.”  > 

It  is  obvious  that  the  federal  courts  have  placed  so  narrow  a con- 
struction upon  the  limits  of  their  authority,  that,  in  the  absence  of  a 
constitutional  amendment  little  or  no  relief  may  be  expected  from 
that  quarter,  unless  the  Supreme  Court  of  the  United  States  shall 
greatly  modify  the  conclusions  above  referred  to.  It  seems  to  us 
that  the  system  here  criticised  can  be  satisfactorily  reached  only  by 
the  exercise  of  a power  of  general  jurisdiction  throughout  the  United 
States  and  that  any  attempt  to  prevent  the  evil  by  local  legislation 
assailing  a system  of  general  application  in  all  the  States  must  prove 
•abortive  or  at  least  insufficient. 

Moreover,  we  are  confronted  not  merely  by  difficulties  incident  to 
the  commission  of  acts  of  unlawful  combination,  oppression  or  re- 
striction extra-territorially,  but  which  affect  the  interests  of  the  State 


No.  40.] 


31 


directly,  there  is  another  consideration  which  contracts  the  limits  of 
possible  relief. 

That  part  of  the  XIV  Amendment  of  the  Federal  Constitution 
which  reads:  “ No  State  shall  make  or  enforce  any  law  which  shall 
abridge  the  privileges  or  immunities  of  citizens  of  the  United  States; 
nor  shall  any  State  deprive  any  person  of  life,  liberty  or  property 
without  due  process  of  law,  or  deny  to  any  person  within  its  juris- 
diction the  equal  protection  of  the  law,”  has  been  held  in  a large 
number  of  authoritative  decisions  to  apply  with  special  force  to  legis- 
lation of  the  character  here  considered  and  to  restrict  the  authority  of 
the  several  States  in  dealing  legislatively  with  this  subject. 

In  a recent  decision  rendered  by  Judge  Swayne  of  the  Federal 
Court  annulling  the  Texas  Anti-Trust  Law  on  the  ground  that  it 
violated  the  foregoing  provision  of  the  Constitution,  the  law  is  set 
forth  with  great  force  and  perspicuity,  and  the  conclusions  reached 
are  amply  fortified  by  authoritative  decisions  of  the  highest  courts 
of  the  various  States  and  of  the  nation,  and  as  to  one  conclusion 
reached  by  him  there  is  little  room  for  discussion. 

The  right  of  contract  inheres  in  the  individual  as  a constitutional 
privilege.  A full  and  free  right  of  contract,  so  far  as  the  same  may 
not  conflict  with  public  policy  or  be  prejudicial  to  public  interests, 
must  a priori  be  conceded.  The  right  of  contract  coexists  with  and 
is  incidental  to  the  right  of  liberty  and  property,  and  is  recognized  in 
the  natural  law  as  the  very  foundation  of  human  progress  and  devel- 
opment. It  is  a sacred  privilege  of  the  citizen  which  is  carefully 
guarded  by  the  Constitution: 

“ The  right  of  liberty  embraces  the  right  of  man  to  exercise  his 
faculties  and  follow  any  lawful  avocation  for  the  support  of  life. 

“ Liberty  in  its  broad  sense,  as  understood  in  this  country,  means 
the  right,  not  only  of  freedom  from  servitude,  imprisonment  or 


32  [Senate, 

restraint  but  the  right  of  one  to  use  his  faculties  in  all  lawful  ways, 
to  live  and  work  where  he  will,  to  earn  his  livelihood  in  any  lawful 
calling,  and  to  pursue  any  lawful  trade  or  avocation. 

“ If  there  is  one  thing  more  than  another  public  policy  requires 
from  us,  it  is  that  men  of  full  age  and  competent  understanding,  shall 
have  the  utmost  liberty  of  contracting,  and  their  contracts  when 
entered  into  freely  and  voluntarily,  shall  be  held  sacred  and  shall  be 
enforced  by  courts  of  justice.” 

A review  of  the  decisions  rendered  in  this  State  would  seem  to 
emphasize  the  conclusion  that  this  constitutional  freedom  of  con- 
tract may  not  be  interfered  with  unless  accompanied  by  or  resulting 
in  acts  of  oppression  or  in  restraint  of  trade  which  trench  upon  the 
constitutional  liberty  and  privileges  of  others. 

Judge  Swayne  quotes  approvingly  from  “ Tiedman’s  Limitations 
of  Police  Power.” 

“ One  of  the  most  sacred  rights  of  liberty  is  the  right  of  contract. 
All  the  rights  of  contract  which  are  necessary  for  the  carrying  on  of 
ordinary  business  affairs  are  protected  by  the  Constitution  and  are 
not  capable  of  being  restrained  by  legislative  action.  Among  these 
rights  is  that  of  forming  business  relations  between  man  and  man. 
A man  may  form  business  relations  with  whom  he  pleases  and  in 
the  conduct  of  such  business  he  may  fix  and  limit  the  character  and 
amount  of  his  business,  the  price  he  will  charge  for  the  produce 
which  he  offers  to  the  public  or  about  which  he  contracts.  It  is  part 
of  the  natural  and  civil  liberties  to  form  business  relations  free  from 
the  dictation  of  the  State;  and  a like  freedom  should  be  secured  and 
enjoyed  in  determining  the  conditions  and  terms  of  the  contract 
which  constitutes  the  basis  of  business  relations  or  transactions.  It 
is,  therefore,  the  general  rule  that  a man  is  free  to  ask  for  his  wares 
or  his  services  whatever  price  he  is  able  to  get  and  others  are  willing 
to  pay.  * * * 


No.  40.] 


83 


“A  man  has  a constitutional  right  to  buy  anything  in  any  quantity, 
provided  he  uses  only  fair  means  and  sets  his  own  price  on  it,  or 
refuses  to  sell  it  at  all.  And  what  one  man  may  lawfully  do  as  an 
individual,  two  or  more  may  also  do  when  combined  as  partners. 
Combination  for  business  purposes  is  legal.  Combinations  are  bene- 
ficial as  well  as  injurious,  according  to  the  motives  and  aims  with 
which  they  are  formed.  It  is,  therefore,  impossible  to  prohibit  all 
combinations.  The  prohibition  must  rest  upon  the  objectionab,e 
character  of  the  object  of  the  combination.” 

Judge  Swayne  then  asserts  as  a general  rule  that: 

“ The  right  to  combine,  to  form  partnerships  and  joint  stock  asso- 
ciations, the  right  to  agree  as  to  prices  and  production,  the  right  to 
fix  prices,  to  raise  and  lower  them  as  business  may  require,  is  not 
oppressive  to  the  public,  nor  unjust  to  the  individual,  nor  contrary 
to  public  policy.  It  is  an  essential  right,  as  part  of  the  liberty  of  the 
citizen,  of  which  no  Legislature  can  deprive  him.” 

We  have  referred  to  this  decision,  because  it  is  the  latest  exposition 
of  the  law  governing  the  subject,  and  bears  every  evidence  of  careful 
preparation. 

The  prohibition  must  rest,  therefore,  not  upon  the  fact  of  com- 
bination, but  upon  the  objectionable  character  of  the  object  of  the 
combination.  And  the  first  question  which  presents  itself  is, 
whether  acts  otherwise  lawful  may  become  objectionable,  against 
public  policy  and  outside  of  the  constitutional  sanction  because  of 
their  magnitude.  It  is  intelligible  that  acts  innocuous  in  themselves 
when  committed  by  individuals,  by  partnerships  or  by  the  normal 
aggregations  contemplated  by  law  may  bear  an  entirely  different 
aspect  when  done  on  an  enormous  scale  by  an  enormous  aggregation 
which  has  or  assumes  to  have  control  of  product  and  market.  Acts 

perfectly  harmless  in  themselves,  standing  alone,  permit  of  a differ- 

3 


34  [Senate, 

ent  interpretation  when  they  form  part  of  a system  which  as  a whole 
in  plan  and  scope  operates  injuriously  to  the  public  interests,  espe- 
cially when  conducted  upon  a scale  and  magnitude  amounting  to 
practical  monopoly. 

Assuming  the  statement  to  be  accurate  that:  “ Combinations  are 
beneficial  as  well  as  injurious  according  to  the  motives  and  aims 
with  which  they  are  formed,”  it  follows  that  a series  of  acts,  each 
lawful  in  itself,  but  tending  toward  and  set  in  motion  for  the  purpose 
of  securing  an  object  prejudicial  to  public  interests,  may  be  declared 
unlawful,  especially  if  the  object  sought  to  be  obtained  was  one  of 
the  underlying  causes  for  the  creation  of  the  combination  itself. 
Applying  these  principles  to  the  question  here  considered  it  would 
seem  that  combinations  formed  on  a scale  or  magnitude  involving 
the  control  of  80  per  cent,  of  the  productive  capacity  of  the  nation  in 
a necessary  of  life  or  an  article  in  daily  use  which  has  become  neces- 
sary to  the  comfort  and  convenience  of  the  public,  formed  with  the 
preconceived  intention  of  securing  that  control  by  means  of  com- 
bination, formed  for  the  purpose  of  restricting  production  and  anni- 
hilating competition  by  a combination  of  all  competitors  capable  of 
practical  competition  and  embracing  in  the  original  plan  the  design 
of  a limited  production  by  the  closing  of  factories  absorbed  with  that 
object  in  order  to  remove  their  competition,  is  a combination  the 
motives  and  aims  of  which  are  injurious  to  public  interests. 

When  to  this  is  added  the  system  of  distribution  under  factors’ 
agreements,  whereby  agencies  are  created  in  name  only,  for  the 
purpose  of  maintaining  a fixed  price  for  the  product  and  incidentally 
controlling  every  practical  channel  of  distribution  to  the  people,  we 
have  the  type  of  combination  which  in  original  plan  of  aim  and 
motive,  in  magnitude,  and  in  the  methods  pursued  to  carry  its  pur- 
poses into  effect,  embodies  objectionable  characteristics  so  prejudi- 


No.  40.]  35 

cial  to  public  interests  that  a clear  distinction  may  be  drawn  between 
them  and  lawful  combinations  within  the  Constitution.  Combina- 
tions which  are  able  to  and  do  successfully  put  in  operation  a 
system  such  as  has  been  here  described,  and  for  the  purposes  above 
indicated,  are  clearly  oppressive.  And  while  no  State  shall  make  or 
enforce  any  law  which  shall  abridge  the  privileges  or  immunities  of 
citizens  of  the  United  States,  neither  should  it  permit  others  to  estab- 
lish systems  which  effectively  abridge  the  privileges  of  citizenship, 
oppressively  restrict  or  destroy  the  area  of  opportunity  and  find  no 
sanction  in  law,  human  or  divine. 

Combinations  of  capital  from  the  crudest  forms  of  partnership  to 
the  highest  perfection  of  corporate  organization  have  been  fostered 
by  the  State  in  the  enactment  of  laws  aiding  and  encouraging  the 
proper  concentra'ion  of  the  resources  and  energies  of  the  many  for 
business  purposes.  We  recognize  that  in  the  progressive  stages  of  an 
advancing  civilization  primitive  forms  of  individual  activity  must 
suffer  because  the  requirements  of  a higher  and  universal  develop- 
ment demand  a volume  and  facility  of  supply  and  a contraction  of 
price  that  renders  concentration  of  skill,  energy  and  resource  indis- 
pensable to  successful  competition. 

We  can  find  no  valid  reason  for  any  departure  from  the  policy  of 
the  State  in  the  encouragement  and  protection  of  combinations  thus 
made;  on'  the  contrary,  every  consideration  of  public  interest  and 
policy  demands  that  the  most  generous  invitation,  the  widest  latitude, 
the  utmost  freedom  and  the  largest  opportunity  be  extended  to 
capital  in  any  form  of  lawful  combination  to  embark  in  every  field 
of  industry  and  commerce. 

It  is  because  of  the  indisputable  fact,  that  the  class  of  combina- 
tions herein  criticised  acts  as  a barrier  to  the  free  employment  of 
capital  in  -individual  control  or  in  moderate  and  normal  association, 


36  [Senate, 

which  imposes  upon  the  State  the  duty  of  exercising  any  prohibitive 
and  punitive  authority  it  may  possess  to  check  the  former. 

So  far  as  the  criminal  jurisdiction  of  the  State  may  be  invoked,  the 
law  can  reach  effectively  only  specific  acts  of  oppression  or  specific 
acts  in  restraint  of  trade  committed  within  our  jurisdiction. 

It  may  be  advisable  on  the  granting  of  corporate  charters  to  im- 
pose limitations  upon  the  volume  of  stock  to  be  issued;  but  in  the 
absence  of  similar  provisions  in  the  laws  of  other  States  a discrimina- 
tion would  exist  injuriously  affecting  domestic  corporations. 

A’s  to  foreign  corporations,  provision  should  be  made  to  remove 
the  inequalities  which  now  exist  between  domestic  and  foreign  cor- 
porations transacting  business  in  this  State.  Our  corporations  have 
a right  to  expect  that  there  shall  be  no  discrimination  against  them 
and  in  favor  of  foreign  corporations  having  the  protection  of  our 
laws  and  the  freedom  of  our  business  and  commercial  opportunities. 
Inequalities  in  taxation  should  be  remedied,  and  foreign  corporations 
should  be  compelled  to  comply  with  all  those  provisions  of  the  local 
law  governing  domestic  corporations  which  may  be  practically  ex- 
tended to  them.  All  requirements  of  the  local  law  especially  de- 
signed for  the  protection  of  creditors  and  shareholders  should  be 
imposed  upon  foreign  corporations  operating  here.  In  this  way  the 
main  incentive  for  foreign  organization  of  domestic  interests  will  be 
removed.  Compliance  with  these  provisions  may  be  enforced  by  suit 
by  the  Attorney-General,  or  by  providing  that  the  license  now  re- 
quired by  law  to  enable  a foreign  corporation  to  transact  business 
here  shall  be  revoked  in  the  event  of  the  refusal  or  a continued  default 
by  the  foreign  corporation  to  obey  these  suggested  requirements. 
A bill  is  in  preparation  to  accomplish  this  recommendation  and  will 
be  submitted. 


No.  40.1 


37 


As  to  foreign  corporations  in  the  nature  of  monopolies,  provision 
may  be  made  for  the  refusal  or  revocation  of  licenses  to  transact 
business  in  this  State.  But  this  would  seem  to  be  too  radical  a 
remedy  in  the  absence  of  a prior  judicial  determination  that  a mo- 
nopoly in  fact  exists.  Another  suggestion,  which  should,  however, 
be  carefully  considered,  would  be  to  invest  the  citizen,  under  proper 
restrictions,  with  the  right  to  maintain  a civil  action  against  any 
capitalistic  monopoly,  conferring  upon  the  Supreme  Court,  in  an 
action  of  that  character,  the  authority  to  issue  an  injunction  against 
such  corporation  and  its  agents,  prohibiting  the  continuance  in  this 
State  of  acts  or  the  transaction  of  business  under  the  system  and  by 
the  methods  criticised  in  this  report.  This  is  a method  so  drastic 
that  it  will  be  further  considered  before  any  bill  is'  presented. 

As  to  remedies  addressed  to  the  correction  of  specific  acts  com- 
mitted in  this  State,  existing  legislation,  with  the  additions  suggested 
in  the  bill  submitted,  appears  to  us  to  be  ample. 

An  important  difficulty  seems  to  be  that  of  securing  the  testimony 
necessary  to  a judicial  ascertainment  of  the  act  itself.  This  may  be 
obviated  by  investing  the  Attorney-General  with  ample  power  for 
the  examination  of  witnesses  under  subpoena  to  be  issued  on  his 
application  ex  parte  by  a justice  of  the  Supreme  Court,  conferring 
the  constitutional  guarantee  of  absolute  immunity  on  those  testify- 
ing, and  providing  that  such  examination  shall  be  had  in  the  presence 
of  a justice  and  shall  be  conducted  pursuant  to  the  usual  rules  gov- 
erning the  admission  of  evidence  to  be  applied  by  such  justice,  the 
testimony  when  taken  to  be  filed  in  the  office  of  the  Attorney-General. 
It  seems  to  us  that  all  the  authority  that  the  Legislature  may  confer 
upon  the  prosecuting  officer  of  the  State  is  thereby  provided. 

In  concluding  this  report  we  deem  it  proper  to  refer  to  the  declara- 
tion made  by  some  of  the  witnesses  before  us  that  competition  was 


38 


[Senate, 


ruinous  to  legitimate  enterprise  and  was  becoming  obsolete.  There 
was  no  attempt  to  conceal  the  purpose  of  controlling  or  regulating 
competition  by  combination. 

We  prefer  to  stand  upon  the  proposition  stated  in  Bishop’s  New 
Criminal  Law,  volume  2,  section  230: 

“ Competition  in  the  various  activities  of  life  is  one  of  the  most 
beneficent  forces  among  men.  It  strengthens  the  race  and  keeps 
individuals  from  mischief  by  stimulating  activity;  promotes  the  hap- 
piness of  all  and  prevents  famine  and  other  like  suffering  by  causing 
commodities  to  be  in  plentiful  supply  and  at  prices  not  unjust;  and  it 
preserves  trade,  labor,  manufactures,  finance  and  all  like  things  at 
an  even  and  equitable  balance.  In  the  nature  of  affairs  it  is  so  seldom 
in  the  power  of  a single  individual,  unaided,  to  do  any  effectual  act 
toward  the  destruction  of  competition  that  the  common  law  has  not 
heretofore  very  clearly  and  certainly  defined  any  offense  of  this  sort 
if  committed  by  one  — the  facts  not  having  furnished  the  needful 
cases  — but  conspiracies  to  impair  competition,  by  monopolies  and 
other  like  combinations  have  always  been  regarded  as  criminal,  and 
when  to  this  sort  of  conspiracy  is  added,  as  in  the  facts  of  most  cases, 
some  unlawful  means,  its  indictability  is  beyond  question.” 

Political  oppression  is  the  refusal  of  equal  rights;  commercial 
oppression  is  the  denial  of  equal  opportunities;  both  are  repugnant 
to  the  people.  The  spirit  that  resisted  the  one  and  wrote  the  shib- 
boleth of  equal  rights  into  the  organic  law  of  the  nation,  will  not 
permit  the  other  to  take  enduring  root  by  tolerating  the  substitution 
of  monopoly  for  equal  opportunity.  The  field  should  be  free  to  all. 
In  the  conflict  of  commercial  rivalry,  genius,  labor  and  capital  should 
have  the  largest  liberty  of  expansion  and  employment,  and  the  fullest 
opportunity  of  entrance  into  every  field  of  industrial  activity.  No 
one  interest  should  be  permitted  by  unfair  and  oppressive  methods 


39 


No.  40.] 

to  build  an  impregnable  trocha  around  any  industrial  pursuit,  and 
rest  its  claims  to  special  privilege  on  abuse  of  power  of  concentrated 
wealth  of  abnormal  magnitude.  The  law  which  protects  the  indi- 
vidual in  the  acquisition  and  use  of  property  and  guarantees  to  him 
the  fullest  opportunity  for  its  enjoyment  couples  with  this  protection 
a guarantee  and  condition  that  such  use  shall  not  be  oppressive. 
And  the  statute  which  permits  the  combination  of  the  resources  of 
many  into  one,  presupposes  that  the  permission  to  combine  shall  not 
operate  to  the  prejudice  of  public  interests.  Sic  liter e tuo  ut  alienum 
non  laedas,  is  a maxim  as  old  as  civilization  itself,  and  illustrates  the 
proposition  that  the  sacred  right  of  contract  and  the  incidental  privi- 
lege of  combination  are  both  subject  to  the  qualification  that  they 
shall  be  exercised  so  as  not  to  prejudice  the  rights  of  others  or  the 
interests  of  the  people. 

In  submitting  this  report  we  append  the  record  of  the  proceedings 
of  the  committee  together  with  a summary  of  the  laws  of  the  United 
States  and  of  the  other  States  of  the  Union  upon  the  subject  here 
discussed. 

Dated  March  9,  1897. 

CLARENCE  LEXOW, 

Chairman. 

CORNELIUS  R.  PARSONS. 
LOUIS  BEDELL, 

HENRY  E.  WARNER. 

ROBERT  MAZET. 

P.  H.  McCARREN. 

Dissenting  only  from  the  findings  and  conclusions  so  far  as  they 
relate  to  the  American  Sugar  Refining  Company. 


MINORITY  REPORT*. 


I dissent  from  the  findings  and  conclusions  of  the  majority  of  the 
committee  in  so  far  as  they  relate  to  the  American  Sugar  Refining 
Company. 

The  testimony  elicited  on  the  investigation  shows  that  prior  to 
the  organization  of  the  American  Sugar  Refining  Company  a number 
of  so-called  “ independent  refineries  ” were  engaged  in  the  refining  of 
sugar  and,  in  many  instances,  by  reason  of  competition,  were  reduced 
to  a condition  of  insolvency  and  bankruptcy,  and  that  during  the  ex- 
istence of  these  so-called  independent  refineries  the  price  of  sugar 
to  the  consumer  was  on  an  average  of  about  30  per  cent,  higher  than 
it  is  to-day,  which  shows  that  the  existence  of  the  American  Sugar 
Refining  Company  has  resulted  in  reducing  the  price  of  sugar  to  the 
consumer  about  30  per  cent,  and  prevented  that  demoralization  in 
the  industry  of  refining  sugar  that  formerly  disturbed  the  financial 
affairs  of  such  enterprises. 

The  testimony  also  shows  that  in  the  aggregate  a greater  number 
of  men  have  been  employed  in  the  sugar  industry  since  the  formation 
of  the  American  Sugar  Refining  Company  than  were  employed  prior 
to  its  existence,  and  that  the  labor  employed  has  been  better  paid. 

The  report  of  the  majority  of  the  committee  does  not  emphasize 
the  fact  that  the  testimony  of  the  president  of  the  Wholesale  Grocers’ 
Association,  or  in  other  words  the  factors  engaged  in  the  distribution 
of  sugar,  shows  conclusively  that  the  American  Sugar  Refining 
Company  did  not  solicit  the  co-operation  of  these  wholesale  grocers, 


42 


[Senate, 


or  factors,  for  the  purpose  of  aiding  the  American  Sugar  Refining 
Company  in  distributing  its  product  or  regulating  and  maintaining 
the  price  of  its  commodity,  but  on  the  contrary,  the  testimony  shows 
that  these  wholesale  grocers,  or  factors,  importuned  the  American 
Sugar  Refining  Company  to  fix  a price  below  which  these  factors 
would  not  sell  its  product.  This  arrangement  was  desired  by  the 
factors  because  they  had  been  for  a long  time  disposing  of  refined 
sugar  at  a loss,  and  inasmuch  as  the  amount  of  sugar  sold  by  these 
factors  represented  about  30  per  cent,  of  the  commodities  sold  by 
them,  they  were  compelled  in  many  instances  to  do  business  at  such 
a loss  as  to  result  ruinously  to  their  trade.  It  was  after  such  experi- 
ences that  the  factors  concluded  that  self-preservation  required  that 
some  understanding  should  be  reached  with  the  American  Sugar 
Refining  Company  in  order  to  protect  them  against  themselves. 

The  testimony  also  shows  that  there  are  a number  of  outside  or 
independent  sugar  refining  companies  having  no  connection  of  any 
kind  with  the  American  Sugar  Refining  Company,  and  that  these 
outside  or  independent  refineries  maintained  the  price  of  refined 
sugar  at  about  the  same  figures  set  by  the  American  Sugar  Refining 
Company  for  the  sale  of  its  product,  and  while  that  would  seem  to  be 
a circumstance  traceable  to  the  influence  of  the  American  Sugar 
Refining  Company,  no  testimony  was  adduced  to  show  that  it  in 
any  way  seeks  to  influence  the  actions  of  these  independent  refineries. 
For  that  reason  it  cannot  be  said  that  the  American  Sugar  Refining 
Company  is  in  any  way  guilty  of  a violation  of  the  statute  which  pro- 
hibits restraint  in  trade,  nor  does  it  in  any  way  interfere  with  free 
and  fair  competition. 

The  testimony  of  Mr.  H.  O.  Havemeyer  shows  that  the  American 
Sugar  Refining  Company  at  its  refineries  in  the  city  of  Brooklyn, 
employs  about  ten  times  as  much  labor  in  handling  sugar  in  that  city 


No.  40.]  43 

as  is  required  to  handle  the  same  amount  in  cities  adjacent  to  New 
York  in  which  the  American  Sugar  Refining  Company  operates  its 
plant,  and  also  that  of  the  entire  freight,  west  bound,  leaving  the  port 
of  New  York,  about  40  per  cent,  goes  from  Brooklyn  and  of  that  90 
per  cent,  is  sugar.  Those  are  circumstances  that  illustrate  the  im- 
portance of  the  sugar  refining  business  to  the  people  of  the  city  of 
Brooklyn. 

The  testimony  of  Mr.  Searles  shows  that  while  sugar  is  to-day 
lower  in  price  than  it  ever  has  been  to  the  consumer,  if  it  were  not 
for  the  operation  of  our  tariff  laws  the  price  would  be  reduced  one 
cent,  or  in  other  wTords  the  price  to-day  to.  the  consumer  would  be 
about  three  cents  per  pound. 

In  response  to  a request  the  American  Sugar  Refining  Company 
filed  with  the  committee  a statement  of  the  taxes  paid  by  it  in  the 
cities  of  New  York  and  Brooklyn,  showing  that  in  the  former  city 
for  the  six  years  inclusive  from  1891  to  1896  they  paid  $33,615.15  and 
in  the  latter  city  in  the  same  time  $457,260.65,  total  $490,876.19. 
This  amount  represents  taxes  paid  upon  property  owned  by  the 
American  Sugar  Refining  Company,  the  assessable  value  of  which 
has  been  enhanced  by  reason  of  the  great  amount  of  territory  covered. 

If  we  are  to  conclude  what  the  value  of  the  property  now  owned 
by  the  American  Sugar  Refining  Company  would  be  if  it  were  not 
used  for  the  purposes  to  which  it  is  now  devoted  from  a comparison 
with  other  property  along  the  Brooklyn  water  front,  the  revenue  of 
the  city  of  Brooklyn  would  be  considerably  diminished. 

In  my  opinion  the  presence  of  the  American  Sugar  Refining 
Company  and  the  location  of  its  plant  in  the  State  of  New  York  has 
resulted  in  developing  our  commerce,  increasing  our  taxable  prop- 
erty and  benefiting  our  people. 


P.  H.  McCARREN. 


MINORITY  REPORT 


OF  THE 

JOINT  COMMITTEE  OF  THE  SENATE  AND  ASSEMBLE 
APPOINTED  TO  INVESTIGATE  TRUSTS. 


In  Assembly,  March  18,  1897. 

To  the  Legislature  of  the  State  of  New  York: 

The  committee’s  report  shows  that  what  was  predicted  at  the  outset 
was  not  for  the  purpose  of  suggesting  effective  remedies. 

I do  not  feel  the  tender  solicitude,  nor  yet  the  open  admiration, 
for  monopolistic  combinations  which  characterize  the  respective  re- 
ports of  my  associates  of  the  joint  committee  to  investigate  those 
evils,  and  I therefore  beg  leave  to  submit  an  independent  report. 

It  is  quite  true,  as  the  majority  report  says, -that  your  committee 
was  given  inadequate  time  for  the  accomplishment  of  its  mission, 
and  it  is  at  least  doubtful  whether  the  ostensible  purpose  of  the 
Legislature  can  ever  be  realized  through  the  medium  of  a legislative 
committee,  whose  members  will,  during  the  session,  usually  be  dis- 
tracted by  other  legislative  duties,  and,  after  the  session,  by  the 
demands  of  private  business  often  too  long  neglected.  Such  a com- 
mittee, therefore,  is  not  best  calculated  to  deal  with  the  subject  under 
consideration.  Its  transcendent  importance,  its  intricacies,  techni- 
calities and  ramifications  would  seem  to  demand  for  their  proper 
investigation  and  solution  a commission  unrestricted  as  to  time, 
invested  with  plenary  powers,  supplied  with  unlimited  facilities,  and 


46  [Senate, 

embracing  in  its  membership  the  highest  statesmanship,  experience, 
patriotism  and  courage  to  be  found  in  our  State. 

In  the  course  of  its  labors,  however,  your  committee  adduced  a 
considerable  amount  of  testimony  in  support  of  facts  which  have 
long  been  a part  of  the  common  knowledge  of  the  merest  wayfarer 
in  the  realms  of  commerce  or  of  politics. 

Had  its  practice  been  to  call  as  witnesses  the  victims,  rather  than 
the  victors,  in  commercial  strife,  some  new  and  useful  facts  might 
have  come  to  light.  Nevertheless,  it  has  been  established  as  the  sum 
of  common  knowledge  plus  the  results  of  your  committee’s  inves- 
tigations: 

First.  That  domestic  and  foreign  corporate  monopolies  in  the 
necessaries'  of  life  have  been  created,  or  permitted  to  operate,  in  this 
State. 

Second.  That  such  monopolies  exist  and  operate  principally  by 
means  of  the  enormous  amount  of  capital  actually  employed;  or 
capitalization  permitted. 

Third.  That  there  is  no  limit  in  this  State  to  the  amount  of  capital 
which  may  be  so  employed. 

Fourth.  That  the  stock  of  such  monopolies  is*made  the  subject  of 
general  sale,  speculation  and  manipulation. 

Fifth.  That  there  is  no  sufficient  provision  in  the  laws  of  this  State 
for  the  curbing,  expulsion  or  dissolution  of  monopolies  operating 
in  this  State,  or  operating  in  other  States,  against  the  welfare  of 
citizens  of  this  State. 

The  existence  of  the  conditions  here  enumerated  will  not  be,  ques- 
tioned. To  discuss  their  effects  would  be  to  re-employ  the  over- 
worked platitudes  of  a decade.  The  single  duty  of  the  Legislature 
is  to  find  a remedy.  In  addressing  itself  to  this  duty  the  Legislature 
will  undoubtedly  be  met  by  two  venerable  but  untenable  objections. 


No.  40.]  47 

The  first  of  these  will  be  that  capital  will  take  flight  at  the  approach 
of  reform,  and  the  second  that  the  monopolies  are  safeguarded  by 
the  operations  of  the  doctrine  of  vested  rights.  There  are  wise  and 
patriotic  men  who  will  answer  in  reply  to  the  first  of  these  objections 
that  capital  employed  in  monopolistic  combination  is  an  enemy  to 
society,  whose  flight  from  our  State  should  not  only  be  desired  but 
accelerated.  To  answer  the  plea  of  vested  right  it  is  only  necessary 
to  say  that  a corporation  is  always  subject  to  the  supervision  of  the 
State  and  that  present  conditions  demand  the  exercise  by  the  State 
of  that  long-suspended  power. 

The  true  solution  of  the  situation,  however,  will  be  found  in  a 
return  to  the  almost  forgotten  doctrine  that  great  corporate  powers 
can  safely  be  granted  only  in  aid  of  undertakings  which  are  quasi- 
public in  their  nature,  necessarily  gigantic  in  their  proportions  and 
desirable  in  their  perpetuity.  Banking,  railway  and  great  construction 
enterprises  are  familiar  and  proper  recipients  of  such  aid.  To  com- 
binations designed  to  deal  in  the  necessaries  of  life,  corporate  powers 
are  never  indispensable.  The  practice  of  granting  those  powers  for 
such  purposes  and  without  stricter  limitations  is  dangerous  to  society. 
It  should  be  curtailed  in  the  future  and  the  State  powers  of  super- 
vision and  amendment  over  corporations  which  are  or  may  become 
monopolistic  should  be  rigorously  exercised  and  enforced. 

To  the  end  that  the  ideas  above  outlined  may  be  put  into  operation, 
I have  the  honor  to  recommend  to  the  Legislature  the  adoption  of  a 
course  of  legislation  on  the  following  lines : 

First.  A bill  to  absolutely  limit  the  amount  of  capital  which  may  be 
employed  by  a corporation  heretofore  or  hereafter  organized  in  this 
State  for  the  purpose  of  manufacturing  or  dealing  in  any  of  the 
necessaries  of  life. 


48  [Senate, 

No  stock  or  bonds  of  such  a corporation  shall  be  issued  except  at 
par,  and  for  moneys  or  property  actually  going  in  the  treasury  of 
said  corporation. 

By  no  other  means  can  individual,  or  even  moderate  corporate 
enterprise,  in  the  ordinary  vocations  be  saved  from  annihilation. 
In  no  other  way  may  our  people  escape  from  an  evil  which  threatens 
the  perpetuity  of  the  republic  itself.  With  such  a law  on  our  statute 
books  the  evils  of  over-issue,  stock-watering,  absorption  of  competi- 
tors, and  acquisition  of  the  stock  of  other  companies  would  cease 
forever. 

Second.  A bill  to  prohibit  the  locating  in  this  State  of  foreign 
corporations  organized  for  the  purpose  of  manufacturing  or  dealing 
in  any  of  the  necessaries  of  life,  whose  capital  shall  exceed  the  limits 
placed  on  the  capital  of  domestic  corporations. 

Common  justice  to  our  own  citizens  would,  of  course,  demand  a 
measure  of  this  latter  kind,  but  it  will  be  apparent  to  all  that  general 
measures  of  the  character  above  indicated  would  need  to  be  supple- 
mented by  — 

Third.  A bill  to  limit  the  number  of  such  corporations  which  an 
individual  or  a group  of  individuals  may  organize  or  control. 

Such  a bill  would  be  necessary  to  prevent,  even  in  a measure,  the 
organization  by  say,  half  a score,  of  men  of  half  a score  of  such  cor- 
porations, designed  to  operate  together,  with  an  aggregate  capital 
of  io  times  the  statutory  limit.  The  danger  could  be  completely 
avoided,  however,  only  by  — 

Fourth.  A bill  to  require  that  incorporators  and  directors  shall 
be  the  actual  and  continuing  (the  latter  term  to  be  interpreted  with 
reference  to  the  mutability  of  human  affairs)  owners  of  a large 
majority  of  the  stock  of  such  corporations. 


No.  40.] 


49 


The  familiar  and  pestilential  dummy  director  would  then  disappear 
from  a field  long  dishonored  by  his  subservience  to  corporate 
rapacity.  It  would,  of  course,  be  essential  to  extend  these  provisions 
to  foreign  corporations  by  requiring  them  to  show  substantial  com- 
pliance with  our  laws  before  admitting  them  to  do  business  in  this 
State. 

When  it  is  reflected  that  corporations  neither  organized  nor  located 
within  this  State,  and  exempt  from  all  of  the  restrictions  above  recom- 
mended, may  yet  by  contract  with  citizens  of  this  State  and  contrary 
to  public  policy,  obtain  control  within  the  State  of  one  or  more  of 
the  necessaries  of  life  the  need  at  once  becomes  plain  for  — 

Fifth.  A bill  providing  that  any  citizen  of  this  State  who  shall 
further  the  operations  in  this  State  of  such  a corporation  shall  be 
guilty  of  a crime. 

Far-reaching  as  such  laws  would  undoubtedly  be,  it  may  well  be 
doubted  if  they  would  bring  the  relief  required  by  present  conditions 
without  — 

Sixth.  A bill  to  prohibit  the  listing  or  general  marketing  of  the 
stock  of  corporations  organized  for  the  purpose  of  manufacturing 
or  dealing  in  the  necessaries  of  life. 

There  can  be  no  honest  motive  and  no  reasonable  excuse  for 
placing  the  stock  of  such  a corporation  on  the  market.  The  pro- 
moters of  such  corporation  should  be  required  to  use  their  own 
money  for  the  purpose  of  the  enterprise  and  required  also  to  take 
all  the  attendant  risk.  The  present  widely  employed  system  of  mar- 
keting such  stock  permits  such  promoters  to  obtain  from  confiding 
or  speculative  outsiders  the  money  with  which  to  float  their  schemes 
to  a position  where  manipulation  of  the  stock  may  be  taken  up  with 
great  profit  to  therriselves  and  with  the  almost  certain  result  that  the 

confiding  are  made  desperate  by  loss,  the  speculative  confirmed  in 

4 


50  [Senate, 

the  gambling  habit,  and  society  at  large  to  that  extent  wronged  and 
injured. 

No  speculation  by  directors  or  officers  in  stock  of  said  corporations. 

The  foregoing  recommendations,  designed  as  they  are,  are  to  effect 
the  complete  control  of  monopolies  by  the  State,  would  still  prove 
ineffective  in  the  absence  of  — 

Seventh.  A bill  to  give  local  authorities,  as,  for  example,  the 
boards  of  supervisors,  the  power  to  initiate  actions  at  the  expense  of 
the  county,  to  dissolve  or  expel  monopolies. 

A law  of  this  nature  would  place  the  responsibility  for  the  proper 
supervision  of  such  corporations  with  officials  who  are  directly  and 
continuously  in  touch  with  the  people.  Such  a provision  as  to  the 
expense  would  operate  as  a check  on  merely  vexatious  actions,  and 
the  people  would  no  longer  be  dependent  for  relief  on  the  slow  and 
cumbrous  methods  of  the  Attorney-General’s  office. 

There  undoubtedly  are  those  who  will  reject  the  above  recom- 
mendations as  revolutionary,  and  who  will  maintain  that  they  are 
certain,  if  enacted,  to  paralyze  the  commerce  of  the  State.  To  such 
I would  reply  that  whatever  of  revolutionary  nature  may  be  found 
in  the  situation  is  contained  in  the  evils  complained  of  not  in  the 
remedies  proposed  and  that  it  were  far  better  that  trade  should 
temporarily  languish  than  that  substantial  liberty  should  perma- 
nently perish. 

Furthermore,  the  recommendations  are  directed  not  against  legiti- 
mate corporate  enterprise,  however  gigantic,  nor  against  corpora- 
tions of  moderate  size  and  lawful  motive  engaged  in  general  trade. 
Such  enterprises  are  usually  beneficial  to  society,  or  at  least  do  not 
threaten  the  State  with  overthrow  nor  the  people  with  bondage  as 
do  the  unbridled,  unconscionable  and  unlawful  monopolies  with 
which  your  committee  has  had  to  do. 


51 


No.  10.] 

While  it  may  be  somewhat  aside  from  the  exact  province  of  your 
committee,  yet  I cannot  refrain  at  this  time  from  directing  the 
attention  of  the  Legislature  to  that  contemporary  and  companion 
of  the  corporate  monopoly  — the  department  store.  The  passage 
of  this  recent  commercial  invention  across  the  mercantile  field  is 
marked  by  the  ruin  of  numerous  previously  prosperous  tradesmen 
and  the  desolation  of  an  army  of  employes.  There  is  no  need  and 
no  place  for  such  an  institution  in  the  commercial  economy  of  our 
State.  It  is  the  expression  of  personal  greed  made  possible  by  un- 
limited capital.  Every  corrective  provision  above  sought  to  be 
applied  to  other  monopolies  may  well  be  used  against  this  later 
enemy  of  society,  with  an  added  provision,  however,  to  limit  the 
number  of  distinctive  wares  which  may  be  dealt  in  by  one  manage- 
ment under  one  roof. 

I desire  to  add  that  the  recommendations  of  the  above  report 
should  apply  as  far  as  practicable  in  restricting  all  monopolies  of  any 
character  or  nature  whatsoever. 

Once  again,  and  in  conclusion,  I assert  that  the  above  recommen- 
dations are  not  even  innovations.  They  seek  only  to  point  out  the 
path  whereby  we  may  return  to  that  condition  of  things  under  which 
the  term  “ equality  before  the  law,”  was  not,  as  it  now  is,  an  antiqu- 
ated figure  of  speech. 

Respectfully  submitted, 

THOMAS  J.  BARRY, 
Minority  Member  Committee  on  Trusts. 

Dated  March  18,  1897. 


; 


- 


' ' 


BILLS  SUBMITTED 


BI  THE 

Committee  and  Accompanying  the  Foregoing  Report, 
in  Their  Final  Form,  as  Approved  by  the  Gov- 
ernor, Known  as  Chapter  383  and  Chap- 
ter 384  of  the  Laws  of  1897. 


CHAP.  383. 

AN  ACT  to  prevent  monopolies  in  articles  or  commodities  of 
common  use,  and  to  prohibit  restraints  of  trade  and  commerce, 
providing  penalties  for  violations  of  the  provisions  of  this  act,  and 
procedure  to  enable  the  attorney-general  to  secure  testimony  in 
relation  thereto. 

Became  a law  May  7,  1897,  with  the  approval  of  the  Governor. 

Passed,  three-fifths  being  present. 

The  People  of  the  State  of  New  York,  represented  in  Senate  and 
Assembly,  do  enact  as  follows: 

Section  1.  Every  contract,  agreement,  arrangement  or  combina- 
tion whereby  a monopoly  in  the  manufacture,  production  or  sale 
in  this  state  of  any  article  or  commodity  of  common  use  is  or  may 
be  created,  established  or  maintained,  or  whereby  competition  in 
this  state  in  the  supply  or  price  of  any  such  article  or  commodity  is 
or  may  be  restrained  or  prevented,  or  whereby  for  the  purpose  of 


51  [Senate, 

creating,  establishing  or  maintaining  a monopoly  within  this  state 
of  the  manufacture,  production  or  sale  of  any  such  article  or  com- 
modity, the  free  pursuit  in  this  state  of  any  lawful  business,  trade 
or  occupation  is  or  may  be  restricted  or  prevented,  is  hereby  declared 
to  be  against  public  policy,  illegal  and  void. 

§ 2.  Every  person  or  corporation,  or  any  officer  or  agent  thereof, 
who  shall  make  or  attempt  to  make  or  enter  into  any  such  contract, 
agreement,  arrangement  or  combination,  or  who  within  this  state 
shall  do  any  act  pursuant  thereto,  or  in,  toward  or  for  the  consum- 
mation thereof,  wherever  the  same  may  have  been  made,  is  guilty 
of  a misdemeanor,  and  on  conviction  thereof  shall,  if  a natural  person, 
be  punished  by  a fine  not  exceeding  five  thousand  dollars,  or  by 
imprisonment  for  not  longer  than  one  year,  or  by  both  such  fine  and 
imprisonment;  and  if  a corporation,  by  a fine  of  not  exceeding  five 
thousand  dollars. 

§ 3.  The  attorney-general  may  bring  an  action  in  the  name  and 
in  behalf  of  the  people  of  the  state  against  any  person,  trustee, 
director,  manager,  or  other  officer  or  agent  of  a corporation,  or 
against  a corporation,  foreign  or  domestic,  to  restrain  and  prevent 
the  doing  in  this  state  of  any  act  herein  declared  to  be  illegal,  or 
any  act  in,  toward  or  for  the  making  or  consummation  of  any  con- 
tract, agreement,  arrangement  or  combination  herein  prohibited, 
wherever  the  same  may  have  been  made. 

§ 4.  The  provisions  of  article  one  of  title  three  of  chapter  nine  of 
the  code  of  civil  procedure  relating  to  the  application  for  an  order 
for  the  examination  of  witnesses  before  the  commencement  of  an 
action  and  the  conduct  of  such  examination  shall  apply,  so  far  as 
practicable,  to  an  action  or  proceeding  by  the  attorney-general  insti- 
tuted pursuant  to  this  chapter;  and  for  the  purpose  of  determining 
whether  an  action  or  a proceeding  should  be  commenced  hereunder, 


No.  40.]  55 

the  attorney-general  may  examine  and  procure  the  testimony  of 
witnesses  in  the  manner  herein  prescribed. 

§ 5.  Whenever  the  attorney-general  deems  it  necessary  or  proper 
to  procure  testimony  before  beginning  any  action  or  proceeding 
under  this  chapter,  he  may  present  to  any  justice  of  the  supreme 
court,  an  application  in  writing  for  an  order  directing  such  persons 
as  the  attorney-general  may  require  to  appear  before  a justice  of 
the  supreme  court,  or  a referee  designated  in  such  order,  and 
answer  such  relevant  and  material  questions  as  may  be  put  to  them, 
concerning  any  alleged  illegal  contract,  arrangement,  agreement  or 
combination,  in  violation  of  this  chapter,  if  it  appears  to  the  satis- 
faction of  the  justice  of  the  supreme  court  to  whom  the  application 
for  the  order  is  made  that  such  an  order  is  necessary,  then  sucli 
order  shall  be  granted.  Such  order  shall  be  granted  without  notice, 
unless  notice  is  required  to  be  given  by  the  justice  of  the  supreme 
court  to  whom  the  application  is  made,  in  which  event  an  order  to 
show  cause  why  such  application  should  not  be  granted  shall  be 
made  containing  such  preliminary  injunction  or  stay  as  may  ap- 
pear to  said  justice  to  be  proper  or  expedient,  and  shall  specify 
the  time  when  and  place  where  the  witnesses  are  required  to  appear 
and  such  examination  shall  be  held  either  in  the  city  of  Albany  or  in 
the  judicial  district  in  which  the  witness  resides  or  in  which  the  prin- 
cipal office  within  this  state  of  the  corporation  affected  is  located. 
The  justice  or  referee  may  adjourn  such  examination  from  time  to 
time  and  witnesses  must  attend  accordingly. 

§ 6.  The  order  for  such  examination  must  be  signed  by  the  jus- 
tice making  it  and  the  service  of  a copy  thereof,  with  an  endorse- 
ment by  the  attorney-general  signed  by  him,  to  the  effect  that  the 
person  named  therein  is  required  to  appear  and  be  examined  at  the 
time  and  place,  and  before  the  justice  or  referee  specified  in  such 


56  [Senate, 

endorsement,  shall  be  sufficient  notice  for  the  attendance  of  wit- 
nesses. Such  endorsement  may  contain  a clause  requiring  such 
person  to  produce  on  such  examination  all  books,  papers  and  docu- 
ments in  his  possession,  or  under  his  control,  relating  to  the  sub- 
ject of  such  examination.  The  order  shall  be  served  upon  the  person 
named  in  the  endorsement  aforesaid,  by  showing  him  the  original 
order,  and  delivering  to  and  leaving  with  him,  at  the  same  time,  a 
copy  thereof  endorsed  as  above  provided,  and  by  paying  or  tendering 
to  him  the  fee  allowed  by  law  to  witnesses  subpoenaed  to  attend 
trials  of  civil  actions  in  a court  of  record  in  this  state. 

§ 7.  The  testimony  of  each  witness  must  be  subscribed  by  him, 
and  all  testimony  taken  by  such  justice  or  referee  appointed  must 
be  certified  and  delivered  to  the  attorney-general  at  the  close  of  the 
examination.  The  testimony  given  by  a witness  in  a proceeding 
or  examination  under  this  act  shall  not  be  given  in  evidence  against 
him  in  any  criminal  action  or  proceeding,  nor  shall  any  criminal 
action  or  proceeding  be  brought  against  such  witness  on  account 
of  the  testimony  so  given  by  him,  nor  shall  any  person  be  excused 
from  answering  any  questions  that  may  be  put  to  him  on  the  ground 
that  it  may  tend  to  convict  him  of  a violation  of  the  provisions  of 
this  act. 

§ 8.  A referee  appointed  as  provided  in  this  act  possesses  all  the 
powers  and  is  subject  to  all  the  duties  of  a referee  appointed  under 
section  ten  hundred  and  eighteen  of  the  code  of  civil  procedure,  so 
far  as  practicable,  and  may  punish  for  contempt  a witness  duly 
served  as  prescribed  in  this  act  for  non-attendance  or  refusal  to  be 
sworn  or  to  testify,  or  to  produce  books,  papers  and  documents 
according  to  the  direction  of  the  endorsement  aforesaid,  in  the  same 
manner,  and  to  the  same  extent  as  a referee  appointed  to  hear,  try 
and  determine  an  issue  of  fact  or  of  law. 


No.  40.] 


57 


§ 9.  Chapter  seven  hundred  and  sixteen  of  the  laws  of  eighteen 
hundred  and  ninety-three  and  chapter  two  hundred  and  sixty-seven  of 
the  laws  of  eighteen  hundred  and  ninety-six,  are  hereby  repealed. 

§ 10.  This  act  shall  take  effect  immediately. 

STATE  OF  NEW  YORK,  j 
Office  of  the  Secretary  of  State.  \ SS' ' 

I have  compared  the  preceding  with  the  original  law  on  file  in  this  office, 
and  do  hereby  certify  that  the  same  is  a correct  transcript  therefrom  and  of 
the  whole  of  said  original  law. 

JOHN  PALMER, 

Secretary  of  State. 


CHAP.  384. 

AN  ACT  to  amend  the  stock  corporation  law,  relating  to  annual 
reports  and  liabilities  of  officers,  directors  and  stockholders  of 
foreign  stock  corporations. 

Became  a law  May  7,  1897,  with  the  approval  of  the  Governor. 

Passed,  three-fifths  being  present. 

The  People  of  the  State  of  New  York,  represented  in  Senate  and 
Assembly,  do  enact  as  follows: 

Section  1.  Section  seven  of  chapter  five  hundred  and  sixty-four 
of  the  laws  of  eighteen  hundred  and  ninety,  entitled  “An  act  in 
relation  to  stock  corporations,  constituting  chapter  thirty-six  of  the 
general  laws,”  as  amended  by  chapter  six  hundred  and  eighty-eight 
of  the  laws  of  eighteen  hundred  and  ninety-two,  is  hereby  amended 
to  read  as  follows: 

§ 7.  Combinations  abolished. — No  domestic  stock  corporation  and 
no  foreign  corporation  doing  business  in  this  state  shall  combine 
with  any  other  corporation  or  person  for  the  creation  of  a monopoly 
or  the  unlawful  restraint  of  trade  or  for  the  prevention  of  competition 
in  any  necessary  of  life. 


58  [Senate, 

§ 2.  Section  thirty  of  article  two  of  such  act  is  hereby  amended  to 
read  as  follows: 

§ 30.  Annual  report. — Every  domestic  stock  corporation  and 
every  foreign  stock  corporation  doing  business  within  this  state, 
except  moneyed  and  railroad  corporations,  shall  annually,  during 
the.  month  of  January,  or,  if  doing  business  without  the  United 
States,  before  the  first  day  of  May,  make  a report  as  of  the  first  day 
of  January,  which  shall  state: 

1.  The  amount  of  its  capital  stock,  and  the  proportion  actually 
issued. 

2.  The  amount  of  its  debts  or  an  amount  which  they  do  not  then 
exceed. 

3.  The  amount  of  its  assets  or  an  amount  which  its  assets  at  least 

equal.  ! 

Such  report  shall  be  signed  by  a majority  of  its  directors,  and 
verified  by  the  oath  of  the  president  or  vice-president  and  treasurer 
or  secretary,  and  filed  in  the  office  of  the  secretary  of  state,  and  in 
the  office  of  the  county  clerk  of  the  county  within  this  state  where 
its  principal  business  office  may  be  located.  If  such  report  is  not 
so  made  and  filed,  all  the  directors  of  the  corporation  shall  jointly 
and  severally  be  personally  liable  for  all  the  debts  of  the  corpora- 
tion then  existing,  and  for  all  contracted  before  such  report  shall 
be  made.  No  director  shall  be  liable  for  the  failure  to  make  and 
file  such  report  if  he  shall  file  with  the  secretary  of  state,  within 
thirty  days  after  the  first  day  of  February,  or  the  first  day  of  May, 
as  the  case  may  be,  a verified  certificate,  stating  that  he  has  endeav- 
ored to  have  such  report  made  and  filed,  but  that  the  officers  or  a 
majority  of  the  directors  have  refused  and  neglected  to  make  and 
file  the  same,  and  shall  append  to  such  certificate  a report  containing 
the  items  required  to  be  stated  in  such  annual  report,  so  far  as  they 


No.  40.]  59 

are  within  his  knowledge  or  are  obtainable  from  sources  of  informa- 
tion open  to  him,  and  verified  by  him  to  be  true  to  the  best  of  his 
knowledge,  information  and  belief. 

§ 3.  Section  fifty-three  of  such  act  is  hereby  amended  to  read  as 
follows : 

§ 53.  Stock  books  of  foreign  corporations. — Every  foreign  stock 
corporation  having  an  office  for  the  transaction  of  business  in  this 
state,  except  moneyed  and  railroad  corporations,  shall  keep  therein 
a book  to  be  known  as  a stock  book,  containing  the  names,  alpha- 
betically arranged,  of  all  persons  who  are  stockholders  of  the  cor- 
poration, showing  their  places  of  residence,  the  number  of  shares 
of  stock  held  by  them  respectively,  the  time  when  they  respectively 
became  the  owners  thereof,  and  the  amount  paid  thereon.  Such 
stock  book  shall  be  open  daily,  during  business  hours,  for  the  in- 
spection of  its  stockholders  and  judgment  creditors,  and  any  officer 
of  the  state  authorized  by  law  to  investigate  the  affairs  of  any  such 
corporation.  If  any  such  foreign  stock  corporation  has  in  this  state 
a transfer  agent,  whether  such  agent  shall  be  a corporation  or  a 
natural  person,  such  stock  book  may  be  deposited  in  the  office  of 
such  agent  and  shall  be  open  to  inspection  at  all  times  during  the 
usual  hours  of  transacting  business,  to  any  stockholder,  judgment 
creditor  or  officer  of  the  state  authorized  by  law  to  investigate  the 
affairs  of  such  corporation.  For  any  refusal  to  allow  such  book  to 
be  inspected,  such  corporation  and  the  officer  or  agent  so  refusing 
shall  each  forfeit  the  sum  of  two  hundred  and  fifty  dollars  to  be  re- 
covered by  the  person  to  whom  such  refusal  was  made. 

§ 4.  Article  three  of  such  act  is  hereby  amended  by  adding  at  the 
end  thereof  a new  section  to  be  known  as  section  sixty,  and  to  read 
as  follows: 


60  [Senate,  No.  40.] 

§ 60.  Liabilities  of  officers,  directors  and  stockholders  of  foreign 
corporations. — Except  as  otherwise  provided  in  this  chapter  the 
officers,  directors  and  stockholders  of  a foreign  stock  corporation 
transacting  business  in  this  state,  except  moneyed  and  railroad  cor- 
porations, shall  be  liable  under  the  provisions  of  this  chapter,  in  the 
same  manner  and  to  the  same  extent  as  the  officers,  directors  and 
stockholders  of  a domestic  corporation,  for: 

1.  The  making  of  unauthorized  dividends; 

2.  The  creation  of  unauthorized  and  excessive  indebtedness; 

3.  Unlawful  loans  to  stockholders; 

4.  Making  false  certificates,  reports  or  public  notices; 

5.  An  illegal  transfer  of  the  stock  and  property  of  such  corpora- 
tion, when  it  is  insolvent  or  its  insolvency  is  threatened; 

6.  The  failure  to  file  an  annual  report. 

Such  liabilities  may  be  enforced  in  the  courts  of  this  state,  in  the 
same  manner  as  similar  liabilities  imposed  by  law  upon  the  officers, 
directors  and  stockholders  of  domestic  corporations. 

§ 5.  This  act  shall  take  effect  immediately. 

STATE  OF  NEW  YORK,  * 

Office  of  the  Secretary  of  State.  } ss" 

I have  compared  the  preceding  with  the  original  law  on  file  in  this  office, 
and  do  hereby  certify  that  the  same  is  a correct  transcript  therefrom  and  of 
the  whole  of  said  original  law. 

JOHN  PALMER, 

Secretary  of  State. 


PROCEEDINGS 

OF 

THE  JOINT  COMMITTEE  OF  THE  SENATE  AND  AS- 
SEMBLY OF  THE  STATE  OF  NEW  YORK  IN  RELA- 
TION TO  TRUSTS  AND  UNLAWFUL  COMBINATIONS 
OF  CAPITAL. 


In  Senate,  March  9,  1897. 

RESOLUTION-  APPOINTING  COMMITTEE. 

Whereas,  Combinations  of  capital  in  the  form  of  trusts  or  other- 
wise appear  to  exist  and  to  be  increasing  in  number  and  influence  in 
this  commonwealth,  resulting  in  concentrating  in  the  hands  of  a few 
various  important  branches  of  industry,  creating  monopolies,  shut- 
ting out  competition,  displacing  labor,  and  driving  the  citizen  of 
moderate  means  out  of  business,  with  the  effect  that  production  and 
price  are  regulated  not  by  the  natural  laws  of  supply  and  demand, 
or  the  rules  of  normal  and  healthy  competition,  but  by  the  arbitrary 
decision  of  combinations  operating  together  to  destroy  competition 
and  exact  unreasonable  charges  from  the  people;  and 

Whereas,  It  is  charged  that  combinations  of  capital  enjoy  special 
and  peculiar  privileges  and  advantages  detrimental  to  public  interests, 
and  that  the  laws  hitherto  enacted  are  inadequate  to  furnish  relief; 
therefore. 

Resolved,  (if  the  Assembly  concur),  That  a joint  committee  of  the 
Legislature,  consisting  of. three  Senators  and  four  members  of  the 
Assembly,  be  appointed  to  draft  such  remedial  acts  as  may  be  neces- 


62  [Senate,  USTo.  40.] 

sary,  and  in  order  that  this  may  be  intelligently  done  the  said  com- 
mittee shall  have  full  power  and  authority  to  institute  and  conduct 
an  investigation  for  that  purpose;  and  the  said  committee  is  empow- 
ered to  hold  sessions  wherever  necessary,  to  employ  counsel,  a 
stenographer^  and  such  other  assistants  as  may  be  necessary,  to  send 
for  persons  and  papers,  issue  subpoenas,  and  enjoy  and  exercise  all 
the  powers,  privileges  and  authority  of  a legislative  committee;  and 
it  is  further 

Resolved,  That  the  committee  make  a report  accompanied  by  a 
bill  or  bills  on  or  before  the  first  day  of  March  next. 

Pursuant  to  the  above  resolution  the  following  committee  was 
appointed: 

Senate. 

Senators. — Lexow,  Parsons  and  Gallagher. 

Assembly. 

Assemblymen. — Bedell,  Warner,  Mazet  and  Barry. 

The  committee  organized  by  selecting  Senator  Lexow  as  chairman 
and  Assemblyman  Bedell  as  secretary. 


PUBLIC  NOTICE  ISSUED  BY  COMMITTEE. 


The  Joint  Committee  of  the  Legislature  appointed  to  investigate 
trusts,  for  the  purpose  of  recommending  remedial  legislation,  has 
now  organized  to  carry  into  effect  the  purposes  of  its  appointment. 

It  is  obvious  that  the  success  of  the  investigation  depends,  to  a 
very  great  extent,  upon  the  co-operation  of  the  people.  All  are  inter- 
ested in  a practical  solution  of  the  questions  involved.  It  is  the  desire 
of  the  committee  to  establish,  at  the  outset,  a relation  of  mutual  con- 
fidence between  committee  and  people;  and  to  that  end  the  fullest 
and  freest  communication  of  facts,  views  and  proposed  remedies  is 
.solicited. 

The  opportunity  is  now  presented  of  meeting  the  serious  problems 
confronting  our  economic  system  squarely,  and  the  committee  is  de- 
termined to  leave  nothing  undone  that  may  enable  it  to  reach  just, 
fair  and  adequate  conclusions. 

Where  there  is  a wrong  that  should  be  righted,  an  evil  that  should 
be  removed,  or  a remedy  that  should  be  applied  in  connection  with  this 
subject,  the  facts,  conditions  and  proposals  should  be  laid  before  the 
committee,  in  order  that  they  may  be  considered  upon  the  question 
of  the  character  of  legislation  to  be  finally  reported. 

All  requests  for  hearings  and  communications  generally  should 
be  addressed  to  the  chairman  of  the  committee,  at  Albany. 


64 


SNATE,  No.  40.J 


COMMUNICATION  TO  THE  COMMISSIONER  OE  LABOR 
STATISTICS. 

Albany,  N.  Y.,  January  29,  1897. 

Mr.  J.  T.  McDonough,  Commissioner  of  Labor  Statistics,  Albany, 
N.  Y.: 

Dear  Sir. — The  committee,  appointed  by  the  Legislature  for  the 
purpose  of  investigating  trusts  in  this  State  desires  to  obtain  from 
you,  at  the  eadiest  moment  practicable,  such  statistics  as  you  may  have 
on  file  or  be  able  to  secure  on  the  following  subjects: 

1.  Number  of  trusts  so-called,  their  general  character,  business, 
capitalization,  origin  and  development  from  1892  to  date. 

2.  Production  during  that  period. 

3.  Labor  employed  during  that  period  and  character  of  labor. 

4.  Comparison  between  number  of  laborers  employed  then  and 
now  and  wages  paid. 

5.  Price  of  the  product  then  and  now. 

Any  other  general  information  in  reference  to  the  subject-matter 
of  the  investigation  which  may  be  of  interest  upon  the  general  ques- 
tion of  remedial  legislation. 

You  are  urgently  requested  to  furnish  us  these  facts  as  soon  as 
possible. 

Yours  very  truly, 

CLARENCE  LEXOW, 


Chairman. 


FIRST  PUBLIC  HEARING 


HELD  BY 

THE  COMMITTEE 

ON  THE 

FIFTH  DAY  OF  FEBRUARY,  1897,  AT  THE  CITY  HALL, 
NEW  YORK  CITY. 


Present. — Senators  Lexow,  Parsons,  Assemblymen  Bedell, 
Warner,  Mazet,  Barry. 

Theodore  A.  Havemeyer  being  duly  sworn  testified  as  folllows: 

Examined  by  Chairman  Lexow. 

Q.  State  your  full  name?  A.  Theodore  A.  Havemeyer. 

Q.  Are  you  connected  with  the  American  Sugar  Refining  com- 
pany? A.  I am. 

Q.  In  what  capacity?  A.  Yice-president. 

Q.  How  long  have  you  been  Vice-president  of  that  company? 
A.  Since  its  organization. 

Q.  That  was  when?  A.  In  1891. 

Q.  Where  was  it  organized,  Mr.  Havermeyer?  A.  In  the  State 
of  New  Jersey. 

Q.  As  a corporation?  A.  As  a corporation. 

Q.  Can  you  give  the  exact  date  of  that  organization?  A.  lean 
not  without — 


5 


G6 


[Senate, 


Q.  You  cannot — A.  Without  reference. 

Q.  Do  you  remember  it  in  the  year  1891?  A.  Yes  sir. 

Q.  You  have  continued  in  the  office  of  Vice-president  of  that 
company  since  its  organization?  A.  Yes  sir. 

Q.  Previous  to  that  time  were  you  connected  with  a sugar  re- 
fining company  or  companies  that  were  consolidated  into  the 
present  company?  A.  Yes  sir. 

Q.  What  companies  were  you  connected  with?  A.  Previous 
to  1^91,  we  were  consolidated  with  the  American  Sugar  Refiner- 
ies Company,  the  Havermeyer  & Elder— let  me  understand  the 
question — Havemeyer  & Elder,  Dick  & Myer — no — the  Matthies- 
sen  & Wiechers,  De  Castro  & Donner.  I believe  that  is  all. 

Q.  Did  the  American  Sugar  Refining  Company  contain  or  em- 
brace other  corporations  or  associations  than  those  you  have  men- 
tioned? A.  There  may  be  one  or  two  more.  I don't  recollect 
them  just  now. 

Q.  Were  you  connected  with  or  an  officer  of  all  the  companies 
that  were  consolidated  into  what  is  now  known  as  the  American 
Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  Were  there  eight  of  them?  A.  I think  so. 

Q.  You  are  actively  engaged  as  trustee  and  director  of  the 
American  Sugar  Refining  Company,  and  know  its  business?  A. 
Yes,  sir;  I think  so. 

Q.  Do  you  devote  yourself  and  time  to  that  company  and  follow 
Its  business  transactions?  A.  Only  as  far  as  regards  its  manu- 
facturing department. 

Q.  Are  von  familiar  with  the  circumstances  that  led  up  to  the 
consolidation  of  companies  forming  the  American  Sugar  Refining 
Company?  A.  Pot  particularly. 

Q.  Who  is?  A.  Well,  I presume  my  brother  would  be  more 
familiar  than  I am. 

Q.  Mr.  H.  O.  Havemeyer?  A.  Yes,  sir. 

Q.  He  is  President,  is  he  not?  A.  He  is  President  at  present, 
yes,  sir. 

Q.  Subsequent  to  the  consolidation  of  the  eight  companies  into 
the  American  Sugar  Refining  Company,  were  any  other  compan- 


No.  40.] 


67 


ies  absorbed  or  consolidated  by  or  into  that  company?  A.  T 
ihink  not.  sir. 

Q.  Since  1891  then,  the  American  Sugar  Refining  Company, 
as  originally  constituted,  remains  the  same?  A.  I think  so  — I 
have  not — I might  say  in  this  case  that  I am  not  as  familiar — 
because  it  is  out  of  my  line  entirely. 

Q.  What  particular  branch  of  the  company's  business  do  you 
attend  to?  A.  1 am  simply  the  refiner,  the  manufacturer;  have 
nothing  whatever  to  do  with  its  commercial  side;  so  that  I am  a 
little  unfamiliar  with  the  details  to  which  your  examination  thus 
far  has  alluded. 

Q.  Have  you  anything  to  do  with  the  fiscal  concerns  of  the 
company?  A.  Not  at  all,  sir;  no  more  than — 

Q.  The  financial  concerns?  A.  Not  at  all;  that  is,  I give  no  at- 
tention to  it. 

Q.  What  was  the  capital  stock  of  the  eight  companies  that 
were  consolidated  into  the  American  Sugar  Refining  Company  at 
the  time  of  the  consolidation?  .V.  I should  have  to  refer  to  give 
you  that  information  later;  I could  not  give  it  to  you  now,  Mr. 
Chairman. 

Q.  Who  or  what  officer  in  the  employ  of  the  company,  or  occu- 
pying an  official  relation  to  the  company,  would  be  able  to  give 
information  with  reference  to  the  capitalization  of  the  old  com- 
panies that  were  consolidated  into  the  new  company?  A.  I sup- 
pose, Mr.  Searles,  the  treasurer  and  secretary  of  the  company. 

Q.  Was  he  the  treasurer  and  secretary  at  the  time  of  the  con- 
solidation? A.  Yes,  sir. 

Q.  You  were  a stockholder  of  the  eight  consolidated  compan- 
ies, were  you  not?  A.  I was  a stockholder  of  some  of  them;  yes. 

Q.  Were  you  not  a stockholder  in  all  of  them?  A.  I don’t 
think  so. 

Q.  In  the  consolidation  did  the  share  interests  represented  by 
individual  stockholders  in  the  consolidated  companies  find  repre- 
sentation in  the  stock  issue  of  the  new  company  upon  exchange 
of  certificates  therefor?  A.  I don’t  know  how  that  was  arranged 

exactly. 


68 


[Senate, 


Q.  Do  you  know  whether  or  not  the  stock  of  the  consolidated 
company  represented  more  nominally  than  did  the  aggregate 
stocks  of  the  companies  that  were  consolidated?  A.  I could  not 
tell  you. 

Q.  Have  you  no  knowledge  on  that  subject?  A.  I really  have 
not  given  much  thought  to  it;  it  was  out  of  my  line. 

Q.  Would  Mr.  Searles  be  able  to  answer  that  question?  A. 
I think  so;  fully. 

Q.  Do  you  know  or  not  know  whether  you  as  a shareholder  in 
the  corporations  that  were  taken  into  the  consolidation  received 
more  nominally  in  the  form  of  stock  than  you  held  in  the  old 
companies  in  the  aggregate?  A.  I don’t  think  we  did;  I don’t 
know;  I should  prefer — 

Q.  What  is  your  recollection  about  that;  have  you  any  recol- 
lection at  all?  A.  Not  at  all;  I had  very  little  to  do  with  it; 
nothing  at  all. 

Q.  You  don’t  remember,  then,  or  do  you,  what  your  share  hold- 
ing was  in  the  old  company?  A.  Not  without  reference  to  my 
books. 

Q.  Have  you  got  memoranda  to  which  you  can  refer,  Mr.  Have- 
meyer?  A.  I think  so. 

Q.  Will  you  be  good  enough  to  produce  them  to  this  commit- 
tee? A.  Yes.  ; 

Q.  Do  you  or  they  transact  any  other  business  than  the  busi- 
ness of  sugar  refining  and  selling?  A.  I think  not. 

Q.  Have  you  not  recently  gone  into  the  manufacturing  of  cof- 
fee? A.  Yes,  sir — I beg  pardon — 

Q.  When?  A.  I think  it  was  about  a month  or  two  ago. 

Q.  Where?  A.  We  bought  an  interest  in  the  Woolson  Spice 
Company  of  Toledo,  Ohio. 

Q.  And  are  manufacturing  coffee  there?  A.  We  are. 

Q.  What  was  the  purpose  of  your  organization  in  1891?  A. 
To  refine  sugar. 

Q.  Any  other  purpose?  A.  No,  sir;  not  that  I know  of. 

Q.  How  many  companies  outside  of  this  consolidated  company 
were  transacting  the  business  of  sugar  refining  in  the  United 


No.  40.] 


69 


States  of  America  at  tlie  time  of  your  consolidation;  do  you  re- 
member the  number?  A.  Well,  I would  have  to  think — I should 
say  there  were  ten  or  twelve. 

Q.  Are  you  incorporated  under  the  general  law  of  the  State  of 
New  Jersey?  A.  I think  we  are;  yes. 

Q.  You  have  a special  charter?  A.  I do  not  think  so. 

Q.  You  have  no  special  charter?  A.  I think  not,  sir. 

Q.  Now  besides  the  refining  of  sugar  has  your  corporation  any 
other  definite  object?  A.  No,  sir. 

Q.  Was  it  not  organized,  in  addition  to  the  mere  refining  of 
sugar,  for  the  purpose  of  preventing  illegal  combinations  of  la- 
bor? A.  No,  sir. 

Q.  Is  that  not  one  of  the  purposes  stated?  A.  No,  sir;  I don’t 
think  so. 

Q.  Are  you  sure  of  that?  A.  I am  pretty  sure. 

Q.  Wasn’t  it  organized  to  control  the  refining  and  sale  of  sugar 
throughout  the  United  States?  A.  I think  it  was  not;  it  is  or- 
ganized to  refine  and  sell  sugar. 

Q.  Was  not  one  of  the  purposes  of  the  organization  the  con- 
centration of  those  companies  into  one  consolidation  for  the  pur- 
pose of  securing  the  control  of  the  sugar  market  in  this  country? 
A.  No,  sir. 

Q.  You  do  control  it,  do  you  not?  A.  No,  sir. 

Q.  Do  you  not  fix  the  price  at  which  refined  sugar  is  sold  in  the 
United  States?  A.  We  fix  the  price  at  which  we  sell  it. 

Q.  And  at  which  it  is  sold?  A.  I do  not  know  about  that. 

Q.  Are  you  able  now  to  recollect  how  many  refining  companies 
outside  of  your  consolidated  company  are  now  transacting  busi- 
ness in  the  United  States?  A.  I should  say,  just  to  guess,  six  or 
eight.  > 

Q.  Can  you  give  their  names?  A.  The  Mollenhauer  Refinery, 
the  National  Refinery,  the  American  Refinery. 

Q.  Where  is  that  last  refinery?  A.  Philadelphia;  the  Hender- 
son Refinery  of  New  Orleans,  a refinery  in  Galveston,  a refinery 
in  California,  in  China;  I think  refined  sugar  is  made  in  Nebras- 
ka; I think  there  is  also  an  establishment  in  Michigan;  there  may 
be  one  or  two  more. 


70 


[Senate. 


Q.  Those  are  all  that  you  can  now  recollect?  A.  Yes,  sir. 

(,).  Are  they  competing  with  you  in  the  markets  of  this  State 
in  the  sale  of  sugar?  A.  Yes,  sir. 

Q.  Are  they  actually  competing?  A.  Yes,  sir;  so  far  as  I 
know. 

Q.  Isn't  it  a fact  that  you  fix  the  price  at  which  sugar  is  sold 
in  this  State  by  the  only  one  other  refinery  in  this  State  that  is 
not  under  your  control,  to  wit,  the  Mollenhauer?  A.  No,  sir;  we 
fix  no  price  except  for  ourselves,  at  which  we  will  sell. 

Q.  Have  you  no  agreement  or  understanding  with  that  refinery 
according  to  which  they  charge  the  same  price  for  sugar  that  you 
charge?  A.  No,  sir;  not  that  I know  of;  as  I said  before,  this  is 
out  of  my  line;  I should  say  so;  but  as  I say  before,  this  mercan- 
tile part  is  out  of  my  department;  I do  not  bother  myself  about 
it. 

Q.  Have  you  not  consulted  with  Mr.  Henry  O.  Havemeyer?  A. 
No,  sir. 

Q.  In  regard  to  the  policy  of  the  company  about  fixing  prices? 
A.  No,  sir;  because,  as  I say,  he  runs  his  department  and  I run 
mine. 

Q.  The  fixing  of  the  price;  is  that  any  part  of  your  official  duty? 
A.  Not  at  all,  sir;  I do  not  know  it. 

Q.  You  do  not  know  what  price  is  fixed?  A.  I seldom  trouble 
myself  about  the  price;  I could  not  tell  you,  to-day,  what  the 
price  is. 

Q.  Then  the  fact  is  that  you  do  not  know  whether  there  is  any 
existing  agreement  between  these  other  concerns  and  your  con- 
cern as  to  price?  A.  I have  never  heard  of  it,  sir. 

Q.  What  percentage  of  the  total  product  of  sugar  do  the  com- 
panies included  within  the  American  Sugar  Refining  Company 
produce  and  sell  in  the  United  States?  A.  I should  say  about — 
roughly  speaking — of  course  this  varies  every  day — I should  say 
about  between  seventy-three  and  seventy-five  per  cent.;  it  may  be 
less. 

Q.  You  mean  about  three-quarters  of  the  total  product?  A. 
Probably;  I should  have  to  verify  that  statement  by  an  examina- 
tion. 


No.  40.] 


71 


Q.  Have  you  books  which  will  show  these  facts?  A.  I have 
no  books  with  me — I have  no  books  that  would  show  the  fact; 
because  we  do  not  know  what  it  amounts  to. 

Q.  Have  you  any  knowledege  of  the  amount  that  is  produced 
by  the  American  Sugar  Refining  Company?  A.  No,  sir;  I have 
not. 

Q.  This  seventy-five  per  cent,  that  you  speak  of,  means  how 
many  barrels  of  sugar  per  day?  A.  I should  have  to  look  that 
up. 

Q.  You  were  examined,  were  you  not,  upon  other  occasions  of 
investigation,  both  here  and  in  Washington?  A.  I think  so,  sir. 

Q.  Have  you  increased  the  capital  of  the  American  Sugar  Re- 
fining Company  since  its  original  organization  in  1891?  A.  I 
think  it  has  been. 

Q.  To  what  extent?  A.  I believe  to  the  extent  of  twenty-five 
million  dollars. 

Q.  When  was  that  increase  made?  A.  I couldn’t  give  you  the 
date  of  that. 

Q.  Can  you  state  generally,  in  what  year?  A.  Well,  I should 
rather  fortify  my  memory;  I don’t  think  I could  tell  you  the  date 
without — 

Q.  You  can’t  state  in  what  year;  1892,  1893,  1894,  1895,  1896? 
A.  I have  an  idea  that  it  was  in  1895. 

Q.  Was  that  it?  A.  I think  Searles  could  give  you  all  these 
facts  of  the  case  better  than  I could ; I have  not  charged  my  mem- 
ory with  it. 

Q.  Is  that  the  only  increase  made  since  you  were  an  official  of 
the  company?  A.  I think  so. 

Q.  Do  you  know  the  purpose  for  which  that  increase  was 
made?  A.  I think  for  the  acquisition  of  other  refineries. 

Q.  It  was  for  the  acquisition  of  other  refineries?  A.  I think  so. 

Q.  Were  they  acquired?  A.  They  were. 

Q.  In  what  year.  A.  Well,  I think  it  was  in  1896. 

Q.  Will  you  name  the  refineries  that  were  acquired  by  this  ad- 
ditional use  of  capital  stock?  A.  I think  the  Franklin  Refinery, 
the  Knight  Refinery,  the  Spreckels  Refinery. 


72 


[Senate), 


Q.  Of  Philadelphia?  A.  Yes;  and  the  Delaware  Refinery. 

Q.  Is  that  all.  A.  I think  so. 

By  Mr.  Bedell: 

Q.  Where  is  the  Franklin  Refinery  situated?  A.  I am  giving 
this  only  from  memory;  it  is  entirely  out  of  my  department,  and 
1 know  very  little  about  it. 

Q.  If  there  is  any  correction  about  it,  you  can  make  it  at  any 
time,  Mr.  Havemeyer; — where  was  the  Knight  Refinery?  A. 
Philadelphia. 

Q.  There  were  three  or  four  of  these  that  were  Philadelphia 
concerns,  and  the  other  a Delaware  concern?  A.  All  were  Phil- 
adelphia concerns. 

Q.  They  were  competing  with  you  in  the  market  at  the  time? 
A.  I presume — yes. 

Chairman  Lexow:  Will  the  stenographer  read  the  names  of 
the  refineries? 

Mr.  Stenographer:  The  Franklin  Refinery,  the  Knight  Refinery, 
the  Spreckles  Refinery  and  a Delaware  refinery. 

By  Chairman  Lexow: 

Q.  The  effect  of  which  was  to  depress  the  price  of  sugar  to  the 
consumer,  was  it  not?  A.  Why,  I don’t  know  about  that. 

Q.  Isn’t  it  a fact  that  before  the  acquisition  of  these  properties 
by  you,  there  was  free  competition  in  sugar,  and  the  price  of 
sugar  to  the  consumer  was  lower  than  after  that  consolidation 
produced  by  the  issue  of  that  increased  capital  stock  was  made? 
A.  I think  the  price  is  lower  now  than  it  was  then. 

Q.  I am  not  speaking  of  now;  I am  speaking  of  that  time?  A. 
T don’t  know  much  about  the  prices;  I couldn’t  say  that. 

Q.  Isn’t  it  true  that  these  properties  were  acquired  in  this  is- 
sue of  capital  stock,  made  for  the  purpose  of  removing  the  com- 
petition then  had  between  you  and  these  four  concerns,  which 
you  say  depressed  the  price  of  sugar  to  the  consumer?  A.  I 
don’t  think  so. 

Q.  Will  you  state  that  it  was  not  a fact?  A.  Yes,  sir. 


No.  40.] 


73 


Q.  You  do  so  state?  A.  Yes;  I don't  think  it  was. 

Q.  Was  the  price  of  sugar  lower  or  higher  prior  to  the  consoli- 
dation of  these  four  additional  companies  as  compared  with  the 
time  subsequent  to  consolidation?  A.  I don't  know,  sir. 

Q.  Don't  you  keep  yourself  posted  about  that  at  all?  A.  No, 
sir;  I have  not  kept  up  any  memory — the  price  list  will  show. 

Q.  Was  that  acquisition  of  these  four  companies  the  purpose  of 
securing  a monopoly  of  the  market?  A.  No,  sir. 

Q.  What  was  the  purpose  of  the  acquisition  of  these  four  com- 
panies in  Philadelphia?  A.  I suppose  the  people  that  owned 
them  wanted  to  sell. 

Q.  You  bought  simply  because  they  wanted  to  sell?  A.  I sup- 
pose so. 

Q.  Were  you  not  competing  with  them  at  the  time,  and  were 
they  not  competing  in  price  against  you?  A.  I suppose  they 

were. 

Q.  Was  it  not  to  remove  that  competition  that  these  proper- 
ties were  secured?  A.  I do  not  think  so,  because  competition 
was  elsewhere,  too;  a little  more  or  less  didn't  make  any  differ- 
ence. 

Q.  Where  else  did  you  have  theu.  or  do  you  have  now,  compe- 
tition in  the  price  of  sugar?  A.  New  York,  Philadelphia,  New 
Orleans,  Michigan. 

Q.  You  mean  with  reference  to  the  other  parties  whom  you 
first  mentioned  that  were  not  in  the  consolidation?  A.  Yes,  sir. 

Q.  In  each  of  these  cases?  A.  Yes;  the  same  competition  now 
as  we  had  then. 

Q.  Isn't  the  price  of  sugar  charged  by  the  only  New  York  con- 
cern that  is  not  in  your  consolidation  precisely  the  price  charged 
by  you  for  refined  sugar  of  the  same  grade?  A.  I couldn't  tell 

you,  sir. 

Q.  Don’t  you  know  that  it  is?  A.  No,  sir. 

Q.  Don’t  you  keep  posted  with  reference  to  prices?  A.  No, 
sir;  I told  you  before;  I know  very  little  about  it. 

Q.  Did  you  issue  all  of  this  twenty-five  millions  of  increased 
capital  stock  for  the  purchase  of  these  additional  companies? 
A.  I don’t  know,  sir. 


74 


[Senate, 


Q.  Don't  you  know  what  was  done  with  that  stock  issue?  A. 
No,  sir;  Mr.  Searles  is  the  man  who  will  tell  you  all  about  that 
concern. 

Q.  How  many  factories  that  went  into  that  consolidation  have 
been  closed  up  since  the  consolidation?  A.  Perhaps  three  or 
four. 

Q.  Can  you  name  them?  A.  I think  Donner  & De  Castro  and 
Havemeyer  & Co;  I believe  that  is  all. 

Q.  Has  your  production  of  refined  sugars  decreased  since  the 
last  consolidation  that  you  mention?  A.  I should  say  it  had  in- 
creased. 

Q.  Did  it  increase  as  the  result  of  the  making  of  that  consolida- 
tion? A.  No,  sir;  not  necessarily. 

Q.  After  the  consolidation  was  made  did  you  continue  the  busi- 
ness by  the  consolidated  companies?  A.  We  refined  in  the  same 
refinery. 

Q.  You  continued?  A.  Refined  it  in  the  same  refinery. 

Q.  When  did  you  close  these  three  refineries  that  you  have 
mentioned?  A.  I think — I should  have  to  refer  to  my — 

Q.  Was  it  before  or  after  the  acquisition  of  these  four  Phila- 
delphia companies?  A.  I couldn’t  tell  you;  I should  have  to  find 
out  about  that. 

Q.  I understood  you  to  say  that  you  conducted  the  manufac- 
turing department  of  that  business?  A.  Yes,  but  you  asked  me 
dates,  you  know;  and  I can’t  recollect  the  dates. 

Q.  You  may  recollect  it  with  relation  to  the  question  of  ab- 
sorption of  these  four  companies?  A.  No,  sir;  I only  know  in  a 
general  way  that  we  had  refineries  sufficient  to  produce  the  con- 
sumption of  sugar — to  supply  the  consumption. 

Q.  What  was  the  date  of  your  examination  before  the  Senate 
Committee  of  the  United  States  Senate?  A.  I can’t  tell  you  the 
date;  I don’t  remember  it. 

Q.  It  was  in  the  year  1894,  was  it  not?  A.  Let  us  see — this  is 
1897— was  it  1895? 

Q.  Was  it  June  15,  1894?  A.  I presume  so,  if  you  have  it 
there.  i 


No.  40.] 


75 


Q.  Is  that  your  recollection?  A.  I don't  recollect  the  date. 

Q.  Now,  did  you  give  testimony  on  that  occasion  before  or 
after  you  had  acquired  these  four  Philadelphia  properties?  A.  I 
don't  think  I testified  to  anything  about  it. 

Q.  No,  but  did  you — I am  asking  of  the  fact  of  testimony  being 
given;  did  you  give  that  testimony  before  or  after  you  had  ac- 
quired these  four  Philadelphia  companies?  A.  I could  not  tell 
you. 

Q.  You  testified  then,  Mr.  Havemeyer,  didn’t  you?  A.  I tes- 
tified. 

Q.  (Continuing) — that  the  product  of  the  refineries  controlled 
by  you  amounted  to  80  per  cent,  of  the  total  refined  sugar 
produced  in  the  United  States — that  is  true?  A.  I suppose  so, 
at  that  time. 

Q.  At  that  time — I understood  you  to  say  a few  moments  ago 
that  your  production  had  increased  x’ather  than  diminished  since 
the  absorption  of  those  four  Philadelphia  companies.  Nowt,  if 
your  product  is  only  72  to  75  per  cent,  now  of  the  total  product 
how  could  it  have  been  80  per  cent,  then  unless  you  are  mistaken 
in  reference  to  your  figures?  A.  Well,  the  total  consumption  of 
the  country  may  have  increased;  at  that  time  our  pro  rata  may 
have  been  80  per  cent,  and  less  now;  we  have  more  competition 
now. 

Q.  Now,  if  the  figures  given  by  you  in  1894  were  correct,  to  wit, 
that  you  produced  80  per  cent,  of  the  total  sugar  in  the  United 
States,  and  if  you  have  increased  since  that  time,  then  you  pro- 
duce more  than  80  per  cent,  of  the  total  product  of  the  United 
States;  now,  do  you?  A.  I don’t  know  about  that;  I would  rath- 
er have  the  figures  to  guide  me  in  making  a statement. 

Q.  Well,  what  is  your  best  judgment?  A.  I should  say,  as  I 
said  before,  that  we  are  now  producing  about  75  per  cent,  of  the 
consumption  of  the  United  States;  the  balance  of  the  sugar  pro- 
duced in  the  United  States  is  produced  by  competitors  or  im- 
ported from  abroad. 

Q.  And  by  comparison  with  what,  Mr.  Havemeyer,  how  did  you 
reach  the  figure  in  1894  that  you  were  producing  80  per  cent.? 


76 


[Senate, 


A.  Because  we  did  not  get  then  the  refilled  sugar  from  abroad 
we  have  been  getting  lately,  and  there  was  not  competition  ex- 
tended as  it  is  now. 

Q.  I mean  how  did  you  reach  the  conclusion  that  you  were  then 
producing  80  per  cent,  by  referring  to  figures  that  you  had  in 
mind?  A.  Because  we  have  statistics  which  show  the  consump- 
tion of  the  United  States  and  go  beyond  what  we  produce;  and  it 
was  very  easy  to  ascertain  the  percentage  which  our  production 
bore  to  the  total  consumption. 

Q.  And  that  is  part  of  your  system,  to  keep  statistics  with  ref- 
erence to  that  question?  A.  They  are  kept  by  my  statistician. 

Q.  In  your  employ?  A.  No;  not  in  our  employ ; but  by  Willets 
& Gray  and  other  people;  I can  give  you  those  facts. 

Q.  I mean  for  your  purposes?  A.  No,  sir;  for  iiublic  purposes. 

Q.  You  do  not,  or  do  you,  keep  a record  of  the  production  in 
the  United  States  of  sugars  in  competition  with  yours?  A.  No, 
sir;  not  that  I know  of;  I don't  think  we  have. 

Q.  Would  that  come  within  the  manufacturing  department? 
A.  No,  sir. 

Q.  Do  these  questions  not  come  up  for  consideration  before 
your  board  of  directors?  A.  Yes,  sir. 

Q.  In  conformity  with  law?  A.  Yes,  sir. 

Q.  Under  the  laws  of  the  State  of  New  Jersey?  A.  I presume 
so.  ; 

Q.  And  these  questionsof  business  import  to  your  organization, 
are  they  not  subject  to  conferences  in  your  directors’  meetings? 
A.  No  sir. 

Q.  Nor  the  fixing  of  prices?  A.  No,  sir;  I never  heard  it  men- 
tioned. 

Q.  Nor  agreements  made  with  competing  companies?  A.  No, 
sir. 

Q.  And  the  board  does  not  discuss  any  of  these  questions  that  I 
have  referred  to  at  its  meetings?  A.  Never  heard  a discussion 
in  the  board  of  those  questions. 

Q.  What  other  part  of  the  business  does  the  board  transact? 
A.  Well,  simply  the  mercantile  part,  the  purchase  and  sale  of 


No.  40.] 


77 


sugars;  the  refining  part;  and  with  committees  to  which  these 
things  are  referred. 

Q.  Who  fixes  the  price,  Mr.  Havemeyer?  A.  My  brother. 

Q.  The  President?  A.  Yes,  sir. 

Q.  Has  he  full  power  to  fix  it,  or  does  he  fix  it  after  consulta- 
tion with  the  other  directors?  A.  That  is  not  my  part  of  it;  I 
don't  know  what  he  does. 

Q.  I mean  in  an  official  way  in  the  meeting  of  the  board  of 
directors?  A.  He  has  authority  to  fix  the  prices,  purchase,  buy 
and  sell — do  the  mercantile — govern  and  control  the  mercantile 
part  of  it,  and  that  strictly  comes  under  his  department. 

Q.  How  much  of  the  total  product  consumed  in  the  State  of 
New  York  do  you  manufacture  and  sell?  A.  I could  not  tell  you, 
sir. 

Q.  Do  you  know  what  the  daily  output  of  the  Mollenhauer 
place  is?  A.  No,  sir.  * 

Q.  What  is  your  daily  output?  A.  It  varies,  according  to  the 
demand  and  supply. 

Q.  Can  you  give  an  average?  A.  I could,  if  you  will  allow 
me  to  refer  to  the  figures  that  I have. 

Q.  Have  you  got  any  figures  in  mind?  A.  It  varies,  day  by 
day,  according  to  supply  and  demand. 

Q.  You  designate  the  capacity  of  a factory,  or  the  factories 
that  you  took  into  the  combination  by  reference  to  their  output 
in  barrels  of  sugar  per  day,  don't  you?  A.  No,  sir. 

Q.  How  do  you  do?  A.  Pounds  melted;  pounds  raw  sugar 
melted. 

Q.  Well,  what  is  the  capacity  of  your  companies  in  pounds  of 
raw  sugar  melted  per  day?  A.  Twenty  million,  perhaps. 

Q.  How  many  barrels  would  that  make?  A.  Oh,  it  would 
average  about  seven  barrels  per  thousand  pounds — well,  to  a ton 
— 25,000  or  30,000  barrels  a day,  perhaps  more. 

Q.  How  much  is  the  capacity  of  the  Mollenhauer  place?  A. 
I could  not  tell  you. 

Q.  Have  you  no  knowledge  on  the  subject?  A.  No  knowl- 
edge whatever ; never  bothered  myself  to  see. 


78 


[Senate. 


Q.  Or  any  figures?  A.  No  figures. 

Q.  Why  were  those  four  concerns  that  you  have  mentioned 
closed?  A.  Because  we  could  do  the  supplying  of  the  demand 
of  the  country  in  the  other  refineries  at  less  cost. 

Q.  How  long  after  your  acquisition  of  those  properties  under 
the  consolidation  was  it  that  they  were  closed?  A.  I couldn’t 
tell  you  that  without  referring. 

Q.  Have  you  any  figures  that  you  could  refer  to?  A.  I can  let 
you  know  when  they  were  closed. 

Q.  Prior  to  consolidation,  they  were  in  active  business,  were 
they?  A.  I could  not  tell  you  whether  they  were  all  at  work  or 
not. 

Q.  Have  you  any  recollection  on  the  subject?  A.  They  did 
not  belong  to  us,  so  I could  not  know. 

Q.  Under  consolidation,  you  did  not  close  then,  any  of  your 
own  refineries,  but  closed  the  refineries  that  had  been  acquired 
by  you?  A.  We  closed  the  refineries  simply  when  we  thought 
the  working  refineries  could  supply  the  demand  of  the  consumer; 
demand  and  consumption. 

Q.  I will  ask  you,  however,  whether  you  closed  any  of  your  own 
refineries  that  were  yours  before  consolidation?  A.  We  closed 
the  Donner  & De  Castro. 

Q.  That  was  situated  where?  A.  Brooklyn. 

Q.  What  was  its  output?  A.  It  could  refine  about  1,200,000 
pounds  a day. 

Q.  How  many  men  were  employed?  A.  I suppose,  about,  al- 
together, from  800  to  1,000. 

Q.  Were  they  discharged  when  you  closed  down  that  factory? 
A.  Some  of  them  were. 

Q.  What  percentage?  A.  I could  not  tell  you  that. 

Q.  Can  you  state  about?  A.  No;  I couldn’t;  a great  many 
v ere  taken  at  Havemeyer  & Elder’s,  to  be  used  there. 

Q.  Were  as  many  as  half  of  them  discharged  permanently? 
A.  Perhaps;  I could  not  tell  you,  though. 

Q.  Would  you  say  it  was  more  than  half?  A.  When  the  re- 
finery shut  down,  they  all  were  discharged. 


No.  40.] 


79 


Q.  Some  of  these  got  work  afterwards  in  the  Consolidation? 
A.  Most  of  them  got  work  afterwards;  had  to  increase  capacity 
of  Havemeyers  & Elder's  Refinery. 

Q.  Was  the  same  true  with  reference  to  the  other  three  refin- 
eries that  were  closed?  A.  Yes,  sir. 

Q.  All  were  discharged?  A.  I think  so. 

Q.  How  many  men  were  at  work  in  the  four  refineries?  A. 
Oh,  I don't  know  that. 

Q.  Can  you  approximate?  A.  I could  not;  no. 

Q.  Was  it  as  many  as  3,000?  A.  Oh,  no,  sir. 

Q.  2,000?  A.  No,  sir. 

Q.  1,500?  A.  I should  say  not. 

Q.  I understood  you  to  say  that  1,000  alone  were  discharged 
when  the  Donner  A Ue  Castro  Refinery  was  closed;  did  the  other 
three  contain  less  than  500  operatives?  A.  Well,  that  is  more 
than — 

Q.  Did  they  contain  less  than  500  operatives?  A.  I suppose 
about  500. 

Q.  So  that  the  total  number  of  men  discharged  as  the  result  of 
the  cessation  of  work  in  these  four  refineries  was  about  1,500? 
A.  Yes;  and  those  men,  or  an  equal  quantity  of  men,  -were  em- 
ployed elsewhere  to  work  on  the  increased  output  of  other  refin- 
eries; in  other  words  the  production  of  sugar  wras  just  the  same 
without  these  refineries,  and  the  same  number  of  men  were  need- 
ed to  make  the  production  of  sugar;  in  other  wTords  the  stoppage 
of  the  refineries  did  not  lessen  the  production  of  sugar;  sugar  was 
simply  made  in  some  other  refinery. 

Q.  Then  was  your  former  statement  incorrect  when  you  said 
that  you  believed  that  as  many  as  500  of  the  original  thousand 
were  permanently  discharged?  A.  I didn’t  say  ‘‘permanently.” 

Q.  I asked  particularly  whether  it  was  a permanent  discharge? 
A.  I doubt  whether  fewer  men  were  employed  to  produce  sugar 
than  there  were  when  those  refineries  were  running;  the  produc- 
tion of  sugar  was  simply  distributed  over  three  or  four  refineries 
and  the  same  number  of  men  were  employed;  that  production 
afterward,  on  account  of  the  economy  that  could  be  introduced, 


80 


[Senate, 


was  confined  to  one  refinery,  and  the  men  instead  of  being  em- 
ployed in  four  refineries,  an  increased  number  were  employed  in 
one  refinery;  what  proportion  that  was  I cannot  say. 

Q.  Did  the  production  at  the  time  or  immediately  after  the 
time  of  the  closing  down  of  these  four  refineries  equal  the  produc- 
tion that  had  been  made  previous  to  the  closing  down  of  these 
four  refineries?  A.  I think  so,  sir — 

Q.  Are  you  certain  about  that?  A.  Pretty  certain. 

Q.  What  was  the  necessity  of  closing  the  four  refineries?  A. 
Because  we  could  do  the  same  work  in  one  refinery  much  cheaper. 

Q.  Do  you  mean  to  say  it  was  simply  a transfer  of  men  and  not 
a lessening  of  product?  A.  Simply  a transfer  of  men  and  not  a 
lessening  of  product. 

Q.  Are  you  certain  about  that?  A.  Pretty  certain,  sir. 

Q.  Well,  are  you  quite  certain?  A.  Quite  certain. 

Q.  Have  you  figures  that  will  show  the  product  of  the  consoli- 
dated company  immediately  prior  and  immediately  subsequent 
lo  the  closing  of  these  four  refineries?  A.  I think  Mr.  Searles 
could  give  them  to  you. 

Q.  Is  Mr.  Searles  here?  A.  He  will  be  here;  I understood 
Mr.— 

Q You  can  produce  them  in  case  Mr.  Searles  cannot?  A. 
Oh,  I think  they  can  be  produced. 

Q.  Why  did  you  go  into  the  coffee  business?  A.  Well,  because 
my  brother  thought  it  was  a good  business,  and  he  would  like  to 
go  into  it. 

Q.  Thought  it  was  a paying  business?  A.  I think  so. 

Q.  And  you  were  not  making  money  enough  in  sugar  and 
thought  you  would  try  coffee;  was  that  the  idea?  A.  The  Ameri- 
can Sugar  Refining  Company  had  nothing  to  do  with  the  coffee 
business. 

Q.  Oh,  you  did  not  go  into  it  as  a corporation,  but  went  into  it 
as  individuals?  A.  Havemeyers  & Elder. 

Q.  You  organized  in  the  State  of  New  Jersey,  yesterday,  a 
corporation  to  do  the  coffee  business  in  that  state?  A.  In  any 
state,  I presume,  to  do  the  business. 


No.  40.] 


81 


Q.  Well,  a corporation  of  that  state?  A.  Yes,  sir. 

Q.  You  were  one  of  the  organizers  appearing  in  the  certificate 
of  incorporation,  yesterday?  A.  Yes. 

Q.  I understood  you  to  say  that  you  had  acquired  an  interest 
in  the  Woolson  Company;  is  that  true?  A.  Havemeyers  & Elder 
have;  yes,  sir. 

Q.  Havemeyers  & Elder?  A.  Yes,  sir. 

Q.  One  of  the  original  members  of  the  consolidated  company? 
A.  No,  sir;  nothing  to  do  with  them. 

Q.  But  a firm?  A.  Havemejrer  & Elder  are  a partnership. 

Q.  Oh.  I see;  of  which  you  are  a member—  A.  Of  which  I am 
a member  and  my  brother  and  m}r  son. 

(].  Have  you  any  litigation  now  pending  in  the  State  of  Ohio 
with  reference  to  that  Woolson  Company?  A.  The  newspapers 
tell  me  so. 

Q.  You  know  nothing  of  it?  A.  Nothing  at  all,  except  in  a 
general  way  ; I have  an  idea  that  there  is  something  pending. 

Q.  Are  you  manufacturing  coffee  in  the  State  of  Ohio  at  pres- 
ent? A.  The  Woolson  Company  are;  yes,  sir. 

Q.  Are  you  certain  that  the  acquisition  of  stock  in  the  Woolson 
Company  was  no  part,  and  is  no  part,  of  the  assets  of  the  Ameri- 
can Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  Certain  of  that?  A.  Yes,  sir. 

Q.  Are  the  directors  of  the  corporation  organized  yesterday 
for  the  manufacturing  of  coffee,  in  the  State  of  New  Jersey,  the 
same  directors  who  are  directors  in  the  American  Sugar  Refining 
Company?  A.  If  you  will  name  the  incorporators  I will — I pre- 
sume they  are;  I believe  the  incorporators  were  Henry  C.  Have- 
meyer,  Theodore  Havemeyer,  John  E.  Searles,  John  E.  Parsons, 
and  another,  I don’t  know  the  name. 

Q.  Are  there  any  officers  of  the  American  Coffee  Company  who 
are  not  officers  and  interested  in  the  American  Sugar  Refining 
Company?  A.  Well,  H.  O.  Havemeyer,  one  of  the  incorporators, 
is  President  of  the  Sugar  Refining  Company;  Theodore  A.  Have- 
meyer, another  one,  is  Vice-President;  John  E.  Searles  is  treas- 
urer; John  E.  Parsons  is  director. 

6 


82 


[Senate, 


Q.  They  keep  the  same  relative  positions  in  the  American 
Sugar  Refining  Company  that  they  occupy  in  the  American  Cof- 
fee Company?  A.  I don’t  know  that  they  occupy  any  positions 
as  incorporators  in  the  coffee  company;  they  occupy  these  other 
positions  in  the  American  Sugar  Refining  Company. 

Q.  You  have  not  gone,  then,  to  the  extent  of  a permanent  or- 
ganization of  the  new  company?  A.  No,  sir;  I think  not. 

Q.  Has  the  organization  of  that  company  anything  to  do  with 
competition  in  the  markets  of  this  State  in  the  price  of  sugar? 
A.  Not  at  all,  sir. 

Q.  Or  any  other  State?  A.  Not  at  all,  sir. 

Q.  Nor  the  State  of  Ohio?  A.  Not  at  all,  sir. 

Q.  Nor  any  relation  to  any  open  competition  in  the  sugar  busi- 
ness by  gentlemen  now  engaged  in  the  prosecution  of  the  coffee 
business?  A.  I believe  not,  sir. 

Q.  Yrou  say  you  believe  not;  are  you  Avilling  to  state  under  oath 
that  the  purpose  and  object  of  the  organization  of  the  American 
(toffee  Company  was  not  to  remove  competition  of  a coffee  com- 
pany now  engaged  in  the  refining  and  selling  of  sugar  in  com- 
petition with  you?  A.  I would  say  so. 

Q.  Will  you  state  positively,  under  oath,  that  there  is  no  inten- 
tion of  that  kind  entering  into  the  organization  of  that  company? 
A.  Yes,  sir. 

Q.  Yes,  you  do?  A.  Yres,  sir. 

Q.  Why  do  you  hesitate,  Mr.  Havemeyer?  A.  Because  I have 
to  think. 

Q.  Are  you  in  doubt  about  it?  A.  Not  at  all;  your  questions 
are  rather  long,  and  I have  to  give  them  a little  consideration; 
the  company  is  organized  to  transact  the  coffee  business,  that  is 
my  impression  as  to  that;  not  to  compete  with  anybody,  or  any- 
thing of  that  kind. 

Q.  Or  to  remove  any  competition  against  you  in  the  sugar 
business?  A.  No,  sir;  how  could  we  do  it? 

Q.  We  are  not  inquiring  here  as  to  any  competition  in  coffee 
except  so  far  as  it  relates  to  the  use  of  competition  in  coffee  to 
destroy  the  competition  in  sugar?  A.  I — no — 


No.  40.] 


83 


Q.  Now  are  you  willing  to  state  under  oath  that  the  organiza- 
tion of  the  American  Coffee  Company  by  gentlemen  connected 
with  the  American  Sugar  Refining  Company  has  not  for  one  pur- 
pose the  removal  of  competition  in  the  field  of  sugar?  A.  So  far 
as  I know,  I am  willing  to  state  so  under  oath. 

Q.  Are  the  secrets  connected  with  the  transaction  of  business 
of  the  American  Sugar  Refining  Company  withheld  from  you, 
Mr.  Havemeyer?  A.  No,  sir;  not  withheld. 

Q.  Do  you  consider  that  you  have  full  access  to  all  the  com- 
mercial secrets  of  the  company?  A.  No. 

Q.  Who  has?  A.  My  brother. 

Q.  Will  he  know  with  reference  to  this  coffee  company?  A.  1 
suppose  so. 

Q.  Don't  you  know  anything  about  the  law  suit  now  pending 
in  Ohio?  A.  Only  the  newspaper  reports. 

Q.  Between  the  Arbuckle  Company  and  the  Woolson  Company 
and  yourselves?  A.  Only  from  the  newspaper  reports. 

Q.  Are  you  defendants  in  that  suit?  A.  I could  not  tell  you. 

Q.  Are  you  defending  that  suit  by  counsel?  A.  I believe  we 
are. 

Q.  Is  the  same  counsel  who  represents  and  appears  for  the 
American  Sugar  Refining  Company  and  for  the  American  Coffee 
Company  the  counsel  who  defends  you  in  that  Ohio  suit?  A.  I 
think  not,  sir. 

Q.  Has  no  relation  to  the  case?  A.  I think  not,  sir. 

Q.  Who  acts  as  your  counsel  in  Ohio?  A.  I don’t  know,  sir. 

Q.  Does  Mr.  Parsons?  A.  No,  sir;  I don’t  think  so;  that  is  on 
our  part. 

Q.  Has  Mr.  Parsons  no  relation  to  that  suit?  A.  I don’t  know; 
but  as  I have  said,  those  are  questions  that  I have  not  troubled 
myself  about;  they  are  mercantile  questions  with  which  I have 
nothing  to  do. 

Q.  But  you  knew  of  the  acquisition  of  the  stock  of  the  Woolson 
Company  by  your  firm?  A.  Yes,  sir. 

Q.  Why  did  you  acquire  that  stock?  A.  My  brother  said  it 
was  a pretty  good  business  to  go  into,  and  asked  me  whether  I 
was  not  willing,  and  I said  “Go  ahead.” 


84 


[Senate, 


Q.  How  long  did  you  come  to  that  conclusion  after  you  had 
ascertained  the  gentlemen  who  were  stockholders  in  that  com- 
pany were  competing  with  you  in  the  price  of  sugar?  A.  I never 
knew  that  they  were  competing  in  the  price  of  sugar. 

Q.  Didn’t  you  know  that  they  were  selling  sugar?  A.  No,  sir. 

Q.  Don’t  you  know  to-day  that  the  Arbuckle  Company  are  sell- 
ing sugar?  A.  I thought  you  referred  to  the  Woolson  Company 
just  now;  I know  nothing  about  Arbuckle’s  business. 

Q.  Did  you  know  that  they  had  any  connection  with  the  Wool- 
son  Company?  A.  No,  sir. 

Q.  Did  you  know  that  they  were  competing  with  you  in  the 
manufacture  and  sale  of  sugar?  A.  No,  sir. 

Q.  Is  it  because  you  are  not  familiar  with  the  surroundings  of 
the  company  with  reference  to  questions  of  that  kind  that  you 
say  no,  or  do  you  state  it  as  a fact  that  they  were  not?  A.  I 
never  knew  that  the  Arbuckle  Company  were  refiners  of  sugar. 

Q.  Did  you  know  that  they  were  selling  sugar  in  competition 
with  you?  A.  Yes,  I think  I did  in  general. 

Q.  And  how  long  after  you  knew  that  fact  was  it  before  it  oc- 
curred to  you  that  it  would  be  a good  enterprise  to  engage  in  the 
manufacture  of  coffee?  A.  I never  thought  of  it. 

Q.  How  long  had  you  known  the  fact  that  Arbuckles  were  sell- 
ing sugar  in  competition  with  you  before  you  undertook  to  en- 
gage in  the  coffee  business?  A.  I did  not  know  that  Arbuckle  & 
Co.  were  competitors  of  ours  in  selling  sugars;  I had  an  idea, 
and  have  always  had  an  idea,  that  they  simply  were  taking  sugar 
to  use  in  their  coffee  business;  I understood  for  sugaring  their 
coffee,  or  some  sugar  and  white  of  eggs,  and  I understood  they 
used  a large  quantity  for  that,  and  recently  I learned  that  they 
had  a little  sugar  put  up  in  two  pound  packages,  or  something  of 
that  kind,  and  distributed  it  with  their  coffee;  I have  never  really 
troubled  myself  about  Arbuckle  & Co.’s  business,  and  know  very 
little  about  it. 

Q.  The  competition  was  so  insignificant  that  you  did  not  deem 
it  worth  while  to  notice?  A.  I don’t  pay  much  attention  to  that 
branch  of  the  business,  that  is,  the  mercantile  branch,  and  I 


No.  40.] 


85 


really  pay  no  attention  to  it  whatever;  I have  just  as  much  as  I 
can  do  to  attend  to  my  own  business. 

Q.  Was  it,  then,  a coincidence  merely  that  you  deemed  it  ad- 
visable to  buy  stock  in  a coffee  company  in  Ohio  and  then  to  or- 
ganize the  American  Coffee  Company  in  the  State  of  New  Jersey; 
was  that  merely  a coincidence  occurring  at  the  same  time  that 
Arbuckles  were  competing  with  you  in  the  sugar  market?  A. 
My  brother  said  to  me,  “I  think  this  coffee  business  is  a good 
business;  will  you  go  in?”  and  I said,  “Go  in;”  and  since  then  I 
have  not  bothered  myself  about  it;  whatever  arrangements  he 
made  and  whatever  steps  he  took  are  entirely  satisfactory  to  me; 
I know  nothing. 

Q.  Is  there  any  other  business  except  the  coffee  business  that 
you  have  thought  it  proper  for  you  to  engage  in  since  the  organi- 
zation of  the  American  Sugar  Refining  Company?  A.  Well,  I 
don’t  know. 

Q.  Do  you  transact  any  commercial  business  but  that?  A. 
Well,  we  have  real  estate;  lots  of  things. 

Q.  I mean,  any  mercantile  competitive  business?  A.  No;  I 
don’t  think  we  do. 

Q.  When  was  it  that  you  purchased  stock  in  the  Woolson 
Company?  A.  Well,  I will  have  to  refer  you  to  my  brother  for 
that;  I couldn’t  give  you  the  date. 

Q.  Wasn't  this  question  of  the  purchase  of  the  Woolson  stock, 
and  the  transaction  of  the  coffee  business  a matter  that  was  dis- 
cussed among  the  directors  at  their  board  meetings  of  the  Ameri- 
can Sugar  Refining  Company?  A.  No,  sir. 

Q.  Never?  A.  No,  sir;  not  to  my  recollection;  I may  not  have 
the  memory — 

Q.  Do  you  remember  when  you  purchased  the  Woolson  stock? 
A.  No;  I think  my  brother  can  give  you  the  date. 

Q.  Now,  Mr.  Havemeyer,  without  beating  around  the  bush, 
didn't  you  substantially,  or  your  company  substantially,  inform 
the  Arbuckle  concern,  that  if  they  competed  in  the  field  of  sugar 
you  would  compete  in  the  field  of  coffee?  A.  Not  that  I know  of, 
sir;  I never  had  any  correspondence  or  conversation  with  him  or 
any  one  else.  1 


86 


[Senate, 


Q.  I am  not  speaking  of  conversations,  but  was  not  tlie  policy 
of  your  company  not  only  determined  but  communicated,  that  if 
Arbuckle’s  chose  to  compete  with  you  in  the  sale  of  sugars  you 
proposed  to  compete  with  them  in  the  sale  of  coffee?  A.  Not  by 
me,  sir. 

Q.  And  wasn’t  that  threat  made  for  the  purpose  of  preventing 
and  destroying  competition  in  sugar  against  your  company?  A. 
Not  by  me,  sir. 

Q.  Do  you  know  any  member  of  your  concern  that  did?  A. 
No,  sir. 

Q.  Have  you  no  information  from  any  person  in  the  company 
of  such  an  occurrence?  A.  No,  sir. 

Q.  But  isn’t  it  a fact?  A.  No,  sir;  I don’t  think  so;  I know 
nothing  about  it;  I have  not  had  the  conversation. 

Q.  Isn’t  it  a fact  that  you  acquired  the  Woolson  Company  and 
that  you  organized  the  New  Jersey  American  Coffee  Company 
for  the  purpose  of  compelling  Arlmckle  & Co.  to  cease  competing 
with  you  in  the  field  of  sugar?  A.  That  is  not  my  idea  of  it,  sir. 

Q.  Where  does  the  American  Sugar  Refining  Company  pay  its 
taxes?  A.  I suppose  in  New  York. 

Q.  On  its  capital  stock  of  $73,000,000?  A.  You  will  have  to 
ask  Mr.  Searles,  the  treasurer,  about  that. 

Q.  Do  you  know  whether  your  taxes  are  paid  in  the  State  of 
New  Jersey  or  in  the  State  of  New  York?  A.  I don’t  know;  Mr. 
Searles  will  tell  you  that;  he  is  the  Secretary  and  Treasurer,  and 
tends  to  that  department. 

Q.  Do  you  do  any  of  the  commercial  business  outside  of 
the  sale  of  your  product  in  other  states,  in  the  State  of  New  Jer- 
sey, or  do  you  conduct  your  business,  your  commercial  business, 
and  have  your  main  office  in  the  State  of  New  York?  A.  We 
have  an  office  in  Jersey  City  and  also  one  in  New  York. 

Q.  You  know  what  I mean  when  I say,  have  you  the  main  of- 
fice of  the  corporation  for  the  transaction  of  the  important  busi- 
ness in  the  city  of  New  York?  A.  We  buy  and  sell  sugars  in  New 
York;  No  117  Wall  street  is  the  office  of  the  American  Sugar  Re- 
fining Company ; we  also  have  an  office  in  Jersey  City. 


No.  40.] 


87 


Q.  Tlie  office  in  Jersey  City  is  one  required  by  the  statute  of 
New  Jersey  to  be  maintained  for  the  purpose  of  maintaining 
you  corporate  existence  there,  is  it  not?  A.  I suppose  so;  I don’t 
know;  I suppose  so. 

Q.  As  a matter  of  fact,  the  business  of  the  company  is  trans- 
acted in  the  city  of  New  York;  you  know  what  I mean,  Mr.  Have- 
meyer,  don't  you?  A.  We  have  an  office  for  the  sale  and  pur- 
chase of  sugar  at  No.  117  Wall  street  now — 

Q.  And  that  is  unequivocally  the  office  of  the  corporation — I 
am  not  speaking  of  the  local  office  of  the  corporation,  but  is  it 
the  business  office?  A.  It  is  where  the  officers  of  the  company 
have  their  offices  and  where  the  business  of  buying  and  selling  is 
transacted. 

Q.  And  all  the  business  of  the  American  Sugar  Refining  Com- 
pany, although  organized  in  the  State  of  New  Jersey,  is  trans- 
acted— all  the  commercial  business,  is  transacted  in  the  city  of 
New  York  in  the  office  you  have  mentioned?  A.  I suppose  so. 

Q.  Why  did  you  organize  in  the  State  of  New  Jersey?  A.  Be- 
cause, I suppose,  our  legal  adviser  told  us  it  was  the  best  place 
to  organize. 

Q.  Wasn't  it  because  in  1891,  the  Statute  Law  of  New  Jersey 
permitted  the  consolidation  of  companies  which  was  not  permit- 
ted under  the  statutes  of  the  State  of  New  York?  A.  I don’t 
know  enough  about  the  legal  question  to  answer  that. 

Q.  Was  there  any  other  object?  A.  Not  that  I know  of. 

Q.  It  was  not  the  object  to  evade  taxation,  was  it?  A.  I don’t 
know. 

Q.  You  don’t  know?  A.  I don’t  know;  we  were  simply  told,  I 
suppose. 

Q.  I am  asking  you  as  a director  of  the  company?  A.  I don’t 
know. 

Q.  Did  you  contemplate,  or  consider  organization  in  the  State 
of  New  York  at  any  time?  A.  I did  not;  the  lawyers  may — Mr. 
Parsons  may,  or  whoever  acted  for  us  at  that  time. 

Q.  On  what  part  of  the  capital  stock  of  the  American  Sugar 
Refining  Company  or  its  property  does  it  pay  taxes  to  the  State 


88  [Senate, 

of  New  York?  A.  I can’t  tell  you  that;  it  is  not  in  my  depart- 
ment. 

Q.  How  muck?  A.  I can’t  tell  you;  Mr.  Searles,  the  Secretary 
and  Treasurer,  can  answer  that. 

Q.  Don’t  you  keep  yourself  informed  with  reference  to  any  of 
those  vital  facts  regarding  the  management  of  your  business? 
A.  I don’t  consider  them  vital  facts. 

Q.  A tax  on  seventy-three  millions  of  dollars  is  a fairly  large 
business  transaction,  is  it  not?  A.  Fairly  so,  yes;  but  I don’t 
see — 

Q.  Don’t  you  keep  yourself  informed  with  reference  to  matters 
of  that  kind?  A.  No;  it  has  nothing  to  do  with  my  department; 
it  is  a matter  for  investigation  on  the  part  of  the  treasurer,  and  if 
it  is  proper  to  pay  it,  I suppose  he  pays  it;  I never  bother — 

Q.  You  don't  know  then,  as  a matter  of  your  own  knowledge, 
although  you  have  stated  the  business  of  this  company  is  trans- 
acted in  the  city  of  New  York,  whether  it  pays  any  taxes  to  the 
State  of  New  York  A.  I don’t  know  anything  about  it;  it  is  en- 
tirely outside  of  my  department;  I don’t  know  whether  it  trans- 
acts all  its  business  in  New  York;  I don’t  know  what  tax  it 
pays;  I know  it  pays  taxes. 

Q.  Where  does  the  board  of  directors  meet?  A.  They  meet  in 
New  York,  at  117  Wall  street. 

Q.  Does  it  ever  meet  in  the  State  of  New  Jersey?  A.  Yes. 

Q.  Yes?  A.  So  I think;  they  have  a meeting  there. 

Q.  Once  a year?  A.  Yes;  perhaps  oftener. 

Q.  What  books  of  the  company  are  kept  in  the  State  of  New 
Jersey,  if  any,  excepting  the  stock  book?  A.  You  *will  have  to 
ask  Mr.  Searles  about  that. 

Q.  Don’t  you  know  anything  about  it?  A.  No,  sir. 

Q.  What  business  has  ever  been  transacted  by  the  American 
Sugar  Refining  Company  in  the  State  of  New  Jersey  outside  of 
that  required  by  the  statutes  of  the  State  of  New  Jersey,  in  order 
to  maintain  its  corporate  existence?  A.  I can’t  answer  that 
question. 

Q.  You  don’t  know?  A.  No,  sir. 


No.  40.] 


89 


Q.  Will  Mr.  Searles  be  able  to  answer  all  these  questions?  A. 
1 presume  so. 

Q.  What  has  been  the  aggregate  of  your  profits  since  1887,  if 
}ou  know?  A.  I do  not  know,  sir. 

Q.  What  percentage  did  it  bear  to  the  capital  invested?  A.  I 
don't  know,  sir. 

Q.  What  percentage  did  the  capital  actually  invested  bear  to 
the  nominal  face  of  the  stock  issued  by  the  Consolidated  Corn- 
pan}’?  A.  I don’t  know,  sir. 

Q.  What  dividend  has  been  declared  in  those  years,  from  1887 
to  1896,  including  1896?  A.  I should  have  to  look  up  the  records. 

Q.  Who  has  charge  of  those  records?  A.  I suppose  any  bank- 
er; I suppose  the  secretary  can  give  it  to  you  or  the  treasurer 
would  know. 

Q.  What  proportion  do  the  dividends  declared  bear  to  the 
actual  value  of  the  property?  A.  I don’t  know,  sir. 

Q.  What  proportion  do  they  bear  to  the  stock  values  of  the 
properties?  A.  Will  you  repeat  that  question,  please. 

Q.  What  proportion  do  the  dividends  bear  to  the  stock  issued 
by  the  company  representing  the  stock  value  to  the  company? 
A.  I should  have  to  look  that  up;  12  per  cent,  was  declared  last 
year,  I believe. 

Q.  What  is  the  value  of  the  American  Sugar  Befining  stock 
now  in  the  market?  A.  I do  not  know,  sir. 

Q.  Can  you  state  approximately?  A.  The  papers  told  me  last 
night;  it  was  about  114  1-2. 

Q.  Does  that  114  1-2  cover  the  entire  stock  issue  of  the  com- 
pany or  is  it  divided  into  different  classes  of  stock?  A.  There 
are  two  classes  of  stock,  preferred  and  common;  half  of  each,  I 

believe. 

Q.  Can  you  state  the  amount?  A.  Yes;  I thing  there  is  37  1-2 
millions  of  preferred  and  37  1-2  millions  of  common. 

Q.  Making  $75,000,000?  A.  I think  so;  yes,  sir. 

By  Mr.  Bedell: 

(*.  What  is  the  interest  on  the  preferred,  fixed?  A.  7 per  cent. 


90 


[Senate. 


By  Mr.  Lexow: 

Q.  What  is  the  divideud  that  is  paid  upon  the  common?  A. 
That  has  been  12. 

Q.  Have  you  a bond  issue?  A.  Makes  91-2  average  on  the 
total. 

Q.  9 1-2  average  since  1887  ? A.  On  the  total ; well,  I don’t 
know  that;  I am  speaking  of  last  year;  seven  per  cent,  on  the  pre- 
ferred and  12  per  cent,  on  the  common — yes,  just  9 1-2  on  the 
total. 

Q.  Have  you  continued  the  payment  of  12  per  cent,  dividend 
on  the  common  stock  since  the  organization  of  the  consolidated 
company  in  1891?  A.  I should  have  to  look  that  up. 

Q.  Don’t  you  know  whether  you  have  been  receiving  12  per 
cent,  dividend  on  that  stock?  A.  I think  so. 

Q.  Have  you  made  any  extra  dividends?  A.  We  may  have 
done  that. 

Q.  Well,  is  it  your  recollection  that  your  profits  have  exceeded 
12  per  cent,  since  1S91  on  the  capitalization  in  force?  A.  I don’t 
know  much  about  that,  only  what  they  have — 

Q.  You  have  paid  7 per  cent,  on  the  preferred?  A.  Yes,  sir. 

Q.  Anything  on  the  bonds?  A.  We  have  no  bonds  issued. 

Q.  You  have  a bond  issue  provided  for,  have  you  not?  A.  I 
think  so;  yes. 

Q.  But  you  have  not  issued  any  of  the  bonds?  A.  I don’t 
think  so. 

Q.  Can  you  state,  Mr.  Havemeyer,  from  your  knowledge  of  the 
company’s  assets  as  a Director  and  Vice-President  what  the  value 
of  those  assets  were  in  money  prior  to  or  at  the  time  of  the  con- 
solidation in  1891?  A.  No,  sir. 

Q.  When  these  properties  were  taken  into  the  consolidation 
was  any  committee  of  appraisement  appointed  or  any  authority 
that  made  an  appraisement  of  the  value  of  the  property?  A.  I 
had  not  much  to  do  with  that  part  of  it;  as  I say  before  that  was 
the  mercantile  part  of  it;  and  I hadn’t  anything  to  do  with  that; 
nothing  at  all. 


No.  40.] 


91 


By  Mr.  Bedell : 

Q.  But  do  you  know  the  fact  whether  or  not  there  was  such 
an  appraisement  made?  A.  No;  I do  not. 

By  Mr.  Lexow: 

Q.  You  acted,  didn't  you,  as  one  of  the  organizers  of  the  Amer- 
ican Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  You  undertook  the  assets  of  the  various  concerns  that  were 
consolidated?  A.  Probably. 

Q.  You  acted  in  a fiduciary  capacity  as  a director?  A.  Per- 
haps. 

Q.  And  in  the  issuance  of  stock,  you  issued  stock  under  the 
laws  of  the  State  of  New  Jersey  to  the  value  of  the  assets  under- 
taken, didn't  you?  A.  I suppose  we  did — if  that  was  the  thing 
to  do— 

Q.  You  did  not  issue  stock  for  money?  A.  I don't  know  about 
that;  you  will  have  to  ask  Mr.  Parsons  how  that  was  arranged. 

Q.  Was  Mr.  Parsons  the  counsel?  A.  I think  so — I do  not — I 
really  know  very  little  about  it — I did  not — those  are  things  that 
other  people  can  do  a great  deal  better  than  I can,  and  I let  them 
do  it. 

By  Mr.  Mazet: 

Q.  Were  all  the  profits  divided  in  the  dividends,  or  did  you 
have  a surplus,  besides?  A.  I don’t  know. 

Q.  Whether  the  profits  were  divided  up  into  dividends,  or 
whether  there  was  a surplus,  in  addition  thereto?  A.  My  im- 
pression is  there  is  a surplus. 

By  Mr.  Lexow: 

Q.  Do  you  know  how  much,  or  how  long  this  surplus  has  ex- 
isted, or  is  it  a continuing  and  accumulating  one?  A.  I presume 
there  is  a surplus;  I do  not  examine  those  things. 

Q.  Well,  don’t  you  know  that  every  year  since  1891  you  have 
not  only  made  12  per  cent,  upon  the  stock  issued,  common 


92 


[Senate, 


stock,  but  there  has  been  an  accumulating  surplus  each  year 
from  your  operations?  A.  There  may  have  been;  I don’t  know 
whether  it  has  been  each  year  or  each  month;  the  question  is 
is  there  a surplus? 

Q.  Do  you  declare  dividends  monthly,  or  half-yearly  or  quar- 
terly? A.  No — quarterly. 

Q.  You  have  no  idea  now  of  the  amount  of  your  surplus?  A. 
I haven’t  looked  into  it. 

Q.  On  the  books  of  your  company,  instead  of  “surplus,”  do  you 
call  it  “reserve?”  A.  Well,  I have  never — I don’t  really  know 
what  they  do  call  it;  I should  call  it  surplus;  I don’t  know  what 
they  put  it  down  there. 

Q.  I will  read  you  some  figures,  and  state  whether  or  not  they 
are  correct;  capital  stock — referring  to  your  company — A.  Yes, 
sir. 

Q.  Capital  stock,  1893,  $73,936,000;  1894,  $73,936,000;  1895, 
$73,936,000.  Debts,  1893,  $22,201,407;  1894,  $21,394,000;  1895, 
$25,130,000.  Reserve,  1893,  $3,943,000;  1894,  $7,694,484;  1895, 
$13,112,560 — Are  those  figures  substantially  correct?  A.  I 
don’t  know  where  they  were  obtained. 

Q.  They  were  obtained  from  the  Financial  Chronicle’s  state- 
ment of  January  30,  1897?  A.  Well,  if  they  are  obtained  from 
Mr.  Searles  they  are  probably  correct. 

Q.  Is  that  your  recollection  that  approximately  those  figures 
are  correct,  and  that  in  the  years  1894  and  1895,  you  increased 
the  then  existing  surplus  of  about  eight  millions  to  over  thirteen 
millions,  besides  paying  12  per  cent,  upon  your  stock,  seven  per 
cent,  upon  your  preferred  stock,  and  all  the  liabilities,  fixed 
charges  and  operating  charges  of  your  concern?  A.  I do  not 
know  where  those  figures  have  been  obtained;  if  Mr.  Searles 
gave  them,  they  are  probably  correct;  he  is  in  charge  of  that  de- 
partment. 

Q.  Does  the  $73,936,000  of  stock  contain  the  twenty-five  mill- 
ions of  stock  that  was  issued  for  the  four  Philadelphia  concerns 
of  which  you  have  spoken?  A.  I think  so. 

Q.  Were  you  present  when  the  stock  issue  was  made?  A. 
Probably  not. 


No.  40.] 


93 


Q.  Do  you  know  whether  or  not  the  stock  was  issued  at  50  per 
cent.?  A.  No;  I know  nothing  about  it. 

Q.  That  is  to  say,  you  issued  part  of  the  stock  for  50  per  cent, 
in  value  of  the  property?  A.  I know  nothing  about  it;  in  fact 
I couldn’t  tell  you  whether  that  stock  was  issued  by  the  Refinery 
— you  still  have  to  ask  somebody  else  about  tliiat;  all  these  trans- 
actions were  entirely  out  of  my  line. 

Q.  Do  you  consider,  Mr.  Havemeyer,  under  the  conditions  pre- 
vailing during  the  last  four  years  that  a profit  of  12  per  cent, 
upon  common  stock,  and  the  accumulation  of  a surplus  at  the 
rate  of  four  millions  a year,  is  placing  a fair  commercial  value 
upon  your  product,  whether  under  conditions  of  competition  or 
non-competition?  A.  I would  not  go  into  business  if  I could  not 
make  16  per  cent. 

Q.  Sixteen?  A.  Fifteen  to  twenty  per  cent,  out  of  it. 

Q.  Does  any  business  not  in  its  nature  a monopoly  make  any 
such  profit  as  that?  A.  Plenty  of  them. 

Q.  Under  the  conditions  that  have  existed  within  the  last  four 
years?  A.  Plenty  of  them. 

Q.  When  I speak  of  a monopoly  I mean  one  that  may  ojjerate 
under  the  privilege  of  patents,  as  well  as  a monopoly  that  oper- 
ates by  the  extinction  of  competition?  A.  I should  say  plenty  of 
them. 

Q.  Now,  excluding  patents  from  your  answer,  are  there  busi- 
nesses that  during  the  last  four  years  have  been  able,  in  your 
judgment,  to  make  16  per  cent,  upon  the  capital  invested, 
that  are  not  themselves  monopolies,  and  control  both  price  and 
market?  A.  I think  so;  coffee  is  one  of  them,  I think. 

Q.  Is  that  why  you  went  into  the  business?  A.  That  is  one  of 
the  reasons. 

Mr.  Lexow:  That  will  be  all,  Mr.  Havemeyer.  In  case  the  com- 
mittee would  like  to  continue  the  line  where  you  have  refused  or 
failed  to  give  an  answer,  we  will  be  obliged  to  you  if  you  will  at- 
tend again;  we  don’t  subpoena  you. 

Witness:  May  I have  the  privilege  of  revising  the  testimony. 
You  know,  the  questions  are  rather  long,  and  sometimes  perhaps 


94 


[Senate. 


I did  not  grasp  them.  You  will  understand  I am  not  accustomed 
to  cross-examination  and  perhaps  I did  not  grasp  the  meaning  of 
Ihe  question  . 

Mr.  Lexow:  I understand.  We  do  not  want  to  take  advantage 
of  any  misapprehension  on  the  witnesses’  part. 

The  Witness:  My  department  is  not  the  mercantile,  and  so  I 
am  a little  ignorant  in  regard  to  a great  many  of  these  matters. 

By  Mr.  Warner: 

Q.  You  generally  attend  the  meeting  of  the  board  of  directors 
of  your  company,  do  you  not?  A.  Yes,  sir. 

Q.  How  often  do  you  meet  here  in  the  city?  A.  Meet  once  a 
year  . 

Q.  At  those  meetings,  the  manner  of  conducting  your  company 
is  brought  up  before  the  directors  and  passed  upon  by  them,  is 
it  not,  and  discussed?  A.  Well,  we  have  two  committees,  a 
mercantile  committee  and  a refining  committee,  and  where  there 
are  subjects  connected  with  the  different  branches  of  the  busi- 
ness, they  are  referred  to  these  committees  and  they  are  supposed 
to  run  it;  for  myself,  I would  have  to  consult  on  my  part  the 
committee  upon  refining,  and  I would  not  consult  the  committee 
upon  mercantile  position. 

Q.  Don't  those  sub  committees  report  to  your  board  of  direc- 
tors A.  Once  in  a while,  yes,  sir;  but  the  sub-committees  are  the 
board  of  directors. 

Q.  Well,  you  hold  meetings  here  more  or  less  in  regard  to  the 
general  transactions  of  }rour  business,  as  I understand  it?  A.  I 
think  so,  yes. 

Q.  Can  you  tell  how  many  trust  certificate  holders  there  are 
in  your  company?  A.  I could  not;  how  many  stockholders. 

Q.  Yes?  A.  You  will  have  to  ask  Mr.  Searles;  I should  say  it 
was  about  8,000  stockholders;  but  that  is  a mere  matter  of  report. 

Q.  What  was  the  aggregate  of  the  capital  stock  of  these  dif- 
ferent companies  that  were  taken  into  your  £5ugar  Refining  Com- 
pany originally?  A.  I can’t  tell  you. 


No.  40.] 


95 


Q.  You  were  a stockholder  and  director?  A.  No;  I was  a 
stockholder  in  one  or  two  of  them. 

Q.  I understood  you  to  say  you  were  a stockholder  in  five  of 
them?  A.  No,  sir;  those  were  the  companies  that  went  in  at  the 
time  of  the  organization;  I think  at  that  time  I was  a stockholder 
in  Havemeyer  & Elder's  and  Donner  & De  Castro’s;  that  is  my 
impression ; I don’t  thiuk  I was  a stockholder  in  any  of  the  others. 

Q.  Can  you  not  give  the  aggregate  amount  of  capital  stock  of 
those  different  companies  that  went  into  the  organization  origi- 
nally? A.  Not  without  reference. 

Q.  Well,  substantially;  approximately?  A.  I think  Mr. 
Searles  could  give;  I refer  to  him  for  information. 

Q.  Is  this  one  Brooklyn  firm — one  firm  that  has  been  shut 
down  here  in  the  State  of  New  York?  A.  Sugar  refinery. 

Q.  Yes?  A.  Yes,  sir;  understand  there  has  been  no  less  sugar 
produced  in  the  State  of  New  York  than  there  was  before;  we  do 
the  same  thing  now  in — we  are  producing  more  in  our  refinery, 
and  we  can  do  it  at  less  cost  than  we  would  if  that  same  produc- 
tion was  scattered  over  four  or  five  different  refineries;  these  re- 
fineries are  kept  intact. 

Q.  Who  are  the  trustees  of  that  company?  A.  H.  O.  Have- 
meyer, John  E.  Searles,  Mr.  Dick,  Wm.  P.  Thomas,  John  E.  Par- 
sons, F.  O.  Matthiessen. 

Q.  Six?  A.  I think  so. 

Q.  What  are  the  terms  of  their  office?  A.  They  are  elected  by 
the  stockholders  for  different  periods;  some  two,  three  and  four 
years,  I think;  two  or  three  years. 

Q.  Has  any  of  the  capital  been  created  by  certificates  of  divi- 
dends? A.  No,  sir;  not  to  my  knowledge. 

By  Mr.  Lexow: 

Q.  In  addition  to  the  Mollenhauers  isn’t  there  a Yonkers  con- 
cern. did  you  mention  that  on  your  former  examination?  A. 
Yes;  that  is  the  National. 

Q.  Those  are  the  only  refiners  in  this  State  not  in  your  combi- 
nation? A.  I think  so. 


96' 


[Senate, 


Q.  Arc-  you  prepared  to  say  under  oath  that  there  is  no  agree- 
ment arrangement,  verbal  or  written,  between  these  concerns  and 
yourself,  as  to  the  maintenance  of  price  or  as  to  the  fixing  of 
price  of  sugar  ? A.  So  far  as  I know,  sir,  I am  willing  to  swear 
that  there  is  no  such  agreement;  I know  of  no  such  agreement. 

Q.  Who  of  >our  company  would  be  the  officer  entrusted  with 
the  making  of  such  an  understanding  or  arrangement?  A.  My 
brother  has  charge  of  the  mercantile  business;  he  would  be  the 
• me. 


By  Mr.  Mazet: 

Q.  In  regard  to  the  refinery  that  was  closed,  who  passes  upon 
that  question  as  to  the  advisability;  does  that  come  in  your  de- 
partment? A.  Yes. 

Q.  How  much  of  a saving  was  made  to  the  company  by  closing 
that  refinery?  A.  Oh,  I suppose;  I don’t  know  the  figures,  but 
quite  largely. 

Q.  What  is  the  average  weekly  pay  roll  of  the  refinery?  A.  I 
couldn’t  give  you  that;  I couldn’t  tell  you. 

Q.  Just  approximately,  if  you  can  give  it?  A.  Quite  large; 
you  mean  the  one  that  was  closed? 

Q.  Yes?  A.  Oh,  as  I say  whqn  you  spoke  of  the  other  concern, 
that  is  in  Brooklyn. 

Q.  Yes?  A.  (continuing)  I will  let  you  know  if  you  will  give — 

Q.  Can  you  ghe  us  any  approximate  figures  now?  A.  No;  but 
in  a general  way  those  men  were  employed  in  another  refinery  to 
do  the  same  work;  the  economies  of  doing  it  in  one  refinery  and 
production  on  a large  scale  were  sufficient. 

Q.  You  have  not  capacity  in  the  other  refineries?  A.  We  have 
capacity;  it  would  mean  that  we  would  have  to  run  uj)on  half 
capacity;  we  preferred  to  keep  the  other  practically;  we  work 
one  refinery  full  and  can  do  that  more  economically  than  work- 
ing the  half  time. 

By  Mr.  Warner: 

Q.  Do  all  the  members  live  in  the  city  of  New  York?  A.  I 
think  my  brother  lives  at  Greenwich,  and  I live  in  New  Jersey — 


No.  40.] 


97 


that  is  at  least  my  home;  I believe  Mr.  Dick  lives  in  Isiin  or  in 
Brooklyn;  Mr.  Matthiessen,  I think,  lives  in  Irvington. 

Q.  You  hold  just  one  meeting  in  New  Jersey?  A.  Well,  we 
sometimes  are  called  there. 

Q.  Well,  generally  to  elect  officers?  A.  An  annual  meeting. 

Q.  What  proportion  of  the  trust  certificates  are  held  by  the 
trustees  of  the  company?  A.  Oh,  I couldn’t  tell  you  that. 

Q.  More  than  half?  A.  I can’t  tell. 

Q.  Can’t  you  tell  whether  more  than — A.  No;  how  should  I 
know  other  people’s  business?  I couldn’t  tell  what  the  trustees 
in  their  private  affairs  are;  what  their  interests  are  in  the  com- 
pany; is  that  what  I understand  you? — you  want  me  to  tell  you, 
for  instance,  what  Mr.  Matthiessen  has  in  stock  of  the  company? 

Q.  What  proportion  of  the  trust  certificates  are  held  by  the 
trustees  of  the  company?  A.  Well,  there  is  no — you  mean  to 
say  a ruling,  or  anything  of  that  kind? 

Q.  No;  what  proportion  is  held?  A.  I could  not  tell  you. 

Q.  Held  by  the  trustees?  A.  I would  not  dare  ask  one  of 
them. 

By  Mr.  Lexow : 

Q.  Mr.  Warner  means  this:  Do  the  trustees  control  a majority 
of  the  certificates  of  the  American  Sugar  Refining  Company?  A. 
I don’t  know. 

Q.  You  don’t  know  whether  they  hold  the  balance  of  stock  and 
control  the  organization  at  its  annual  meeting?  A.  No,  sir,  I 
don’t  know  anything  about  it. 

Q.  You  do  not  know?  A.  I know  nothing  about  it. 

Q.  You,  in  connection  with  your  friends,  control  that  com- 
pany at  the  annual  meeting  of  stockholders;  is  that  so?  A.  I 
don’t  know. 

Q.  Don’t  you  vote  yourselves  in  as  directors?  A.  No. 

Q.  Who  does  it?  A.  The  stockholders. 

Q.  Well,  don’t  you  cast  your  ballot  as  a stockholder  to  vote  in 
meetings?  A.  A proxy  is  sent  out  requesting  the  stockholders 

7 


98  [Senate, 

to  send  their  proxies  to  certain  people,  and  the  proxies  are  re- 
ceived; that  is  how  we  vote;  that  is  all  I know  about  it. 

Mr.  Lexow:  That  is  all. 

The  committee  does  not  wish  to  be  unaccommodating  in  insist- 
ing that  its  subpoenaes  issued  be  obeyed.  We  will  insist  that 
Mr.  Searles  be  here  at  two  o’clock  this  afternoon  for  examination. 

We  will  now  take  a recess  until  two  o’clock,  and  the  witnesses 
subpoenaed  will  please  attend  again  at  that  time. 

Henry  O.  Havemeyer  being  duly  sworn,  testified  as  follows: 

Q.  Where  do  you  reside?  A.  Greenwich,  Conn. 

Q.  Are  you  President  of  the  American  Sugar  Refining  Com- 
pany? A.  I am  the  President  of  the  American  Sugar  Refining 
Company  of  New  Jersey,  incorporated  under  the  laws  of  the 
State  of  New  Jersey. 

Q.  The  American  Sugar  Refining  Company  of  New  Jersey — 
is  that  the  name  of  the  company?  A.  Yes,  sir. 

Q.  And  have  been  President  since  the  organization  of  the  com- 
pany? A.  Yes,  sir. 

Q.  Your  company  is  a consolidation  of  four  existing  compan- 
ies, or  rather  of  eight  existing  companies?  A.  It  is  not. 

Q.  What  is  it  then?  A.  It  is  a company  organized  under  the 
State  of  New  Jersey,  the  corporation  laws. 

Q.  And  the  assets  that  were  transferred  to  the  New  Jersey  cor- 
poration were  the  assets  of  the  eight  existing  corporations?  A. 
They  were  the  assets  that  were  bought  of  the  different  corpo- 
rations that  originally  formed  the  Sugar  Refineries  Company, 
known  as  the  Sugar  Trust;  there  were  fifteen  instead  of  eight. 

Q.  Firms  and  corporations?  A.  Those  that  had  been  firms 
were  formed  into  corporations  and  these  made  up  the  Sugar 
Trust;  the  assets,  the  real  and  personal  property,  were  bought  by 
the  American  Sugar  Refining  Company,  a corporation  organized 
under  the  laws  of  the  State  of  New  Jersey. 

Q.  Did  there  not  exist  prior  to  the  organization  of  the  New 
Jersey  Company  an  agreement  between  the  various  interests 
which  were  organized  into  that  company,  did  there  not  exist  an 


No.  40.] 


99 


agreement?  A.  There  existed  an  agreement  between  the  stock- 
holders of  the  various  companies  known  as  the  Sugar  Trust; 
there  was  no  agreement  between  those  stockholders  and  that 
company,  so-called,  and  the  American  Sugar  Refining  Company. 

Q.  There  was  an  agreement  between  the  owners  of  the  assets 
of  the  companies  that  were  purchased  by  the  American  Sugnr 
Refining  Company  to  undertake  this  organization  in  the  State  of 
New  Jersey,  was  there  not?  A.  There  was  some  sort  of  a re- 
organization committee  and  an  agreement  between  the  certificate 
holders,  I believe;  what  the  exact  legal  phase  of  it  was  I have 
forgotten. 

Q.  When  did  this  so-called  Sugar  Trust  come  into  existence? 
A.  In  October,  1887. 

Q.  And  operated  as  such  until  when?  A.  The  first  of  January, 
1891. 

Q.  At  the  time  of  the  organization  of  this  New  Jersey  com- 
pany? A.  Yes,  sir;  the  New  Jersey  Company  was  organized  in 
January,  1891. 

Q.  What  constituted  the  elements  of  the  so-called  trust, 
corporations  or  firms?  A.  Only  corporations,  the  stock  of  which 
was  held  by  the  so-called  Sugar  Trust. 

Q.  Firms  were  existing  prior  to  that  time  and  were  incorpo- 
rated at  the  time  of  the  organization  of  the  Sugar  Trust  and  the 
stock  of  the  various  corporations  were  placed  in  the  hands  of 
the  trustees;  is  that  not  true?  A.  Correct. 

Q.  That  was  the  principle  upon  which  it  was  organized?  A. 
That  was  the  actual  form. 

Q.  How  many  organizations  were  there  that  were  part  of  the 
so-called  original  Sugar  Trust?  A.  I believe  about  fifteen. 

Q.  What  was  the  capital  stock  of  those  fifteen  concerns?  A. 
I am  not  able  to  say. 

Q.  Have  you  any  data  that  will  enable  you  to  state?  A.  I 
think  it  may  be  furnished;  yes,  sir. 

Q.  Those  figures  are  obtainable?  A.  Yes,  sir. 

Q.  Are  they  in  the  custody  or  possession  of  the  American 
Sugar  Refining  Company?  A.  I think  they  are  embodied  in  the 
testimony  given  before  previous  legislative  committees. 


100 


[Senate. 


Q.  Is  that  the  only  place  where  you  know  they  are  obtainable 
now?  A.  I think  they  can  be  obtained  from  those  who  are  in- 
terested in  these  different  companies. 

Q.  Where  is  the  original  document  or  agreement  that  you  have 
mentioned?  A.  I doubt  its  existence  at  present. 

Q.  When  did  you  last  see  it?  A.  About  eight  years  ago. 

Q.  Have  you  seen  it  since?  A.  No,  sir. 

Q.  Where  was  it  then?  A.  In  the  custody  of  Counsel  John  E. 
Parsons. 

Q.  You  have  not  seen  it  since?  A.  No,  sir. 

Q.  What  did  the  capital  stock  of  those  various  corporations 
represent  at  the  time  the  so-called  Sugar  Trust,  as  such,  was 
organized?  A.  It  represented  the  assets,  both  real  and  personal, 
of  the  respective  companies. 

Q.  How  have  these  figures  been  fixed?  A.  They  have  been 
fixed  by  the  individual  preferences  of  those  who  formed  the  com- 
pany without  regard  to  actual  value. 

Q.  How  many  of  those  fifteen  companies  were  you  interested 
in  at  the  time  of  the  organization  of  the  Trust?  A.  Two. 

Q.  Those  who  compose  the  Board  of  Directors  of  the  American 
Sugar  Refining  Company — were  they  the  controlling  spirits  in 
the  fifteen  companies  that  were  in  the  Sugar  Trust  Combination? 
A.  I think  the  power  was  invested  by  the  deed;  that  would  ex- 
plain exactly  what  their  power  were;  I have  forgotten  what  their 
powers  actually  were. 

Q.  What  I mean  is  this:  Were  those  who  constituted  and 
were  directors  of  the  American  Sugar  Refining  Company  the 
controlling  spirits  in  the  original  fifteen  companies  that  com- 
posed the  Sugar  Trust?  A.  I think  it  may  be  so  assumed. 

Q.  Don’t  you  know  it  as  a fact?  A.  I know  that  when  you 
operate  under  a deed  that  it  ought  to  be  produced;  you  should 
not  tax  the  memory  of  a witness  on  such  matters;  I don’t  know 
it  as  a fact. 

Q.  Where  is  the  deed?  A.  I don’t  know  where  the  deed  is,  I 
told  you. 

Q.  Is  that  all  that  has  governed  for  years  what  is  called  the 


No.  40.] 


101 


Sugar  Trust,  a deed;  you  say  you  have  no  personal  recollection— 
I am  asking  not  about  the  contents  of  tbe  deed,  but  about  your 
personal  recollection;  have  you,  as  one  of  tbe  present  officers 
and  trustees  of  tbe  American  Sugar  Refining  Company,  any 
recollection  as  to  whether  tbe  present  officers  and  trustees  of 
tbe  American  Sugar  Refining  Company  were  tbe  controlling 
spirits  in  tbe  fifteen  companies  that  composed  tbe  Sugar  Trust, 
originally?  A.  Whether  tbe  Board  of  Directors  of  tbe  Ameri- 
can Sugar  Refining  Company  of  New  Jersey  were  tbe  same 
Board  of  Trustees  as  the  Sugar  Refineries  Company,  so-called? 

Q.  I am  asking  you  now  as  to  your  recollection,  not  as  to  tbe  con- 
tents of  tbe  deed?  A.  I should  say  that  six  of  tbe  present  di- 
rectors of  tbe  present  company  were  in  tbe  Sugar  Trust  deed, 
and  tbe  seventh  has  been  added  since,  Mr.  John  E.  Parsons. 

Q.  You  say  your  recollection  is  that  Mr.  Parsons  was  tbe  only 
addition  to  tbe  Board?  A.  They  have  been  diminished;  tbe  for- 
mer deed  bad  nine;  tbe  present  Board  has  seven,  six  of  which 
were  with  tbe  nine  and  they  with  Mr.  Parsons  constitute  tbe 
seven  in  tbe  Board  of  Directors  of  tbe  American  Sugar  Refining 
Company. 

Q.  You  were  active  in  the  creation  of  that  Sugar  Trust?  A. 
I was  not  particularly  active;  I tvas  one  of  tbe  parties  interested. 

Q.  Were  you  a member  of  tbe  Board  or  Committee  that  made 
tbe  appraisal  of  tbe  value  of  tbe  properties  that  entered  into 
that  Sugar  Trust  combination?  A.  No,  sir. 

Q.  You  were  not?  A.  No,  sir.  , 

Q.  Can  you  state  who  they  were?  A.  I don’t  know  of  any 
such  Board. 

Q.  Who  fixed  tbe  values  of  the  properties  that  entered  into 
that  combination?  A.  So  far  as  Havemeyer  & Elder  and  tbe 
De  Castro  & Donner  companies,  tbe  only  ones  with  which  I bad 
any  contract  whatever,  the  members  of  tbe  Board,  by  repre- 
senting tbe  stockholders  of  tbe  different  companies. 

Q.  And  did  you  accept  without  investigation  or  inquiry  tbe 
appraisals  fixed  by  the  other  thirteen  concerns  that  became  part 
of  that  Sugar  Trust?  A.  We  operated  under  a deed,  which  was 
presumably  satisfactory  to  everybody  that  went  into  it. 


102 


[Senate. 


Q.  What  I desire  to  elicit  from  you  is  just  howi  you  reached 
the  valuation  or  figures  then  entered  into  that  Sugar  Trust  com- 
bination? A.  By  agreement  between  the  stockholders  of  the 
different  companies. 

Q.  You  were  a party  to  that  agreement  representing  your  in- 
terest? A.  Yes,  sir. 

Q.  You  fixed  the  value  of  the  interests  pooled  by  you  and  your 
associates?  A.  Yes,  sir. 

Q.  Did  any  of  the  other  thirteen  concerns  fix  the  valuations 
of  their  properties  without  inquiry  or  investigation  to  ascertain 
whether  those  values  were  reasonable,  fair  and  proper  valua- 
tions? A.  They  did. 

Q.  Without  any  inquiry  or  investigation?  A.  Without  the 
slightest. 

Q.  Are  those  figures  contained  in  that  deed  to  which  you  have 
referred?  A.  I believe  so. 

Q.  And  that  is  the  only  document,  do  I understand  you,  that 
contains  any  reference  to  the  values  upon  which  the  various 
properties  were  taken  into  the  Trust?  A.  So  far  as  I know. 

Q.  Can  you  recollect  the  total  of  these  valuations?  A.  I be- 
lieve it  was  $50,000,000,  less  15  per  cent. 

Q.  What  did  the  15  per  cent,  stand  for?  A.  Something  to  re- 
main in  the  treasury  for  the  acquisition  of  other  plants. 

Q.  Do  I understand  you  to  say  that  15  per  cent,  of  the  total 
remained  in  the  treasury  as  a fund  for  acquiring  additional 
plants?  A.  For  additional  plants  and  the  necessary  improve- 
ments of  the  business. 

Q.  Can  you  give  the  date  of  that  transaction;  do  you  remem- 
ber? A.  I believe  it  was  in  October,  1887. 

Q.  Did  you  have  before  you  at  the  time,  or  was  there  in  exist- 
ence to  your  knowledge  any  schedule,  report  or  other  document 
showing  the  actual  amount  of  invested  capital  of  the  fifteen  or 
any  of  the  fifteen  companies  that  went  into  that  combination? 
A.  I never  saw  any. 

Q.  Did  the  $50,000,000  of  capital  represented  by  the  trust  cer- 
tificates represent  an  equivalent  amount  of  the  stock  of  those 


No.  40.] 


103 


fifteen  companies  to  which  you  have  referred?  A.  It  was  largely 
in  excess  of  the  par  value  of  the  stock,  but  not  of  its  actual  value. 

Q.  How  much  was  the  par  value  of  the  stock?  A.  I am  not 
able  to  say;  it  was  very  small  compared  to  the  aggregate  of  the 
certificates  issued  against  it. 

By  Mr.  Mazet: 

Q.  Was  that  an  arbitrary  sum,  or  how  did  you  reach  that  par- 
ticular sum?  A.  They  thought  it  was  the  value  of  the  property 
that  was  going  to  be  issued  against  it. 

By  Mr.  Lexow: 

Q.  Less  15  per  cent.?  A.  Yes,  sir. 

Q.  Did  you  fix  the  amount  by  reference  to  the  actual  value  of 
the  assets  or  by  any  quotations  of  the  stock  of  the  companies  con- 
cerned? A.  I think  the  assets  coupled  with  the  good  will  made 
up  the  aggregate. 

Q.  And  without  reference  to  the  market  quotations  of  the 
stocks  of  those  companies?  A.  Without  regard  to  whether 
there  was  any  market  quotations  for  any  of  them. 

Q.  Was  anything  beyond  the  share  certificates  of  those  fifteen 
companies  turned  over  to  the  Trust?  A.  The  entire  stock  of 
those  different  corporations  was  turned  over  to  the  Trust. 

Q.  So  all  that  the  Trust  had  was  the  share  certificates  of  those 
fifteen  companies,  and  the  trustees  issued  against  those  share 
certificates  $50,000,000  of  trust  certificates,  less  15  per  cent.? 
A.  Yes,  sir. 

Q.  Have  you  any  data  whereby  you  can  furnish  the  committee 
with  the  face  value  of  the  stocks  of  those  subsidiary  committees? 
A.  I have  not. 

Q.  Were  the  trust  certificates  increased  from  1887  until  1891? 
A.  No  sir. 

Q.  Remained  the  same?  A.  Yes,  sir. 

Q.  The  constituents — the  constituent  companies?  A.  There 
might  have  been  an  addition;  I cannot  recall. 


104 


[Senate, 


Q.  Did  any  of  those  subsidiary  companies  increase  their  capi- 
tal stock  during  the  continuance  of  the  trust?  A.  No,  sir. 

Q.  There  was  no  change  in  the  capital?  A.  No,  sir. 

Q.  Did  you  acquire  any  additional  properties?  A.  Very  likely. 

Q.  Do  you  remember  whether  you  did  or  not?  A.  I can  not 
recall. 

Q.  You  have  stated  that  you  organized  the  American  Sugar 
Refining  Company  of  New  Jersey  in  1891;  that  took  the  place  of 
the  Trust,  did  it  not?  A.  It  succeeded  to  the  Trust  property. 

Q.  By  a transfer  of  the  assets?  A.  By  a purchase. 

Q.  A purchase  from  the  subsidiary  companies  of  the  assets 
held  by  those  companies?  A.  I believe  that  was  the  form. 

Q.  You  dissolved  the  Trust  by  giving  back  to  the  shareholders 
another  lot  of  stock  certificates  which  were  given  in  proportion 
to  the  representation  of  the  subsidiary  companies  in  the  trus- 
tees’ hands?  A.  No,  sir;  I don’t  think  that  was  the  form  in 
which  it  was  done. 

Q.  How  was  it  done?  A.  I think  the  certificates  of  the  Sugar 
Trust  were  surrendered  to  a reorganization  committee  which 
incorporated  this  new  company  in  New  Jersey  and  then  bought 
out  the  assets,  bought  real  and  personal,  of  those  different  com- 
panies and  so  acquired  under  a legal  title  what  those  different 
companies  had  held  under  a legal  title  in  the  different  states  in 
which  they  were  incorporated. 

Q.  There  was  a receivership  at  the  time  for  the  North  River 
Refining  Company?  A.  I believe  there  was  a receivership  ap- 
pointed for  that  company. 

Q.  And  the  court  had  adjudicated  against  the  Trust  in  that 
suit?  A.  That  had  no  reference  to  the  formation  of  this  new 
company;  the  Court  of  Appeals  decided  the  legality  of  the  Trust; 
it  was  under  that  decision  that  we  reorganized. 

Q.  Was  there  any  change  except  in  form?  A.  It  depends  up- 
on what  you  call  legality,  as  against  illegality;  the  Court  of  Ap- 
peals held  that  we  were  illegal  and  we  became  legal. 

Q.  By  the  transfer  of  assets  to  this  New  Jersey  corporation? 
A.  After  a purchase  at  actual  values. 


No.  40.] 


105 


Senator  Lexow:  I assume  that. 

Q.  You  organized  with  a capital  stock  of  $75,000,000?  A.  No, 
sir;  $50,000,000  was  the  amount. 

Q.  Originally?  A.  In  1891;  subsequently  increased  to 
$75,000,000.  1 

Q.  Did  you  receive  at  the  time  of  the  organization  any  assets 
other  than  those  theretofore  controlled  by  the  so-called  Sugar 
Trust?  A.  The  corporations  of  those  different  companies  that 
went  into  the  Trust  are  not  controlled  by  the  Trust;  I have  al- 
ready said  that  the  deed  gave  power  to  the  trustees  of  the  Sugar 
Trust  to  take  over  the  property,  together  with  the  properties  ac- 
quired after  the  formation  of  the  Trust  and  before  1891,  that  con- 
stituted all  of  the  property  that  went  into  the  New  Jersey  cor- 
poration. 

Q.  So  that  there  may  be  no  mistake:  then  the  New  Jersey  cor- 
poration acquired  by  purchase  all  the  property  held  by  the  then 
existing  or  theretofore  existing  Sugar  Trust  and  nothing  beyond 
that?  A.  Precisely. 

Q.  It  issued  $50,000,000  of  stock?  A.  About  that. 

Q.  Was  an  appraisement  made  at  the  time  of  the  issuance  of 
the  stock,  or  before  its  issuance,  of  the  value  of  the  properties 
received?  A.  I cannot  answer  as  to  that;  I have  no  recollection. 

Q.  Were  you  one  of  the  directors  of  the  Refining  Company, 
originally;  I mean  the  New  Jersey  Company.  A.  Yes,  sir. 

Q.  One  of  the  incorporators?  A.  Yes,  sir. 

Q.  You  were  active  in  securing  the  transfer?  A.  Yes,  sir. 

Q.  Do  you  remember  whether  in  the  making  of  that  transfer 
and  the  issuance  of  the  stock  of  that  company,  any  schedule  or 
appraisment  of  the  value  of  the  properties  of  the  so-called  Sugar 
Trust  was  made  prior  to  the  issuance  of  the  stock?  A.  I cannot 
say  exactly  the  form  it  took.  i 

Q.  What  is  your  best  recollection?  A.  My  recollection  of  that 
is  that  the  board  of  directors  considered  the  property  that  was  to 
be  transferred  fully  equal  in  value  to  the  stock  to  be  issued 
against  it  or  for  it  without  additional  appraisement. 

Q.  Do  you  know  how  they  reached  that  conclusion?  A.  They 


106 


[Senate, 


had  been  familiar  with  the  concerns  for  four  or  five  years;  I 
think  through  the  several  investigating  committees  that  had  ex- 
amined into  the  value  of  this  property  and  had  satisfied  them- 
selves that  it  was  fully  if  not  more  valuable  than  the  price  they 
paid. 

Q.  The  capital  stock  remained  at  $50,000,000  until  when?  A. 
I believe  that  it  was  in  1893  that  it  was  increased. 

Q.  About  how  much?  A.  $25,000,000. 

Q.  You  heard  the  testimony  of  your  brother  this  morning  with 
reference  to  the  purchase  of  the  four  Philadelphia  concerns;  was 
that  $25,000,000  of  stock  issued  for  that  purpose?  A.  Consid 
erable  of  it  was;  the  greater  part  of  it. 

Q.  Was  all  that  was  issued  issued  for  that  purpose?  A.  Yes, 
sir. 

Q.  Then  you  have  some  two  or  three  millions  of  stock  still  in 
the  treasury?  A.  The  issued  stock-capital  I don’t  think  was 
$75,000,000. 

Q.  It  is  $73,936,000 — is  that  right?  A.  Undoubtedly. 

Q.  Then  all  this  additional  stock  went  into  the  transfer  of  that 
property?  A.  I think  so. 

Q.  When  you  issued  stock  for  that  purpose  and  fixed  the  value 
of  the  Philadelphia  concerns  did  you  have  an  appraisement  or 
investigation  made  for  the  value  of  those  Philadelphia  proper- 
ties? A.  I believe  there  was  something  of  the  kind. 

Q.  Was  a committee  appointed?  A.  I am  not  sure  about 
that. 

Q.  Or  were  you  the  committee?  A.  I was  not  the  committee. 

Q.  Did  you  transact  the  business  and  make  the  deal?  A.  No, 
sir. 

Q.  At  what  figure  was  the  stock  put  into  that  transfer  or  pur- 
chase? A.  What  stock? 

Q.  The  $73,936,000  of  stock?  A.  It  was  put  in  at  par. 

Q.  Was  it  not  put  in  at  fifty  cents  on  a dollar  according  to  the 
valuation  of  the  property  as  then  fixed  by  you  and  your  asso- 
ciates? A.  It  was  not;  it  was  put  in  at  par. 

Q.  Do  you  mean  that  you  and  your  associates  estimated  the 


No.  40.] 


107 


value  of  that  Pennsylvania  property  at  §23,936,000?  A.  Yes, 
sir. 

Q.  Were  those  incorporated  concerns?  A.  Yes,  sir. 

Q.  What  was  the  stock  capital  of  those  concerns?  A.  I have 
forgotten. 

Q.  Has  that  been  the  subject  matter  of  inquiry  by  any  other 
investigating  committee?  A.  Yes,  sir. 

Q.  Have  you  given  any  figures  as  to  the  stock  of  those  four 
conpanies?  A.  I believe  so. 

Q.  To  what  committee?  A.  Perhaps  I am  wrong;  in  the 
Pennsylvania  courts  where  the  legality  of  this  thing  was  at- 
tacked by  the  state  all  that  data  was  furnished,  I think;  we  are 
willing  to  furnish  the  committee  with  anything  of  that  kind  it 
desires  to  have. 

Q.  If  you  will  then  furnish  the  committee,  to-morrow,  with  the 
data  referring  to  the  amount  of  stock  originally  issued  by  the 
fifteen  constituent  companies  of  the  Sugar  Trust  and  the  amount 
of  shares  in  capital  of  the  four  companies  absorbed  by  the  New 
Jersey  Company  in  1893,  we  would  like  to  have  the  testimony 
to-morrow  without  subpoena?  A.  I shall  furnish  the  testimony 
but  you  must  give  me  more  latitude  than  to-morrow;  those  peo- 
ple are  not  accessible. 

Q.  Is  it  not  in  the  archives  of  your  company?  A.  I think  not. 

Q.  What  those  original  companies  represented?  A.  It  may 

be. 

Q.  We  would  like  to  have  you  furnish  that  information  to- 
morrow? A.  If  such  information  is  in  our  possession  we  will 
furnish  it;  it  is  in  the  custody  of  Mr.  Searles;  we  will  furnish  it 
to  the  committee. 

Q.  Have  you  any  recollection  of  the  shares,  par  value,  of  the 
four  companies  that  were  absorbed  by  you  in  the  year  1S93?  A. 
No,  sir;  it  had  no  fixed  ratio  to  any  actual  value;  one  company 
might  have  a million  and  a half  and  ten  times  the  assets  of 
another  company  with  two  millions;  so  that  I have  not  that 
amount  in  my  mind. 

Q.  Can  you  state  what  the  share  value  or  the  par  value  of  the 


108 


[Senate. 


shares  of  the  fifteen  companies  and  the  four  companies  that  have 
been  mentioned — the  original  par  value  of  their  stock,  approxi- 
mately? A.  I cannot;  that  I propose  to  furnish. 

Q.  It  was  very  much  smaller  than  the  capitalization  of  the 
New  Jersey  Sugar  Refining  Company?  A.  Very  much. 

Q.  You  control  the  sugar  market,  do  you  not?  A.  We  do  not. 

Q.  You  fix  the  price  then,  don't  you?  A.  We  do  not. 

Q.  Is  it  not  true  that  the  American  Sugar  Refining  Company 
has,  since  1893,  fixed  the  price  of  refined  sugars  for  the  United 
States?  A.  It  is  not  the  fact. 

Q.  Have  you  any  arrangement  with  the  Mollenhauer  concern 
in  this  State?  A.  None  whatever. 

Q.  Or  with  the  National  Company?  A.  None  whatever. 

Q.  Nor  with  the  St.  Louis?  A.  None  whatever. 

Q.  You  testified  before  the  United  States  Senate  Committee  in 
1894?  A.  Yes,  sir;  I rely  upon  you  for  the  date. 

Q.  It  was  in  June,  1894?  A.  (No  answer). 

Q.  Did  you  organize  the  American  Sugar  Refining  Company 
for  the  purpose  of  controlling  the  product  and  fixing  the  price  of 
refined  sugar  in  the  United  States?  A.  We  did  not. 

Q.  Nor  was  that  one  of  the  objects  of  your  organization?  A. 
It  had  nothing  to  do  with  it. 

Q.  Are  you  able  to  control  the  product  in  the  United  States? 
A.  We  are  not. 

Q.  Are  you  able  to  fix  the  price  for  the  product  in  the  United 
States?  A.  We  are  not. 

Q.  I now  read  from  your  testimony  given  before  the  United 
States  Senate  Committee  in  answer  to  questions  of  Senator  Al- 
len, “The  American  Sugar  Refining  Company  is  able  to  control 
the  price  of  sugar  sold  in  the  United  States,  Mr.  Havemeyer,  is 
it  not?  A.  No,  sir;  up  to  the  importing  point  it  is.” 

Q.  Were  you  correct  when  you  made  that  answer?  A.  I think 
we  were  at  that  time. 

Q.  You  were  at  that  time?  A.  Yes,  sir. 

Q.  What  change  has  arisen  between  the  conditions  of  manu- 
facture in  1894  and  the  conditions  in  1897  which  has  altered  your 


No.  40.] 


109 


testimony  given  at  that  time?  A.  There  has  been  an  increased 
competitive  capacity  due  to  the  building  of  new  refineries. 

Q.  How  many  new  refineries  have  been  built?  A.  I think  the 
Mollenhauer  and  the  McCahan;  the  National  was  built  since  then. 

Q.  You  state  that  the  Mollenhauer,  the  McCahan  and  the  Na- 
tional; what  is  the  total  product  of  those  three  competitive  con- 
cerns? A.  That  I don’t  know. 

Q.  Have  you  any  knowledge  on  that  subject?  A.  None. 

Q.  Do  they  compete  with  you  in  the  markets  on  the  question 
of  price?  A.  They  do. 

Q.  Is  their  price  exactly  the  same  as  the  price  you  charge  for 
the  sugars?  A.  It  is  not. 

Q.  How  does  it  differ?  A.  It  is  generally  a little  lower. 

Q.  And  is  it  so  now?  A.  Yes,  sir. 

Q.  You  keep  yourself  informed  with  reference  to  the  product 
of  competing  concerns,  do  you  not?  A.  No,  sir;  I do  not. 

Q.  Who  in  your  business  does?  A.  I don’t  think  that  is  the 
function  of  anybody  in  our  business. 

Q.  You  keep  no  statistics  officially  with  reference  to  the  prod- 
uct of  competing  concerns?  A.  No,  sir;  we  do  not 

Q.  Either  by  the  day,  the  week,  the  month  or  the  year?  A. 
We  do  not. 

Q.  You  state  that  the  New  Jersey  Sugar  Refining  Company 
was  not  organized  for  the  purpose  of  controlling  the  price,  prod- 
uct or  markets;  is  that  your  positive  recollection?  A.  Certainly 
it  is. 

Q.  And  that  is  as  true  to-day  as  it  was  in  1891  when  you  incor- 
porated the  American  Sugar  Refining  Company?  A.  It  has 
been  always  so. 

Q.  There  has  been  no  change  in  the  situation  ihat  would 
change  that  object?  A.  You  ask  if  it  was  the  object  for  which 
the  company  was  formed;  that  object  has  not  changed. 

Q.  It  never  entered  into  the  organization  of  the  company 
or  the  conduct  of  its  business?  A.  Not  that  I am  aware  of. 

Q.  I call  your  attention  to  the  testimony  that  you  gave  before 
The  United  States  Senate  Committee  in  answer  to  Senator  Allen: 


110  [Senate,, 

“ Q.  When  you  sell  in  this  country  you  control  the  price?  A. 
“ Yes,  sir. 

“ Q.  And  it  was  organized,  as  I understand  it,  with  a view  of 
“ controlling  the  price  and  output  to  the  people  of  this  country? 
“A.  That  was  one  of  the  objects  of  consolidation. 

“ Q.  And  you  have  succeeded  in  doing  it?  A.  Yes,  sir. 

“ Q.  That  was  the  principal  object  in  organizing  the  American 
“ Sugar  Refining  Company?  A.  It  may  be  said  that  that  was  the 
“ principal  object.” 

Q.  Mr.  Havemeyer:  To  control  the  price?  A.  Mr.  Lexow:  Yes, 
sir, 

“ Q.  And  making  money  incident  to  that  control?  A.  Yes, 

Fir.” 

Mr.  Havemeyer:  Did  I say  “control  of  price”  or  “control  of 
output?” 

Mr.  Lexow:  “Control  of  the  price  and  the  output.” 

Mr.  Havemeyer:  I don’t  think  that  is  right. 

Q.  Do  you  wish  to  change  the  testimony  that  you  gave  before 
the  Senate  Investigating  Committee?  A.  I would  have  to  read 
it  myself. 

(Witness  reads  testimony  given  before  Senate  Committee.) 

A.  It  certainly  does  appear  that  at  that  time  that  was  my  un- 
derstanding of  one  of  the  objects  of  the  formation  of  the  Ameri- 
can Sugar  Refining  Company. 

Q.  You  say  there  that  it  was  the  principal  object;  do  you  mean 
to  say  now  that  your  recollection  of  the  object  of  the  organization 
of  the  American  Sugar  Refining  Company  in  1891 — do  you  mean 
to  say  now  that  your  recollection  is  better  as  to  the  main  and 
principal  object  of  that  organization  than  it  was  in  1894  when  you 
gave  this  testimony?  A.  I would  answer  by  saying  that  when  I 
gave  that  testimony  that  was  in  my  mind;  and  I answer  now 
what  is  in  my  mind;  that  is  not  in  my  mind  now. 

Q.  Then  this  testimony  was  true  that  you  gave  before  that  com- 
mittee? A.  That  is  the  way  that  I -felt  at  that  time,  undoubt- 
edly. 

Q.  Therefore  we  start  out  with  the  proposition  that  the  main 


No.  40.] 


Ill 


object  of  the  organization  of  tbe  company  was  to  control  the  pro- 
duct and  to  control  the  price  of  refined  sugar  in  the  United 
States?  A.  No,  sir;  I think  that  is  too  broad;  the  intention  was 
to  control  the  output  of  their  product  and  the  price  of  their  pro- 
duct. 

Q.  That  would  control,  under  the  circumstances,  as  you  control 
the  company?  A.  Undoubtedly. 

Q.  Therefore  the  organization  of  a combination  of  interests,  all 
of  which  you  controlled  at  the  time  of  the  organization,  could  not 
have  been  for  the  purpose  of  controlling  their  output  or  their 
price?  A.  How  could  I control  the  output  or  the  price  of  any 
other  refinery?  It  goes  without  saying  that  a man  who  produces 
SO  per  cent,  of  an  article  can  control  the  price  by  not  producing; 
the  price  must  advance  if  he  does  not  produce;  and  it  must  de- 
cline if  he  does  produce,  if  he  produces  more  than  the  market 
will  take;  I do  not  see  any  significance  in  contrasting  the  evi- 
dence. 

Q.  You  were  asked  by  me  as  to  whether  or  not  one  of  the  ob- 
jects of  the  organization  of  the  New  Jersey  Company  was  to  con- 
trol the  price  and  the  product.  You  said  in  answer  to  my  question 
that  it  was  neither;  that  you  had  no  intention  of  controlling  the 
price  nor  the  product.  In  the  United  States  testimony  you  state 
that  that  was  the  main  object  of  consolidation;  that  is  to  say,  to 
control  the  price  and  the  product  and  the  refined  sugar  of  the 
United  States?  A.  I am  willing  to  admit  either  phase;  as  far  as 
the  object  is  concerned  it  goes  without  saying  that  a corporation 
that  controls  SO  per  cent,  of  the  product  does  control  the  market 
price  up  to  the  importing  point,  if  he  chooses  to  exercise  that 
power,  for  it  goes  without  saying  that  that  same  power  can  be 
exercised  to  diminish  the  price;  when  you  ask  whether  it  was  the 
idea  in  mind  on  the  formation  of  the  company,  I would  say  that 
I do  not  think  it  was;  that  testimony  wants  to  be  read  in  connec- 
tion with  what  went  before  it  and  with  the  objects  of  that  inves- 
tigation. 

Q.  Then,  according  to  your  present  version  of  it,  in  any  event, 
whether  it  was  your  object  or  not,  that  object  was  reached  by 


112 


[Senate, 


reason  of  jour  controlling  80  per  cent,  of  the  product;  you  do  in 
fact  control  the  product  and  price  in  the  United  States?  A.  We 
undoubtedly  do. 

Q.  You  do  it  by  reason  of  the  consolidation  of  the  interests 
which  can  produce  80  per  cent,  of  the  refined  sugar  of  the  United 
Staes?  A.  I do  not  know  what  the  consolidation  of  interests  has 
done;  we  do  through  the  fact  that  we  refine  so  much  sugar. 

Q.  You  have  brought  under  one  head  and  under  one  direction, 
through  your  company,  the  agencies  that  produce  80  per  cent, 
of  the  refined  sugar?  A.  We  might  do  as  we  did  at  one  time, 
control  95  per  cent,  of  the  sugar;  and  the  Supreme  Court  has  de- 
cided that  it  is  perfectly  legal  to  do  it. 

Q.  I understand  you  to  say  that  you  produce  80  per  cent,  of  the 
refined  sugar?  A.  From  75  to  80  per  cent. 

Q.  When  you  entered  upon  the  Sugar  Trust  arrangement  in 
1887  you  had  numerous  competitors  in  the  market,  did  you  not? 
A.  In  amount  greater,  so  far  as  output,  than  to-day;  in  numbers 
fewer. 

Q.  That  is  to  say  that  each  of  those  fifteen  companies  was  un- 
deniably competing  in  the  market  for  the  sugar  trade?  A.  Do 
you  mean  when  we  formed  the  Trust? 

Q.  Before?  A.  Yes,  sir. 

Q.  And  the  formation  of  that  Trust  removed  that  competition? 
A.  To  a very  great  extent. 

Q.  To  the  extent  of  those  fifteen  companies?  A.  Not  absolute- 
ly; the  companies  were  all  controlled  by  separate  members  and 
they  had  their  own  views  of  matters;  but  practically  yes. 

Q.  Didn’t  the  price  of  sugar  decline  materially  prior  to  1887 — 
prior  to  the  time  of  the  formation  of  this  so-called  Trust?  A.  A 
year  or  two  previous  it  was  slightly  lower;  for  a period  of  ten 
years  it  was  slightly  higher. 

Q.  After  the  formation  of  the  Sugar  Trust  the  price  of  I’efined 
sugars  was  increased?  A.  Slightly  advanced. 

Q.  As  a matter  of  fact  the  price  of  refined  sugar — I am  speak- 
ing with  reference  to  your  particular  interests — has  increased 
from  the  time  of  the  organization  of  the  Trust  down  through  the 


No.  40.] 


113 


organization  of  the  American  Sugar  Refining  Company,  has  it 
not?  A.  Oh,  no;  it  has  been  up  and  down. 

Q.  I am  not  speaking  now  of  the  price  of  sugar  itself;  I am 
speaking  of  the  difference  between  the  price  of  raw  material  and 
the  refined  sugar,  which  is  the  margin  of  profit  that  you  have;  is 
it  not  true  that  the  price,  although  sugar  has  declined,  has  either 
remained  stable  or  has  increased  during  that  period  of  time?  A. 
I should  answer  that  question  by  saying  that  the  margin  upon 
raw  and  refined  sugar  since  the  formation  of  the  Trust  has  been 
considerably  lower  than  it  was  for  a corresponding  period  before; 
I cannot  go  into  details  of  three-quarters  of  a cent;  to-day  a cent 
and  a quarter;  last  summer  it  went  up;  but  the  average  price  to 
the  consumer,  that  is  to  say,  the  margin  between  the  raw  ma- 
terial, out  of  which  the  manufacturing  expenses  are  to  be  paid 
and  a profit  paid  to  the  stockholders,  has  been  considerably  lower 
than  it  was  for  a considerable  period  before  the  formation  of  the 
Trust,  irrespective  of  all  statements  to  the  contrary. 

Q.  Have  you  got  figures,  or  do  you  keep  figures,  that  show  the 
price  of  raw  material  during  the  years  from  1887  down  to  the 
present  time  contrasted  with  the  prices  of  the  refined  product  as 
put  upon  the  market  by  you?  A.  Yes,  sir. 

Q.  Will  you  furnish  those  figures  to  the  committee?  A.  Yes, 
sir. 

Q.  To-morrow  morning?  A.  I presume  to-morrow  morning; 
I do  not  want  to  come  down  unless  I am  urgently  requested. 

Q.  You  have  those  figures,  of  course?  A.  They  have  been 
made  up  for  Washington. 

Q.  How  many  of  those  constituent  companies  were  closed  up 
after  they  became  part  of  the  American  Sugar  Refining  Com- 
pany of  New  Jersey?  A.  I guess  half  a dozen. 

Q.  Located  w7here?  A.  I think  there  were  two  in  Boston;  the 
Donner  & De  Castro  Sugar  Refining  Company  was  not  in 
operation  at  the  time  of  the  formation  of  the  Trust;  that  was  an 
error  of  Mr.  Havemeyer  on  the  stand  this  morning;  it  was  closed 
and  remained  closed;  I think  there  was  one  in  New  Jersey. 

8 


114 


[Senate, 


Q.  When  you  bought  out  those  Philadelphia  concerns,  did  you 
buy  out  Mr.  Spreckels  in  Philadelphia  as  well?  A.  Yes,  sir. 

Q.  He  was  an  active  competitor  against  your  company  at  the 
time?  A.  Yes,  sir. 

Q.  And  most  active  at  that  time?  A.  No,  sir;  the  Franklin 
was  more  than  he. 

Q.  And  paid  him  in  stock  of  the  American  Sugar  Refining 
Company?  A.  Yes,  sir. 

Q.  At  what  valuation?  A.  Do  you  mean  what  he  obtained? 
I do  not  exactly  know. 

Q.  Do  you  compete  with  Mr.  Spreckels  now?  A.  Mr. 
Spreckels  has  no  refineries. 

Q.  Does  your  sugar  come  into  competition  with  his?  A.  He 
has  no  refineries. 

Q.  Has  he  not  one?  A San  Francisco  refinery?  A.  Yes,  sir. 

Q.  He  has  one  in  San  Francisco,  California?  A.  Yes,  sir. 

Q.  Do  you  ship  sugar  west  of  the  Mississippi  in  competition 
with  him?  A.  Yes,  we  ship  sugar  to  the  Missouri  river. 

Q.  When  did  you  stop  shipping  west  of  the  Missouri?  A.  We 
never  shipped  a pound  there  in  our  lifetime. 

Q.  Did  you  have  any  understanding  or  agreement  at  the  time 
you  bought  out  the  Philadelphia  concerns  that  you  would  not 
compete  -with  him  west  of  the  Missouri  river?  A.  Nothing  of 
the  kind. 

Q.  No  agreement?  A.  No,  sir;  we  cannot  compete  geographi- 
cally or  physically. 

Q.  It  depends  on  that  entirely?  A.  It  depends  on  the  Rocky 
mountains;  it  costs  us  a cent  and  a half  where  it  costs  him  one- 
half  that;  the  idea  of  competition  is  out  of  the  question. 

Q.  Have  you  any  sugar  refineries  in  Louisiana?  A.  Yes,  sir. 

Q.  Are  there  factories  in  Louisiana  competing  against  you? 
A.  About  250. 

Q.  Refineries?  A.  Yes,  sir. 

Q.  In  Louisiana?  A.  Yes;  located  on  estates. 

Q.  Small  affairs?  A.  That  is  a question  of  what  is  small  and 
what  is  big. 


Xo.  40.] 


115 


Q.  Do  you  know  how  much  they  produce?  A.  They  produce 
more  than  we  do. 

Q.  In  Louisiana?  A.  Yes,  sir. 

Q.  You  don’t  mean  to  say  that;  do  you  fix  the  price  there? 

A.  Only  for  our  own  product. 

Q.  Do  you  fix  it  for  the  rest  of  the  refineries?  A.  We  fix  it 
for  nobody  but  ourselves;  it  goes  without  saying  that  when  we 
fix  the  price  they  do  not  undersell  it  but  a very  little. 

Q.  The  situation  is  substantially  this:  When  you  fix  the  price, 
whether  you  desire  to  do  it  or  not,  you  actually  do  fix  the  price 
for  the  rest  of  the  country?  A.  There  is  no  doubt  about  it. 

Q.  And  whether  you  do  it  directly  or  indirectly  the  fixing  of 
the  price  by  you  means  the  fixing  of  the  price  of  every  other  com- 
pany, whether  competitive  or  not?  A.  That  is  undoubtedly  sub- 
stantially the  way  it  works. 

Q.  So  you  have  reached  that  condition  in  your  development 
where  you  exercise  a practical  monopoly  of  product  and  price? 
A.  Well,  fortunately,  the  term  "monopoly”  has  been  decided  by 
the  Supreme  Court,  and  under  that  decision  there  can  be  no  mo- 
nopoly in  the  sugar  business;  they  have  held  that  there  can  be 
no  monopoly  without  restriction;  I do  not  care  to  put  my  person- 
al judgment  against  that  of  the  court  on  this  particular  word; 
we  do  not  restrict  anybody  from  going  into  the  business;  so  that 
we  may  control  ninety-nine  per  cent,  and  yet  not  be  a monopoly. 

Q.  I understand  that  distinction ; you  mean  the  Supreme  Court 
distinction?  A.  Yes,  sir. 

Q.  You  say  now  you  have  adopted  it?  A.  Yes,  I have  adopted 

it. 

Q.  You  undertake  to  control  the  price  of  the  product  and  the 
output?  A.  We  don't;  we  undertake  to  control  what  we  want 
to  market;  what  we  want  to  sell;  we  have  our  exclusive  business, 
irrespective  of  what  anybody  else  does;  how  it  operates,  that  is 
for  them  to  determine ; we  look  out  for  our  own  interest. 

Q.  You  admit  that  it  operates  that  way  whether  you  under- 
take it  or  not?  A.  I candidly  confess  that  I think  it  does. 

Q.  You  know  the  Woolson  Company  of  Ohio?  A.  I do. 


116  [Senate, 

Q.  Were  you  active  in  securing  an  interest  in  the  capital  stock 
of  that  company?  A.  I was. 

Q.  When  I speak  of  your  being  active — you  were  the  gentle- 
man who  did  it?  A.  I did  it. 

Q.  Did  you  do  it  on  behalf  of  the  American  Sugar  Refining 
Company  of  New  Jersey?  A.  I did  not. 

Q.  You  did  it  in  what  capacity?  A.  Member  of  the  firm  of 
Ilavemeyer  & Elder. 

Q.  The  Woolson  Company  is  a coffee  concern?  A.  Yes,  sir. 

Q.  Do  you  know  Arbuckle  & Co.?  A.  I do. 

Q.  That  is  a concern  that  is  competing  against  you  in  the  sale 
of  sugar — of  refined  sugar?  A.  No,  sir. 

Q.  Do  you  mean  that  their  competition  is  so  trifling  that  you 
do  not  call  it  competition?  A.  It  is  not  in  competition  in  any 
way;  they  are  wholesale  grocers;  they  sell  our  product  as  factors, 
as  agents. 

Q.  Only  your  product?  A.  I don’t  know  what  other  business 
they  do;  I only  know  their  relation  to  our  company. 

Q.  Did  they  engage  in  the  refining  of  sugar?  A.  No,  sir. 

Q.  At  no  time?  A.  No,  sir;  at  no  time. 

Q.  Did  you  refuse  to  sell  them  sugar?  A.  Never. 

Q.  Do  they  buy  sugar  from  others  except  yourself,  that  you 
know  of?  A.  I understand  they  do,  largely. 

Q.  And  do?  A.  And  do. 

Q.  Is  that  sugar  in  competition  with  yours?  A.  In  competi- 
tion with  our  product  as  grocers. 

Q.  In  whatever  capacity,  the  effect  of  it  is  that  they  entered 
into  active  competition  with  you  and  sold  the  product  of  refiner- 
ies in  competition  with  your  sugar?  A.  As  everybody  else  does; 
in  no  other  respect. 

Q.  They  do  in  small  quantities?  A.  Their  business  with  other 
companies  is  very  much  in  excess  of  what  they  do  with  us. 

Q.  They  sell  considerable  sugar?  A.  Yes,  sir. 

Q.  They  have  sold  it  in  competition  with  your  product?  A. 
If  you  call  that  competition;  I was  presuming  that  you  meant 
the  competition  of  sugar  refining;  I do  not  consider  that  if  a 


No.  40.] 


117 


grocer  buys  somebody  else’s  sugar  that  you  regard  him  as  a com- 
petitor; we  have  over  3,500  competitors  on  that  line. 

Q.  Have  you  any  agreement  with  grocers  requiring  them  to 
buy  from  you  and  no  other  refining  concern?  A.  No,  sir 

Q.  Did  you  threaten  the  Arbuckles  that  unless  they  refrained 
from  further  competition  that  you  would  engage  in  the  coffee 
business?  A.  No,  sir. 

Q.  How  long  ago  was  it  that  you  discovered  that  the  Ar- 
buckles were  buying  refined  sugars  largely  from  your  competi- 
tors and  selling  it  in  competition  with  your  product?  A.  It  has 
been  their  practice  for  twenty  years. 

Q.  Didn’t  it  increase  lately?  A.  Not  at  all;  you  mean  their 
purchase  of  others? 

Q.  Yes,  sir.  A.  I presume  it  did. 

Q.  Don’t  you  know  as  a matter  of  fact  that  it  had  increased 
largely  prior  to  your  purchase  of  the  interest  in  the  Woolson 
stock?  A.  Yes,  sir;  I know  all  about  it. 

Q.  And  you  bought  the  Woolson  stock  on  that  account.  A. 

Not  at  all. 

Q.  Have  you  not  stated  that  that  was  your  object  in  purchas- 
ing that  stock?  A.  I have  not  so  stated;  it  is  not  a fact. 

Q.  How  long  after  you  ascertained  that  the  Arbuckles  were 
increasing  their  purchases  largely  from  competing  refineries  was 
it  that  you  purchased  this  interest  from  the  Woolson  Company? 
A.  The  purchase  of  the  Woolson  Company  had  nothing  to  do 
with  any  such  action;  I cannot  give  dates. 

Q.  When  was  it  that  you  discovered  that  the  Arbuckles  were 
purchasing  very  largely  of  competing  companies?  A.  I think  it 
was  about  six  months  ago. 

Q.  When  did  you  buy  the  interest  in  the  Woolson  Company? 
A.  About  two  months  ago;  one  had  no  relation  to  the  other;  I 
can  tell  you  what  induced  the  Arbuckles  to  shift  the  bulk  of  their 
trade;  you  better  have  it  from  me  while  I am  here  and  not  take 
it  all  from  him;  you  will  please  excuse  the  suggestion;  in  consid- 
eration of  our  barrel  factory  taking  empty  barrels  from  John 
Arbuckle  for  twenty  cents  each  he  continued  his  business  with 


118 


[Senate, 


us;  a competing  refinery,  Mollenhauer,  offered  him  twenty-two 
cents  and  he  shifted  his  trade  from  us  to  them;  it  had  nothing 
whatever  to  do  in  any  shape  or  manner  with  the  purchase  of  the 
Woolson  plant. 

Q.  You  found  out  the  fact  of  his  shifting  about  sis  months 
ago?  A.  I think  it  was  that;  we  were  much  surprised  to  lose  his 
trade,  as  our  relations  have  been  close  for  twenty-five  years. 

Q.  His  trade  is  a large  and  valuable  trade?  A.  Undoubtedly; 
is  to-day. 

Q.  And  three  months  after  you  discovered  that  fact  you  bought 
an  interest  in  the  coffee  concern  in  the  State  of  Ohio;  was  that 
simply  a coincidence?  A.  That  is  all;  it  had  nothing  to  do 
with  it. 

Q.  Did  you  engage  in  any  other  commercial  enterprise  of  a 
mercantile  character  excepting  the  sugar  business?  ■ A.  No; 
never  had  any  such  desirable  business  presented  to  us. 

Q.  Had  the  profits  in  the  coffee  business  increased  so  largely 
prior  to  this  purchase  of  yours  that  it  presented  an  extremely  de- 
sirable field  of  operation?  A.  Yes,  sir. 

Q.  Just  before?  A.  It  was  brought  to  my  attention  and  I dis- 
covered that  it  had  been  for  a long  time. 

Q.  And  is  now?  A.  No,  sir;  it  is  not  now. 

Q.  Then  why  did  you  organize  the  American  Coffee  Company 
to-day  in  the  State  of  New  Jersey?  A.  Because  under  the  lower- 
ing of  prices  we  have  so  increased  the  demand  that  we  must  put 
up  another  plant  to  supply  it,  which  is  under  construction  at  this 
present  moment. 

Q.  But  if  your  sole  inducement  in  buying  that  business  arose 
from  the  fact  that  the  coffee  field  presented  such  a large  profit, 
and  you  have  since  ascertained  that  there  is  no  money  in  the 
business,  how  did  you  come  to  organize  a large  coffee  concern  in 
the  State  of  New  Jersey  to-day?  A.  I did  not  say  there  was  no 
money  in  it;  if  it  reduces  the  price  there  will  be  a very  large 
amount  of  money  in  it. 

Q.  Notwithstanding  the  fact  that  the  profits  are  not  as  large 
now  as  they  were  when  you  bought  the  Woolson  stock?  A. 


No.  40.] 


119 


They  are  not  over  one-third  as  large  and  yet  it  yields  a magnifi- 
cent income  and  the  innovation  has  been  of  incalculable  advan- 
tage to  the  consumer,  over  two  cents  per  pound;  a monster 
monopoly  in  fact  has  been  put  upon  legitimate  business  prin- 
ciples to  serve  the  consumer  at  the  ver3r  slightest  amount  of 
profit  consistent  with  fair  returns  on  the  capital  invested  and 
the  brains  required  to  run  it. 

Q.  Do  you  apply  that  same  principle  to  the  American  Sugar 
Kefining  Company?  A.  That  is  the  basis  of  the  whole  success. 

Q.  Do  you  think  that  is  consistent  with  a situation  which 
discloses  during  the  last  four  years  the  earning  of  a profit  of 
12  per  cent,  upon  common  stock  largely  beyond  the  face 
value  of  the  stock  exchanged  for  it  and  the  putting  aside  of  a 
surplus  in  the  treasury  at  the  rate  of  .$2,000,000  a year  besides? 
A.  That  is  the  true  and  rightful  significance;  and  because  of 
that  great  imposition,  the  doing  of  a large  business  at  a very 
slight  profit,  the  consumer  gets  the  advantage,  because  the  busi- 
ness can  be  done  at  such  a slight  margin. 

Q.  Then  you  think  the  coffee  field  presents  a trade  more  allur- 
ing than  the  figures  suggested  in  my  last  question?  A.  I do  and 
propose  to  continue  the  coffee  business  on  the  same  basis  and  so 
enlarge  the  business  that  instead  of  a profit  of  three  and  four 
cents  a pound,  which  has  prevailed  for  years,  the  public  will 
have  the  benefit  of  a half  cent  per  pound  profit  and  the  invest- 
ment will  still  produce  a magnificent  return;  I make  that  open 
declaration  in  court. 

Q.  In  what  way  did  the  suggestion  come  to  you  to  buy  this 
interest  in  the  Woolson  Company?  A.  I wrote  Mr.  Arbuckle  a 
letter  when  I heard  that  he  was  going  into  the  sugar  business, 
telling  him  that  I heard  that  he  was  going  into  the  business  and 
asking  him  if  there  was  anything  in  our  relations  that  he  would 
like  to  have  changed,  and  he  wrote  a cordial  letter  in  which  he 
stated  that  he  was  going  into  the  sugar  business  for  mercantile 
reasons;  I then  had  Mr.  Silliken,  of  the  firm  of  Crosstein  Bros., 
brought  to  me  and  I examined  into  this  coffee  business  and 
found  that  the  price  of  coffee  had  declined  six  cents  during  the 


120 


[Senate, 


year  1S96,  but  that  Arbuckle  bad  kept  tbe  price  of  roasted  coffee 
so  that  it  only  declined  three  cents  per  pound;  I made  up  my 
mind  that  be  bad  taken  this  extra  three  cents  per  pound;  and  I 
said  “ there  is  a field  for  me,”  and  I immediately  despatched  the 
gentleman  and  bought  the  stock,  1710  out  of  1800  shares;  he 
then  sent  an  emissary  out  there  with  full  knowledge  of  what 
had  transpired  in  the  reduction  of  prices  and  bought  sixty-one 
shares;  the  court  has  the  matter  in  abeyance  now  as  to  what  the 
decision  shall  be;  we  have  now  increased  the  output  of  that 
plant  a thousand  bags  a day  to  three  thousand  bags  per  day; 
the  profit  when  we  went  into  the  business  was  three  cents  per 
pound  and  now  it  is  one  cent,  and  the  consumer  has  the  benefit 
and  we  have  trebled  the  business  and  the  profit  is  over  a cent  a 
pound;  is  on  that  basis  that  it  will  be  continued. 

Q.  Of  the  Woolson  Company  you  say  that  you  control  all  the 
shares  but  sixty,  except  what  the  directors  themselves  own; 
now,  the  illustration  that  you  have  made  with  reference  to  coffee 
and  Mr.  Arbuckle’s  relation  to  it,  applies  with  absolute  exacti- 
tude to  the  sugar  business  and  your  relation  to  it?  A.  That  is 
the  reverse. 

Q.  Is  it  not  true  that  the  price  of  sugar  has  declined  very 
largely  and  yet  the  price  of  refining  sugar  has  been  the  same  or 
almost  the  same?  A.  That  is  the  reverse;  the  raw  has  declined 
and  the  refined  is  probably  as  low  as  ever  known  in  the  history 
of  the  country. 

Q.  What  was  it  six  months  ago?  A.  It  was  a cent  a pound, 
if  not  more;  I cannot  give  the  exact  figures. 

Q.  What  was  a cent?  A.  The  margin  between  the  raw  and 
the  refined. 

Q.  What  was  it  three  years  ago?  A.  About  a cent  a pound. 

Q.  What  is  it  now?  A.  Three-quarters  of  a cent. 

Q.  So  that  it  has  not  been  materially  decreased  in  three  years 
spoken  of?  A.  Yes;  there  is  a greater  reduction  owing  to  the 
difference  in  the  tariff;  under  the  McKinley  tariff  we  had  one- 
half;  under  the  Democratic  tariff  we  had  one-eighth. 

Q.  Your  price  was  regulated  to  some  extent  by  the  import 
duty  upon  sugar?  A.  Yes,  sir,  on  refined  sugar. 


No.  40.] 


121 


Q.  If,  therefore,  there  has  been  a reduction  in  the  price  of  re- 
fined sugar,  it  has  been  due  to  the  removal  of  the  tariff?  A.  Re- 
duction in  the  duty. 

Q.  Then,  so  far  as  your  concern  is  concerned,  you  have  main- 
tained always  the  same  relative  figure  as  to  the  value  of  the  raw 
material  and  the  value  of  the  product  sold  by  you,  except  with 
reference  to  duty?  A.  That  is  exactly  it;  barring  the  ups  and 
downs  of  trade  it  does  not  vary  over  one-half  cent. 

Q.  Then,  notwithstanding  the  consolidation  of  those  numerous 
concerns,  into  one,  you  have  not,  to  the  consumer,  reduced  the 
margin  of  your  profit?  A.  I told  you  that  we  had. 

Q.  You  stated  that  it  was  to  maintain  the  percentage  of  1 
per  cent,  between  the  raw  and  the  refined  articles?  A.  Yes,  sir. 

Q.  And  the  only  advantage  to  the  consumer  has  resulted  in  a 
reduction  of  the  tariff?  A.  I said  that  the  price  had  been  some- 
what reduced  by  the  reduction  in  the  tariff. 

Q.  The  only  changes  are  changes  made  by  reduction  or  in- 
crease in  the  tariff?  A.  I said  that  the  price  had  been  somewhat 
reduced  by  the  reduction  in  the  tariff;  I said  that  the  price  to  the 
consumer  was  much  lower  than  before  the  formation  of  the 
Trust. 

Q.  Much  less  to  the  consumer  than  it  was  in  1887?  A.  Yes, 
sir. 

Q.  Since  the  formation  of  the  Trust  and  the  New  Jersey  Com- 
pany, the  margin  of  profit  to  you,  or  the  margin  between  the  val- 
ue of  the  raw  material  and  the  value  of  the  refined  article  sold, 
has  remained  about  the  same?  A.  About  the  same;  allowing 
for  variations. 

Q.  Subject  to  fluctuation  owing  to  changes  in  the  tariff?  A. 
And  the  ordinary  fluctuations  of  trade  and  the  supply  and  de- 
mand. 

Q.  There  have  been  large  improvements  in  the  handling  of  the 
stuff  in  the  way  of  improved  machinery  and  in  other  items  that 
have  led  to  more  economical  results  in  the  manufacture?  A. 
Yes,  sir. 

Q.  So  that  maintaining  that  margin  during  that  period  of  time 


122  [Senate, 

the  margin  of  profit  has  been  very  much  larger?  A.  Yes;  the 
net  result. 

Q.  Due  to  these  circumstances — the  concentration  of  much  of 
the  business  in  one  hand,  and  the  control  of  the  price  and  the  out- 
put? A.  Better  machinery. 

Q.  And  less  expense  in  the  handling;  is  that  true?  A.  That 
is  it  precisely,  if  you  qualify  in  reference  to  the  maintenance  of 
the  output  and  the  price. 

Q.  I was  simply  using  your  own  expression.  A.  I said  “ our 
own  prices  and  our  own  output”;  you  are  using  the  expression 
that  you  charged  me  with  some  years  ago. 

Q.  Was  it  simply  a coincidence,  Mr.  Havemeyer,  that  you 
learned  of  the  value  of  this  coffee  business  just  after  the  time 
that  Mr.  Arbuckle  withdrew  his  large  trade  from  you?  A.  No, 
sir,  it  had  nothing  to  do  with  that. 

Q.  Was  it  simply  a coincidence?  A.  I did  not  learn  it  at  that 
time;  he  withdrew  his  trade  some  time  last  summer,  as  I was 
informed;  I went  into  the  Spice  Company  about  the  first  week  in 
December. 

Q.  I understand  you  to  say  that  you  had  received  a letter  from 
Mr.  Arbuckle,  friendly  in  its  character,  about  the  same  time 
that  you  heard  of  the  enormous  profits  to  be  made  in  the  coffee 
business;  that  six  months  ago  Mr.  Arbuckle  had  withdrawn  his 
trade;  that  three  months  ago  you  purchased  the  stock  in  that 
Woolson  Company — is  it  simply  a coincidence  that  you  have 
gone  into  the  coffee  business  in  competition  with  the  Arbuckle 
firm  a short  time  after  that  concern  withdrew  its  trade,  or  largely 
withdrew  its  trade  from  you?  A.  Simply  a coincidence;  it  has 
simply  nothing  to  do  with  that  matter. 

Q.  WThere  does  your  company  pay  its  taxes?  A.  We  pay  taxes 
wherever  the  real  estate  is  located,  and  pay  taxes  on  personal 
property  wherever  the  personal  property  is  located;  in  New  York, 
Philadelphia,  New  Jersey,  Louisiana — wherever  it  may  be. 

Q.  It  does  not  pay  to  the  State  of  New  Jersey  the  tax  upon 
the  whole  of  its  capital  stock?  A.  No,  sir;  it  pays  wherever  the 
property  may  be. 


No.  40.] 


123 


Q.  As  a matter  of  fact,  although  incorporated  in  New  Jersey, 
your  company  is,  to  all  intents  and  purposes,  a New  York  cor- 
poration? A.  Far  from  it. 

Q.  Have  you  not  your  main  offices  in  New  York?  A.  No,  sir; 
the  main  office  is  in  Jersey  City. 

Q.  What  do  you  keep  in  Jersey  City  in  the  way  of  main  offices? 
A.  We  keep  books,  clerks,  accounts;  the  mercantile  department 
is  principally  in  New  York. 

Q.  How  does  the  office  in  Jersey  City  compare  with  the  New 
York  office?  A.  The  New  York  office  is  more  magnificent;  I 
would  much  rather  be  in  New  York. 

Q.  How  many  clerks  hare  you  in  New  Jersey  A.  I should 
say  twenty-five. 

Q.  In  the  city — in  Jersey  City?  A.  In  Jersey  City;  that  is 
over  the  river. 

Q.  Is  that  the  place  where  your  main  office  is  located  according 
to  your  certificate  of  incorporation?  A.  Yes,  sir. 

Q.  Is  any  business  of  the  corporation  outside  of  the  transfer 
books  transacted  there?  A.  Oh,  yes. 

Q.  Have  you  a refinery  there?  A.  Yes,  sir. 

Q.  And  your  office  is  kept  in  connection  with  that  refinery? 
A.  Yes,  sir. 

Q.  Is  it  on  the  premises?  A.  Yes,  sir. 

Q.  But  your  business  office  where  you  make  your  eschanges, 
where  you  transact  the  business  of  all  these  companies,  all  these 
original  companies  now  included  into  one,  is  in  New  York?  A. 
Where  we  buy  and  sell. 

Q.  It  is  in  the  city  of  New  York?  A.  Yes,  sir;  except  that  the 
Philadelphia  business  is  done  in  Philadelphia;  the  Louisiana 
business  is  done  in  that  State;  the  New  Jersey  business  in  that 
State. 

Q.  But  the  clearing  house  is  here,  is  it  not?  A.  We  have  no 
clearing  house;  the  business  is  not  on  that  order. 

Q.  But  you  clear  for  these  different  concerns  through  your 
New  York  office,  do  you  not?  A.  No,  sir;  only  the  business  in 
New  York  and  Jersey  City  is  run  here. 


124  [Senate, 

Q.  You  mean  the  books  of  the  .company  are  kept  in  Jersey? 
A.  No  answer. 

Q.  Do  the  reports  of  the  other  concerns  in  the  company  come 
to  your  New  York  office?  A.  Yes,  sir., 

Q.  They  are  received  here?  A.  They  are  received  here. 

Q.  Isn’t  a big  part  of  the  business  of  the  whole  corporation 
transacted  here  in  the  city  of  New  York;  don’t  the  reports  come 
here  to  the  city  of  New  York?  A.  I think  they  go  to  Jersey  City 
for  the  corporation  books,  but  they  go  through  the  New  York 
office;  I think  that  is  the  way,  but  I aru  not  familiar  with  that;  I 
don’t  pay  attention  to  that  part  of  the  business. 

Q.  Do  you  not  keep  transfer  stock  books  and  books  in  which 
you  keep  reports  from  the  refineries  located  in  other  places?  A. 
I think  the  principal  books  of  the  company  are  kept  there. 

Q.  Do  you  mean  books  of  account?  A.  No;  the  books  that 
show  the  sales  and  the  purchases;  the  journal  and  the  ledger  and 
presumably  the  cash  book  is  kept  here  because  our  deposits  are 
mostly  made  here. 

By  Mr.  Warner: 

Q.  In  January,  1891,  when  you  reorganized,  did  you  change  the 
name  of  the  company;  did  you  change  the  corporate  name?  A. 
We  organized  a company  with  a corporate  name;  the  Trust  was 
known  as  the  Sugar  Refineries  Company. 

Q.  Has  your  company  that  same  name?  A.  It  is  known  as  the 
American  Sugar  Refining  Company. 

Q.  Now,  these  fifteen  companies  you  speak  of  as  having  en- 
tered into  this  combination  or  consolidation  in  1887— did  all  the 
capital  stock  go  into  the  consolidation?  A.  There  was  no  con- 
solidation; there  was  no  combination;  there  was  no  capital  stock 
about  it. 

Q.  It  was  a transfer?  A.  There  was  a purchase  and  transfer 
of  the  property. 

Q.  There  was  a transfer  of  more  or  less  of  the  stock  to  the 
trustees  in  1887?  A.  No,  sir;  the  stock  remained  in  the  posses- 
sion of  the  trustees  of  the  different  companies  and  the  companies 
were  dissolved. 


No.  40.] 


125 


Q.  Now,  these  fifteen  companies  do  not  retain  their  corporate 
character?  A.  No,  sir;  they  are  out  of  existence. 

Q.  That  was  done  in  1891?  A.  Yes,  sir,  or  shortly  after  that 
they  consolidated. 

Q.  Can  you  give  the  capital  stock  of  the  two  companies  out  of 
the  fifteen  that  were  controlled  by  you  in  1887?  A.  I cannot. 

Q.  Can  you  give  an  approximate  idea?  A.  I cannot. 

Q.  In  1887?  A.  I cannot. 

Q.  Have  yoxi  any  idea  of  the  approximate  capital  of  those  fif- 
teen companies?  A.  They  all  varied;  no,  sir. 

Q.  You  were  one  of  the  promoters  of  the  undertaking?  A.  I 
promoted  my  own  business,  and  no  others. 

Q.  You  know  the  capitalization  of  the  different  companies? 
A.  No,  sir. 

Q.  Had  no  idea?  A.  It  had  no  significance. 

Q.  You  didn't  take  that  into  consideration?  A.  Not  the 
slightest;  it  had  no  bearing  on  it. 

Mr.  Mazet: 

Q.  How  was  the  purchase  of  those  companies  paid?  A.  In 
certificates  of  the  American  Sugar  Refining  Company. 

Q.  How  was  the  amount  fixed?  A.  By  agreement  between 
the  buyer  and  the  seller. 

Q.  Irrespective  of  the  actual  value  of  the  plant?  A.  They  all 
thought  they  obtained  full  value. 

Q.  You  had  a valuation?  A.  No,  sir;  I merely  sold  my  own; 
I never  thought  that  I got  adequate  compensation  for  mine. 

Q.  You  were  not  interested  in  what  others  got?  A.  No,  sir. 

Q.  As  a director  of  the  new  company  did  you  not  have  an 
interest  as  to  whether  they  were  getting  more  for  theirs  in 
proportion?  A.  I was  satisfied  with  the  amount  paid  for  the 
whole. 

Mr.  Warner: 

Q.  Did  those  Philadelphia  companies  give  up  their  corporate 
character  and  dissolve?  A.  No,  sir. 


126  [Senate, 

Q.  They  still  hold  it,  do  they?  A.  Yes,  sir;  a foreign  corpora- 
tion can  hold  the  stock  of  a Pennsylvania  corporation. 

Mr.  Lexow: 

Q.  AYhat  was  the  object  in  organizing  your  company  in  the 
State  of  Yew  Jersey  when  your  main  business  is  in  the  city  of 
Yew  York?  A.  The  advantages  of  organization  were  very  much 
greater  than  in  Yew  York;  there  was  less  tax  upon  the  fran- 
chise; and  there  was  less  scrutiny  and  less  investigating  into 
corporate  companies;  there  were  many  other  advantages  which 
the  counsel  stated;  right  after  the  decision  of  the  Court  of  Ap- 
peals the  legislature  of  the  State  of  Yew  York  broadened  its 
corporation  act;  I think  it  is  now  broader  than  in  New  Jersey. 

Q.  That  in  1892?  A.  Yes,  sir. 

Q.  Was  the  fact  that  the  Yew  Jersey  law  contained  a provi- 
sion which  permitted  the  purchasing  and  acquiring  of  the  stocks 
of  other  companies  and  holding  them  in  your  treasui’y  that  you 
organized  in  the  State  of  Yew  Jersey?  A.  I believe  it  had  a 
great  deal  to  do  with  it. 

Q.  You  hold  the  stocks  of  these  Pennsylvania  companies  in 
your  treasury  under  that  permission  of  the  Yew  Jersey  law? 
A.  There  is  a statute  authorizing  that. 

Q.  The  statute  is  the  same  in  Yew  York?  No  answer. 

Q.  When  you  mentioned  a suit  brought  in  the  State  of  Penn- 
sylvania did  you  mean  the  Knight  suit?  A.  Yes,  sir. 

Q.  Have  you  got  the  documents  in  that  case?  A.  I could  get 
them  for  you. 

Q.  Will  you  produce  them  here  to-morrow?  A.  Monday  of 
next  week,  you  mean. 

Q.  Yo,  sir;  I mean  to-morrow;  please  make  a memorandum  of 
that.  Mr.  Havemeyer:  Will  you  let  me  ask  the  committee 
whether  they  attach  any  importance  as  to  whether  the  Woolson 
stock  is  owned  by  a New  York  or  a Yew  Jersey  firm  or  by  a 
firm  of  individuals. 

Senator  Lexow:  Not  at  all 

Q.  The  simple  question  was  the  intent;  whether,  after  finding 
that  the  Arbuckles  were  competing  against  you  in  the  sugar 


No.  40.] 


127 


trade,  you  purchased  the  Woolson  stock  so  as  to  destroy  their 
competition  against  you  in  the  sugar  business?  A.  That  had 
nothing  whatever  to  do  with  it;  Mr.  Arbuckle  lias  never  been  a 
competitor  wTitk  us  in  the  sugar  business;  my  purpose  is,  and  the 
American  Sugar  Refining  Company  have  under  serious  consid- 
eration the  same  proposition,  to  engage  in  the  coffee  business 
whether  the  Arbuckles  are  in  it  or  not;  but  a three  or  four  cent 
margin  on  roasted  coffee  is  at  an  end. 

Q.  This  committee  would  want  to  see  the  utmost  competition 
both  in  coffee  and  sugar;  and  this  is  interesting  because  it  prom- 
ises to  hold  out  to  the  people  the  benefit  of  competition  in  coffee; 
but  if  that  competition  in  coffee  arises  from  the  fact  that  you 
went  into  it  for  the  purpose  of  destroying  competition  against 
you  in  the  sugar  business  is  an  important  one  for  us  as  legis- 
lators to  know?  A.  There  is  no  truth  in  any  such  statement; 
nor  is  there  any  foundation  for  it. 

The  Chairman:  With  the  exception  of  the  production  of 
those  documents  we  think  that  we  are  through  with  you,  unless 
Mr.  Searles’  testimony  should  develop  some  facts  about  which 
we  should  like  to  interrogate  you  again. 

John  Arbuckle,  being  duly  sworn,  testified  as  follows: 

By  Mr.  Lexow:  Mr.  Arbuckle,  please  step  aside  for  a moment. 
Mr.  Havemeyer  will  please  take  the  stand  again. 

Q.  You  stated  that  you  had  no  agreement  with  customers  ex- 
cluding other  sugars?  A.  We  have  none. 

Q.  Have  you  a system  of  rebates  which  accomplishes  the  same 
purpose?  A.  We  have  not. 

Q.  Don’t  you  give  rebates  to  customers  under  certain  condi- 
tions? A.  We  give  rebates  to  factors  under  certain  conditions — 
our  agents. 

Q.  Men  wrho  operate  between  you  and  the  customer,  the  con- 
sumer or  the  retailer,  which?  A.  Either — both. 

Q.  You  have  factors  with  whom  you  have  an  agreement  to  give 
a rebate  under  certain  contingencies?  A.  Yes,  sir. 

Q.  Have  you  a copy  of  that  agreement  wfith  you?  A.  I have. 

Q.  Please  hand  it  to  me  for  a moment. 


128 


[Senate, 


Q.  This  document  which  I now  hand  back  to  you  is  the  notice 
that  you  send  to  your  customers?  A.  Yes,  sir. 

Please  hand  it  to  the  stenographer.  (Marked  exhibit  A.) 

THE  AMERICAN  SUGAR  REFINING  COMPANY. 

H.  O.  HAYEMEYER,  PRESIDENT. 

JNO.  E.  SEALRES,  SECT.  AND  TREAS. 

NEW  YORK, ,189  . 

Dear  Sir. — We  enclose  herewith  invoice  of  even  date,  from 
which  you  are  entitled  to  our  usual  deductions  of  one  per  cent, 
trade  discount  on  one  hundred  barrel  lots,  and  one  per  cent,  for 
cash  if  paid  within  seven  days. 

Should  you  so  desire  we  shall  be  pleased,  upon  receipt  of  with- 
in written  request,  to  constitute  you  one  of  our  agents,  in  which 
case  sugar  will  be  consigned  to  you  for  sale  as  our  factor,  upon 
the  following  terms,  the  title  to  remain  in  us  subject  to  your  ad- 
vances and  return  to  you  of  your  necessary  outlay: 

1.  You  are  to  advance  to  us  within  thirty  days  the  amount  of 
the  invoice,  which  will  be  made  up  at  our  daily  quotations,  less 
one  per  cent,  trade  discount  on  one  hundred  barrel  lots,  with  the 
right  to  deduct  one  per  cent,  additional  if  invoice  is  made  cash  in 
seven  days ; the  advance  to  be  without  recourse  to,  or  reclamation 
upon  us,  and  to  be  due  in  any  event. 

2.  The  sugar  when  sold  is  to  be  billed  in  your  name,  although 
in  fact  as  factor  for  us,  and  you  shall  without  reclamation  upon 
us,  at  your  own  cost,  pay  all  expenses  and  assume  all  risks  of  the 
property  and  of  payment  or  collection.  You  are  not  to  incur  any 
expense  on  our  account. 

3.  None  of  the  sugar  shall  be  sold  or  disposed  of  by  you,  either 
directly  or  indirectly,  for  less  than  our  daily  quotations,  with 
freight  added  from  refining  point  to  point  of  sale  (as  per  equality 
rate  book),  nor  on  more  liberal  terms  as  to  credit  or  cash  dis- 
counts. 

So  long  as  the  foregoing  conditions  are  observed  by  you  we 
will,  upon  an  affidavit  to  that  effect,  pay  you  a commission  of 


No.  40.] 


129 


tliree-sixteentlis  of  a cent  per  pound,  and  in  addition  thereto  you 
shall  retain  the  profit,  if  any,  over  the  advance  made  as  above 
provided.  In  ease  of  any  failure  to  comply  with  either  of  the 
above  conditions  no  commissions  will  be  payable.  Settlements 
will  be  made  for  each  month's  commissions  at  the  expiration  of 
three  months  thereafter.  All  commissions  payable  for  the  period 
preceding  the  three  months  will  then  become  due.  Payments 
will  only  be  made  as  above. 

This  agency  is  terminable  at  the  pleasure  of  either  party,  on 
written  notice. 

Yours  respectfully, 

THE  AMERICAN  SUGAR  REFINING  COMPANY. 


Mr.  Lexow: 

Q.  That  is  the  answer  that  you  expect  to  get  back  from  your 
factor  or  customer  before  you  enter  into  final  arrangements?  A. 
Before  we  pay  money. 

Q.  This  affidavit  that  you  require  the  customer  to  make  be- 
fore you  give  him  the  rebate  mentioned  in  two  other  documents 
will  be  marked  (Exhibit  C);  you  require  him  to  make  such  affi-' 
davit?  A.  Yes,  sir. 

State  of ss. 

County  of 

being  duly  sworn,  says:  I,  as  factor  of 

the  American  Sugar  Refining  Company,  claim  from  the  company 
a commission  of  three-sixteenth  of  a cent  per  pound  (less  one  per 

cent,  where  trade  discount  has  been  allowed),  upon 

pounds  of  sugar  consigned  by  the  company  to  me  by  invoices,  the 
dates  of  which  cover  the  period  from to inclu- 

sive. In  compliance  with  the  conditions  upon  which  the  sugar 
was  consigned  to  me.  and  to  entitle  myself  to  the  commission,  I 
do  hereby  make  affidavit  that  none  of  the  sugar  mentioned  in 
the  said  invoices  has  been  or  will  be  sold  or  disposed  of  by  me, 
either  directly  or  indirectly,  for  less  than  the  daily  quotations  of 
9 


130 


[Senate, 


the  company,  with  freight  added  from  refining  point  to  point  of 
sale,  as  per  Equality  Rate  Book,  nor  on  more  liberal  terms  as  to 
credit  or  cash  discounts. 

Sworn  to  before  me 

this  day  of , in  the  year  189 . . 

Mr.  Lexow: 

Q.  Do  you  and  those  who  constitute  the  board  of  the  American 
Sugar  Refining  Company  hold  the  control  of  its  stock  A.  I 
don’t;  I don’t  know  about  what  they  do. 

Q.  Are  you  iu  control?  A.  I think  not. 

Q.  You  and  your  associates?  A.  I think  not;  the  stock  of  the 
American  Sugar  Refining  Company  is  held  by  over  S,000  stock- 
holders; it  will  be  perfectly  impracticable  for  anybody  to  control 
the  business. 

The  Chairman: 

We  desire  those  papers  and  figures  produced,  to  which  we 
made  reference  during  your  examination. 

The  stenographer  will  mark  this  document  (Exhibit  C). 

189.. 

THE  AMERICAN  SUGAR  REFINING  COMPANY, 

P.  O.  Box  No.  2036, 

New  York  City. 

Gentlemen : 

WTe  are  in  receipt  of  yours  covering  invoice  for  sugar.  We  de- 
sire to  be  enrolled  as  your  agents  and  to  receive  sugar  on  consign- 
ment, in  accordance  with  the  terms  of  your  letter,  and  we  hereby 
agree  to  faithfully  maintain  the  terms  and  conditions  therein  pro- 
vided on  all  sugar  received  by  us. 


Yours,  truly, 


No.  40.] 


131 


Arbuckle,  John,  recalled. 

Mr.  Havemeyer:  As  to  the  amount  of  stock  of  these  different 
corporations,  I am  unable  to  furnish  that.  Mr.  Searles  has  that 
in  his  custody.  As  soon  as  we  can  get  him  I will  furnish  them. 

By  Mr.  Bedell: 

Q.  Is  Mr.  Searles  in  town?  A.  I think  he  is  in  Washington;  I 
am  not  aware,  however,  where  he  is. 

Mr.  Bedell:  I desire  to  have  the  stenographer  enter  upon  his 
minutes  the  fact  that  Mr.  Searles  has  been  called  for  here  in 
open  session  this  afternoon,  and  that  he  was  also  called  for  this 
morning,  and  that  he  has  failed  to  attend,  pursuant  to  the 
subpoena. 

Mr.  Havemeyer:  I may  be  mistaken  in  locating  him. 

Mr.  Bedell:  But  he  is  not  here. 

Mr.  Havemeyer:  No,  sir. 

Mr.  Lexow:  Mr.  Arbuckle  will  now  take  the  stand. 

Q.  You  have  heard  some  of  the  questions  propounded  in  rela- 
tion to  the  Woolson  Company?  A.  Yes,  sir. 

Q.  Are  you  acquainted  with  the  facts  in  connection  with  the 
matter?  A.  Some  of  them. 

Q.  Are  you  engaged  in  the  coffee  business?  A.  Yes,  sir. 

Q.  And  sold  the  sugars  of  the  American  Sugar  Kefining  Com- 
pany? A.  Yes,  sir. 

Q.  In  connection  with  your  coffee?  A.  Yes,  sir 

Q.  Were  you  a large  dealer  in  their  product?  A.  Yes,  sir. 

Q.  To  what  extent?  A.  I do  not  know  really;  I do  not  attend 
to  the  buying  of  the  sugars;  but  it  amounted  to  a large  amount. 

Q.  Have  you  any  idea,  approximately,  of  the  amount?  A.  No, 
sir;  I could  not  give  it  to  you;  I could  get  it  from  the  books; 
may  I explain  to  save  you  time;  a large  amount  of  this  sugar 
that  we  bought  from  that  and  other  companies  has  been  packed 
into  two  pound  packages  by  a packing  machine  and  the  barrels 
are  returned  to  the  refinery;  that  is  where  the  great  part  of  our 
sugar  goes  to. 


132 


[Senate, 


Q.  You  take  the  product  of  the  American  Sugar  Refining  Com- 
pany, or  did,  and  pack  it  into  two  pound  packages  by  machinery 
and  sold  it  in  connection  with  your  coffee?  A.  Yes,  sir; 
separate  companies,  of  course;  we  have  a house  in  Pittsburg  and 
they  buy  and  sell  it  by  the  barrel;  but  most  of  our  sugar  is  put 
into  these  two  pound  packages  by  machinery. 

Q.  Can  you  give  any  approximate  idea  of  the  amount  that 
you  purchase  from  them?  A.  We  have  only  one  machine  run- 
ning, but  when  we  double  our  capacity  we  can  pack  60,000  pounds 
per  day;  that  is  during  twenty-four  hours;  some  times  we  run 
double  turn  and  sometimes  only  single  turn;  it  depends  on  the 
demand. 

Q.  You  pack  from  thirty  to  sixty  thousand  pounds  per  day? 
A.  Yes,  in  twenty-four  hours;  in  ten  hours  we  can  pack  25,000 
pounds. 

Q.  And  this  other  concern  to  which  you  referred  sold  it  by  the 
barrel;  that  is  in  Pittsburg,  Pa?  A.  The  firm  of  Arbuckle 
Brothers. 

Q.  They  also  deal  with  the  American  Sugar  Refining  Com- 
pany? A.  Yes,  sir;  I thing  we  are  dealing  with  them  now. 

Q.  Did  you  have  any  misunderstanding  with  the  company? 
A.  To  amount  to  anything,  I think  once  or  twice  when  we  didn’t 
get  as  much  sugar  as  we  wanted;  they  cut  down  our  orders; 
that  is  all. 

Q.  You  withdrew  your  business  from  the  company?  A.  1 
don’t  think  so;  I think  we  are  buying  from  them  yet. 

Q.  Which  member  of  your  concern  knows  about  this?  A.  The 
books  will  show;  the  books  of  the  broker  that  buys  the  sugar. 

Q.  Who  operates  through  the  American  Sugar  Refining  Com- 
pany? A.  We  generally  buy  through  Mr.  Taylor,  the  sugar 
broker. 

Q,  Do  you  do  that  part  of  the  business?  A.  No,  sir;  I have 
not  for  a number  of  years;  Mr.  Jarvie  or  another  member 
usually  bought  the  sugars;  Mr.  Jarvie  is  here. 

Q.  Do  you  know  anything  about  the  Woolson  Company  stock? 
A.  Yes,  sir. 


No.  40.] 


133 


Q.  Did  yon  buy  it?  A.  We  have  bad  one  share  for  a number 
of  years,  several  years,  I think;  last  June  when  this  trouble 
arose  we  bought  sixty  additional  shares;  we  hold  sixty-one 
shares  of  the  stock  of  that  company. 

Q.  Had  you  previous  to  the  buying  of  those  sixty  additional 
shares  severed  your  connection  with  the  American  Sugar  Refin- 
ing Company,  so  far  as  purchasing  from  them?  A.  I think  we 
are  still  buying  from  them. 

Q.  I am  speaking  of  buying  this  sugar  that  you  put  up  into 
two  pound  packages,  not  sugar  by  the  barrel?  A.  That  had  no 
connection  with  it  at  all;  our  buying  of  that  one  share  was 
simply  curiosity  to  see  how  the  company  was  doing;  that  was 
held  in  the  firm’s  name;  they  were  large  competitors  of  our  house 
and  that  was  the  only  object  that  we  had  in  buying  that  one 
share;  the  buying  of  the  other  shares  were  different;  we  felt 
that  the  American  Sugar  Refining  Company  was  using  that  as  a 
club  to  bring  us  to  terms,  so  that  we  would  not  build  our  re- 
finery that  we  now  have  in  the  process  of  erection. 

Q.  You  are  about  constructing  it?  A.  We  are  working  at  it 
now. 

Q.  You  bought  the  sixty  shares  of  stock  in  the  Woolson  Com- 
pany because  you  believed  that  the  American  Sugar  Refining 
Company  had  purchased  the  balance  of  the  stock  for  the  pur- 
pose of  holding  it  as  a club  over  your  firm?  A.  I believe  that 
we  can  prove  it 

Q.  Because  you  built  this  refinery?  A.  Yes,  sir. 

Q.  Or  because  you  stopped  purchasing?  A.  We  are  still  buy- 
ing of  them;  it  is  because  of  our  building  the  refinery;  I can  ex- 
plain this;  several  months  ago  Mr.  Matthiessen,  a director  of  the 
American  Sugar  Refining  Company,  called  to  see  us  about  pur- 
chasing the  packing  machine,  and  we  told  him  that  we  had  decided 
not  to  sell  the  machine  and  that  we  were  going  to  build  a refinery 
ourselves  and  use  these  machines;  so  after  talking  back  and  forth 
he  asked  how  we  would  like  it  if  they  went  into  the  coffee  roast- 
ing business;  well,  we  said  that  we  could  not  object  if  they  went 
into  it  in  a legitimate  manner;  that  of  course  the  field  was  open 


134 


[Senate, 


to  everybody  and  that  we  could  not  object;  but  from  the  way  it 
was  spoken  we  felt  that  it  was  an  implied  threat  that  if  we  went 
on  with  our  sugar  refinery  that  they  would  go  into  the  coffee 
roasting  business. 

Q.  You  went  on  with  your  sugar  refinery?  A.  Yes,  sir;  we  are 
working  at  it  now. 

Q.  They  went  into  the  coffee  business?  A.  Yes,  sir. 

Q.  Did  you  have  any  conversation  with  any  other  director  of 
the  Havemeyer — the  American  Sugar  Refining  company?  A. 
No,  sir;  not  that  I know  of. 

Q.  Don’t  you  know  that  prior  to  that  time  you  had  turned  a 
large  percentage  of  your  sugar  trade  over  to  a concern  competing 
against  the  American  Sugar  Refining  Company?  A.  I suppose 
the  books  will  show  that  we  are  buying  as  much  from  them  as 
from  any  of  the  others;  I think  it  is  so;  we  can  bring  you  those  fig- 
ures. 

Q.  You  heard  Mr.  Havemeyer’s  statement  that  you  had  turned 
over  to  a competing  company,  competing  establishments,  the 
trade  that  you  had  been  doing  with  his  company,  which  was 
large?  A.  I don’t  think  we  ever  did;  we  bought  from  several. 

By  Mr.  Bedell : 

Q.  Mr.  Havemeyer  stated  that  the  reason  for  that  was  that 
they  had  been  allowing  you  twenty  cents  for  barrels  returned  and 
that  this  competing  company  had  agreed  to  allow  you  twenty-two 
cents?  A.  I don’t  know  about  that;  we  always  buy  our  goods 
where  they  can  be  bought  cheapest;  if  we  could  buy  cheaper  we 
would  go. 

Q.  Who  would  know  about  it?  A.  Mr.  Jamison. 

Q.  Is  he  here?  A.  No,  sir. 

Q.  Does  Mr.  Jarvie  know?  A.  I don’t  know. 

Jarvie,  James  M.,  being  duly  sworn,  testified  as  follows: 

By  Mr.  Lexow: 

Q.  Are  you  an  employee  of  the  Arbuckle  Brothers?  A.  No> 
sir;  I am  a member  of  the  firm. 


Yo.  40.] 


135 


Q.  Are  you  familiar  with  the  circumstances  surrounding  the 
controversy  with  the  American  Sugar  Refining  Company?  A.  I 
believe  I am. 

Q.  I asked  Mr.  Arbuckle  questions  as  to  whether  you  had  with- 
drawn your  sugar  trade  from  the  American  Sugar  Refining  Com- 
pany, or  diverted  it  to  some  other  concern ; have  you  any  knowl- 
edge of  the  facts?  A.  I think  Mr.  Arbuckle’s  answer  was  sub- 
stantially correct;  we  buy  sugar  through  Taylor  & Co.,  brokers 
concern;  we  leave  it  pretty  much  to  them  whose  sugars  they  buy; 
there  are  only  two  concerns,  B.  H.  Howyell  & Co.,  and  the  Ameri- 
can Sugar  Refining  Company. 

Q.  B.  H.  Howell  & Co.,  is  a Yonkers  concern?  A.  They  are 
the  purchasing  and  selling  agents  of  the  Yonkers  and  Mollen- 
hauer  Companies. 

Q.  Do  you  knowr  a western  concern  competing  in  this  market? 
A.  Yot  that  I am  aware  of. 

Q.  Yone  of  the  concerns  outside  of  the  American  Sugar  Refin- 
ing Company  except  the  twTo  that  you  have  mentioned  in  this 
State?  A.  Yot  that  I am  aware  of. 

Q.  You  don’t  know7  then  from  wrhat  source  your  broker'  pur- 
chases his  sugar?  A.  I see  every  contract  that  he  buys;  he  sends 
the  contract  to  our  office;  and  I usually  check  them  off,  or  Mr. 
Jamison. 

Q.  You  heard  the  testimony  of  Mr.  Havemeyer  that  you  had 
withdrawm  your  trade  and  turned  it  over  to  a competing  concern? 
A.  He  may  be  mistaken  about  that;  I am  under  the  impression 
that  he  is  wrong;  I think  that  we  buy  some  sugar  from  the  Amer- 
ican Sugar  Refining  Company. 

Q.  As  to  volume,  w7hile  you  may  get  some  through  the  broker, 
don’t  you  buy  the  bulk  from  other  concerns?  A.  I should  say 
that  we  buy  moie  from  How^ell  & Co.,  than  from  the  American 
Sugar  Refining  Company  just  now. 

By  Mr.  Bedell: 

Q.  What  wyas  the  situation  prior  to  six  months  ago  as  to  the 
volume  that  you  purchased?  A.  We  bought  more  of  the  Ameri- 
can Sugar  Refining  Company  at  that  time. 


136 


[Senate, 


By  Mr.  Lexow: 

Q.  Now  more  of  Howell  & Co.?  A.  Yes;  I think  we  buy  more 
of  them. 

Q.  You  alluded  to  a misunderstanding  between  you  and  the 
American  Sugar  Refining  Company?  A.  I would  not  want  to  say 
that;  I do  not  know  what  they  thought  of  it. 

Q.  State  what  you  know;  there  was  a statement  made  here  that 
you  were  allowed  twenty  cents  per  barrel  by  the  American  Sugar 
Refining  Company  and  that  you  got  twenty-two  cents  per  barrel 
from  a competing  company?  A.  That  is  the  first  that  I have 
heard  of  it. 

Q.  Is  it  because  you  have  heard  nothing  about  it;  do  you  state 
that  it  is  not  a fact?  A.  I would  not  state  that  it  was  not  a fact; 
I know  nothing  about  it;  but  I am  sure  that  two  cents  on  a barrel 
did  not  enter  into  our  buying  from  another  house;  we  cannot  fig- 
ure quite  as  close  as  that. 

Q.  State  now,  without  my  putting  specific  questions  to  you, 
what  you  know  about  this  controversy  between  your  concern  and 
the  American  Sugar  Refining  Company;  Mr.  Arbuckle  spoke 
about  an  interview  that  he  had  with  Mr.Matthiessen  of  the  Amer- 
ican Sugar  Refining  Company.  A.  That  was  in  September. 

Q.  Were  you  present?  A.  Yes,  sir. 

Q.  Wha’t  did  Mr.  Matthiessen  say?  A.  He  ended  the  conversa- 
tion by  saying,  “How  would  you  like  it  if  the  American  Sugar 
Refining  Company  went  into  the  coffee  roasting  business?” 

Q.  What  had  there  been  said  that  led  up  to  that  statement  of 
Mr.  Matthiessen?  A.  That  we  were  going  to  build  a refinery; 
we  had  made  that  statement  to  him. 

Q.  What  official  relation,  if  any,  does  he  occupy  with  the  Amer- 
ican Sugar  Refining  Company?  A.  I am  under  theimpressionthat 
he  is  a Trustee  or  Director;  I presume  that  he  is  chairman  of 
some  of  the  important  committees;  I have  heard  it  so  stated. 

Q.  F.  O.  Matthiessen?  A.  I believe  that  is  his  name. 

Q.  Had  he  come  down  to  you  to  speak  with  reference  to  the 
business  between  your  concern  and  the  American  Sugar  Refining 
Company?  A.  I think  he  came  with  the  intention  of  talking 


No.  40.] 


137 


about  tiie  sugar  packing  machine;  and  we  had  several  conversa- 
tions with  him  previous  to  that;  they  wanted  to  buy  that  ma- 
chine, and  he  apparently  came  with  the  idea  of  wanting  us  to 
name  what  price  we  would  take  for  the  machine;  we  told  him 
that  we  had  carefully  considered  the  matter  and  that  we  found 
that  we  had  a good  demand  for  sugar  in  packages,  that  particular 
package,  and  we  concluded  that  we  would  build  a small  refinery 
so  as  to  manufacture  our  own  sugar. 

Q.  Did  you  make  that  statement  or  did  Mr.  Arbuckle  make  it? 
A.  Either  one  of  us  made  it. 

By  Mr.  Bedell: 

Q.  Is  that  machine  patented?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  It  was  in  answer  to  that  that  he  made  this  implied  threat 
about  coffee?  A.  Yes,  sir. 

Q.  What  else  was  said?  A.  I cannot  say  anything  else  than 
that  we  told  him  that  he  was  the  first  one  to  know  that  we  had 
thought  of  going  into  the  refining  business  outside  of  the  part- 
ners of  our  own  firm;  that  we  preferred  that  the  American  Sugar 
Refining  Company  know  it  from  us  rather  than  from  rumor  out- 
side— from  outside  parties. 

Q.  How  long  ago?  A.  In  September. 

Q.  Of  this  year?  A.  Yes,  sir;  it  might  have  been  in  October. 

Q.  How  long  after  that  was  it  that  they  acquired  the  Woolson 
interest?  A.  I am  under  the  impression  that  it  was  early  in  De- 
cember. 

Q.  Within  sixty  days  after  that  proposition?  A.  That  would 
be  ninety  days  I should  say. 

Q.  Are  they  competing  now  in  the  market  against  you  in  cof- 
fee? A.  Yes,  sir;  their  business  is  tied  up  for  the  time  being  in 
court  under  an  injunction. 

Q.  In  the  Ohio  court?  A.  Yes,  sir. 

Q.  You  have  no  competition  with  the  New  Jersey  concern? 
A.  No,  sir;  the  first  that  we  heard  of  it  was  yesterday. 


138 


[Senate, 


Q.  Was  any  word  or  conversation  used  beyond  what  you  have 
mentioned  that  implied  a threat  that  if  you  went  into  the  sugar 
business  that  they  would  go  into  the  coffee  roasting  business? 
A.  Yes,  sir;  there  has  been  a gentleman  whose  name  has  not  been 
mentioned,  but  whose  business  was  mentioned  by  a former  wit- 
ness— the  man  who  has  charge  of  the  barrel  business;  he  told  me 
that  if  we  insisted  on  going  into  the  sugar  business  that  they 
would  certainly  go  into  the  coffee  business,  and  that  the  Have- 
meyers  had  more  millions  than  the  Arbuckles  and  that  it  would 
be  a fight  to  the  end. 

By  Mr.  Bedell: 

Q.  What  is  that  gentleman’s  name?  A.  L.  M.  Palmer. 

Q.  When  was  that?  A.  It  was  about  the  middle  of  Septem- 
ber; he  called  on  me  at  the  office  and  he  had  some  conversation 
with  another  gentleman,  and  friend  of  ours,  and  he  tried  to  get 
him  to  use  his  influence  to  prevent  us  from  going  into  the  sugar 
business;  and  he  insisted  that  if  we  did  persist  in  going  into  the 
sugar  business  that  they  would  go  into  the  coffee  business  be- 
cause we  were  going  to  compete  with  them  in  the  sugar  busi- 
ness; I talked  the  matter  over  with  my  partners  and  they  sug- 
gested that  I go  to  see  them  and  say  that  we  were  not  going  to 
compete,  but  that  we  were  going  on  with  the  business  as  an  ad- 
junct to  our  coffee  business;  that  we  had  some  customers  with 
different  wholesale  grocers  throughout  the  United  States;  that 
was  the  reason  that  I called  on  Mr.  Palmer. 

Q.  That  is  what  you  said  to  him?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  What  did  he  say?  A.  He  said  that  he  yms  sorry;  that  he 
had  known  us  for  a long  time;  that  the  result  would  be  that  we 
would  lose  lots  of  money,  because  it  would  result  in  a fight. 

Q.  Was  anything  said,  substantially,  to  the  effect  that  if  you 
withdrew  your  competition  against  them  in  the  field  of  sugar 
that  they  would  not  enter  into  competition  with  you  in  the  coffee 
business?  A.  Yes,  sir. 


No.  40.] 


139 


Mr.  Lexow:  That  is  all. 

Arbuckle,  John,  recalled. 

Mr.  Havemeyer:  Will  the  committee  let  me  make  a statement? 
I desire  to  say  that  no  such  man  as  Mr.  Palmer  has  authority 
to  make  statements  for  the  Havemeyer  & Elder  Company,  nor 
anybody  else  interested  in  that  company;  the  gentleman  appears 
to  have  the  impression  that  he  is  an  emissary  from  us  because  he 
told  him  something  or  other. 

Q.  What  relation  has  Mr.  Palmer  to  your  company?  Is  he 
your  cooper?  A.  He  is  the  head  of  the  cooperage  department. 

Q.  Is  that  a separate  business?  A.  Yes,  the  stock  of  which 
is  controlled  by  the  American  Sugar  Refining  Company;  it  is  a 
collateral  interest  of  our  company. 

Q.  Where  was  that  company  incorporated?  A.  I think  it  is 
a New  Jersey  company. 

Q.  And  the  bulk  of  the  stock  is  held  by  the  American  ISugar 
Refining  Company  and  Mr.  Palmer  is  President  of  the  Company? 
A..  Yes,  sir.  * 

Mr.  Bedell: 

Q.  Mr.  Palmer  is  also  a trustee  of  the  American  Sugar  Refin- 
ing company?  A.  No,  sir. 

Q.  Is  he  appointed  by  the  Board  of  Directors  of  the  company 
to  look  after  the  interests  represented  by  the  cooperage  concern? 
A.  He  is  elected  by  the  stockholders — by  the  directors  in  the 
usuul  form;  he  is  President  of  that  company. 

Q.  Has  he  any  official  relation  to  the  American  Sugar  Refin- 
ing Company,  as  such?  A.  None  whatever. 

Q.  Are  the  directors  of  the  Cooperage  Company  the  same  as 
the  directors  of  the  American  Sugar  Refining  Company?  A. 
Four  of  them  are. 

Q.  With  the  exception  of  Mr.  Palmer,  the  other  directors  of 
this  Cooperage  Company  are  directors  in  the  American  Sugar 
Refining  Company?  A.  Yes,  sir;  but  he  had  no  authority  to 
say  what  he  did,  if  he  did  say  it;  I wish  to  disabuse  the  minds  of 
the  committee  of  that  impression;  he  was  not  an  emissary  of  the 
company. 


140 


[SENATE. 


Q.  How  many  directors  are  there  in  the  American  Sugar  Re- 
fining Company?  A.  Seven. 

Q.  Then  the  four  who  are  on  the  Board  of  the  Cooperage  Com- 
pany are  a majority  of  the  Directors  of  the  American  Sugar 
Refining  Company?  A.  Yes,  sir. 

Q.  Mr.  Matthiessen  is  on  the  Board  of  Directors  of  the  Ameri- 
can Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  Is  he  on  the  Board  of  the  Cooperage  Company  as  well?  A. 
Yes,  sir. 

Mr  Jarvie:  I desire  to  make  a statement;  in  addition  to  the 
two  gentlemen  whose  names  I have  mentioned,  Mr.  W.  F.  Mc- 
Laughlin, of  Chicago,  stated  to  us  that  he  had  authority  to  say 
that  if  we  were  willing  to  go  out  of  the  sugar  business  that  the 
sugar  people  wrnuld  not  continue  in  the  coffee  business;  and  he 
said  the  statement  came  from  one  high  in  authority. 

Q.  Did  he  give  the  name?  A.  We  could  not  get  the  name. 

Q.  Did  he  mean  somebody  high  in  authority  in  the  American 
Sugar  Refining  Company?  A.  Yes,  sir;  we  have  several  memo- 
randums in  regard  to  testimony  that  was  brought  out  at  Toledo 
in  the  action;  we  were  hoping  to  have  that  here  this  afternoon,, 
but  it  may  not  come  before  Monday  morning;  the  affidavits,  fig- 
ures and  facts  are  in  the  possession  of  the  court. 

By  Mr.  Lexow: 

Q.  And  a motion  was  argued  with  reference  to  an  injunction? 
A.  Yes,  sir. 

Q.  Do  you  mean  those  papers?  A.  I couldn’t  say  as  to  that 
fact. 

Q.  But  the  deposition  taken  on  the  trial?  A.  Yes,  sir. 

Q.  Will  you  be  able  to  produce  those  to-morrow?  A.  Yes,  sir; 
if  they  come  here  by  mail;  probably  not  until  Monday  morning. 

Q.  But  if  they  should  come  we  can  have  them  to-morrow  morn- 
ing? A.  They  show  who  the  stock  was  bought  for,  to  whom 
paid,  by  whom  the  checks  were  signed,  etc. 

Mr.  Havemeyer:  Let  me  contradict;  I deny  absolutely  that 
anybody  was  authorized  to  speak  to  Mr.  Jarvie,  or  anybody  else 


No.  40.] 


141 


in  behalf  of  Havemeyer  & Elder  threatening  anything;  we  never 
would  do  it  in  that  way;  if  we  had  any  threats  to  make  we  would 
fell  them  direct;  we  never  said  anything  of  the  kind;  I likewise 
desire  to  say  that  the  business  of  the  company  testified  to  by  Mr. 
Jarvie  as  having  been  enjoined,  is  not  so;  there  has  been  an  in- 
junction against  the  transfer  of  stock  and  the  election  of  a new 
board,  but  the  business  has  been  especially  exempted;  there  ap- 
pears to  be  a great  effort  to  create  the  impression  that  the  Amer- 
ican Sugar  Refining  Company  is  not  going  into  the  coffee  busi- 
ness; the  American  Sugar  Refining  Company  is  to  go  into  the 
■coffee  business  and  have  taken  the  matter  under  serious  consid- 
eration; they  have  not,  but  they  probably  will. 

By  Mr.  Mazet: 

Q.  In  what  business  is  the  Havemeyer  & Elder  Company? 
A.  They  have  real  estate;  they  have  no  active  mercantile  busi- 
ness whatever. 

Q.  No  business?  A.  Lighterage  business  and  milling 
machines. 

Mr.  Havemeyer:  It  might  as  well  be  understood  that  the  com- 
pany intends  to  go  into  the  coffee  business  whether  they  are  in 
The  sugar  business  or  not,  or  in  any  other  business,  unless  we  are 
enjoined  by  the  courts. 

Q.  Do  I understand  that  you  substantially  admit  what  your 
brother  refused  to  admit  on  the  stand  this  morning,  that  while 
under  the  guise  of  the  Havemeyer  & Elder  Company,  the  real 
fact  is  that  the  American  Sugar  Refining  Company  is  contempla- 
ting going  into  the  coffee  business  in  competition  with  the  Ar- 
Ruckle?  A.  There  is  no  misunderstanding  that  fact  whatever; 
they  bought  this  stock;  they  are  at  perfect  liberty  to  sell  this 
stock;  and  the  American  Sugar  Refining  Company  is  at  perfect 
liberty  to  go  into  the  coffee  business;  and  it  will,  probably;  it  has 
the  matter  under  serious  contemplation;  but  it  has  not  been  act- 
ed on  yet.  < 

Mr.  Lexow : It  was  the  expectation  of  the  committee  to  take  up 
the  examination  of  Mr.  Searles;  but  I am  informed  by  Mr. 


142 


[Senate, 


Shepherd  that  Mr.  Searles  is  not  in  the  city,  although  he  was 
subpoenaed  last  night  or  yesterday  afternoon;  I hope  that  it  will 
not  occur  again;  if  a witness  is  subpoenaed  by  our  committee 
hereafter,  he  will  either  be  here  in  attendance  or  the  authority  of 
the  law  and  the  authority  of  the  Legislature  will  be  invoked  to 
secure  attendance. 

Mr.  Shepherd:  I suggest  that  if  subpoenas  are  issued  they 
be  given  to  the  persons  twenty-four  hours  ahead  of  the  time  for 
appearance.  Those  gentlemen  will  be  here  if  they  receive  suit- 
able notice;  serving  him  last  night  was  not  suitable  notice. 

By  Mr.  Bedell: 

Q.  Mr.  Searles  does  not  present  any  reasonable  excuse  as  to 
why  he  is  not  in  attendance  and  there  is  nobody  representing 
him  here;  does  that  justify  Mr.  Searles  attitude  on  this  matter? 

Mr:  Shepherd:  I am  not  justifying  him;  I simply  stated  that 
I did  not  think  twelve  hours  suitable  notice  for  a business  man 
to  attend;  he  could  have  been  found  a week  ago  and  notified  that 
he  would  be  wanted  to-day;  he  will  be  here  on  reasonable  notice. 

Q.  He  will  be  here  to-morrow  morning? 

Mr.  Shepard:  I think  so;  so  I am  informed. 

Mr.  Lexow:  That  there  may  be  no  question  about  this  the 
stenographer  will  note  the  fact  that  Mr.  Searles’  name  was  called 
and  that  he  failed  to  attend;  that  before  the  adjournment  the 
name  of  Mr.  Searles  was  again  called  and  he  failed  to  respond. 
The  committee,  however,  in  case  Mr.  Searles  appears  to-morrow 
will  waive  any  default  on  his  part. 

The  committee  will  now  adjourn  until  eleven  o’clock  to-morrow 
morning. 


No.  40.] 


143 


SECOND  PUBLIC  HEARING,  COMMON  COUNCIL  CHAM- 
BER, NEW  YORK  CITY,  SATURDAY,  FEBRUARY  6, 

1897. 

Present:  Senators  Lexow,  Parsons;  Assemblymen  Bedell, 
Warner,  Mazet  and  Barry. 

Absent:  Senator  Gallagher. 

Mr.  Lexow:  The  Sergeant-at-Arms  will  call  the  name  of  John 
E.  Searles,  Jr. 

Mr.  John  E.  Parsons:  Mr.  Searles  is  not  here.  He  was  served 
with  a subpoena  as  he  was  on  his  way  to  the  train  to  keep  an  en- 
gagement out  of  town.  It  is  perhaps  generally  known  that  mat- 
ters concerning  the  sugar  company  are  somewhat  in  charge  of 
myself  as  counsel  of  the  company.  I was  compelled  yesterday 
to  be  before  the  Court  of  Appeals  in  the  argument  of  a case  that 
is  unfinished.  I got  back  here  last  night  and  found  that  you  de- 
sired Mr.  Searles.  I made  every  effort  to  see  whether  I could 
have  him  here  this  morning  by  telegraphing.  I understand  that 
you  desire  from  him  data,  the  preparation  of  which  will  require 
some  little  time.  Instructions  have  already  been  given  for  the 
data,  and  if  the  committee  will  make  some  appointment  when 
Mr.  Searles  can  be  examined  he  will  be  here  with  such  data.  I 
have  not  yet  been  able  to  look  over  the  report  of  the  proceedings. 
That  will  somewhat  facilitate  matters. 

Mr.  Lexow:  Do  I understand  you  to  say  that  he  left  the  city 
immediately  after  the  service  of  the  subpoena  upon  him  on  the 
street  ? 

Mr.  John  E.  Parsons:  The  committee  will  recognize  that  a 
gentleman  engaged  in  large  business  enterprises  is  entitled  to 
some  reasonable  time.  He  was  on  his  way  to  the  train  and  was 
served  in  the  street. 

Mr.  Lexow:  Did  he  communicate  with  you  before  leaving  the 
city? 

Mr.  John  E.  Parsons:  He  stopped  at  my  office  and  left  the 
subpoena  there,  with  the  request  that  I make  his  excuses,  and  I 

am  here  to  do  it. 


144 


[Senate, 


Mr.  Lexow:  Is  his  present  whereabouts  known? 

Mr.  John  E.  Parsons:  He  is  in  Washington. 

Mr.  Lexow:  Was  he  yesterday? 

Mr.  Parsons:  Where  he  was  yesterday  I don't  know.  All  I 
know  is  that  this  morning  I had  a telephone  from  him  from 
Washington. 

Mr.  Lexow:  The  committee  does  not  seem  inclined  to  take  the 
situation  for  granted  and  relieve  Mr.  Searles  of  the  necessity  of 
appearing  here.  But  we  will  consider  the  statement  made  by 
you,  Mr.  Parsons,  in  executive  session  after  the  session  here  to- 
day. We  will  then  notify  you  whether  the  committee  will  insist 
upon  the  contempt  already  apparently  perpetrated  or  give  Mr. 
Searles  an  opportunity  to  attend  on  Monday. 

Mr.  John  E.  Parsons:  I suppose  even  if  Mr.  Searles  is  treated 
as  being  in  contempt  of  the  committee  the  committee  will  come 
to  no  conclusion  upon  that  subject  without  an  opportunity  being 
given  for  a more  full  statement  in  a more  formal  way  than  I am 
making  at  this  time. 

Mr.  Lexow:  We  will  give  you  full  opportunity  on  Monday. 

Mr.  John  E.  Parsons:  I take  it  for  granted  that  what  the 
committee  wishes,  is  to  get  such  information  as  may  contribute 
to  this  investigation;  that  he  is  not  only  willing  but  desirous  of 
doing  and  it  seems  to  me  that  would  be  facilitated  by  permitting 
him  to  give  his  testimony;  he  can  be  summoned  to  Albany. 

Mr.  Lexow:  And  in  case  we  hold  the  contempt  as  having  been 
perpetrated  we  will  decide  whether  we  will  bring  the  matter  to 
the  attention  of  the  legislature  or  allow  Mr.  Searles  to  purge 
himself  of  the  contempt  by  his  appearance. 

Mr.  John  E.  Parsons:  I understand,  sir. 

Mr.  Lexow:  I understand,  Mr.  Parsons,  that  you  stated  that 
Mr.  Searles  will  appear  before  this  committee  on  Monday,  either 
here  in  Albany,  according  to  the  necessities  of  the  case. 

Mr.  John  E.  Parsons:  I reached  him  by  telephone  about  half 
past  ten  o’clock  this  morning  and  told  him  the  situation;  he 
said  that  I would  appear  here  and  say  that,  if  necessary,  he 
would  come  to  Albany  so  as  to  facilitate  the  convenience  of  the 


Xo.  40.] 


145 


committee;  he  said  it  would  be  an  inconvenience  to  him;  but  I 
suppose  you  would  not  care  for  that;  he  will  come  to  Albany  to 
keep  his  appointment,  or  here  if  you  desire. 

Mr.  Lexow:  Are  there  any  witnesses  in  attendance  here  who 
were  subpoenaed  to  appear  here’ yesterday  with  reference  to  the 
Arbuckle  question? 

A Voice:  Mr.  Jennison  is  here;  Mr.  Arbuckle  is  here. 

Mr.  Lexow:  Mr.  Arbuckle  will  please  take  the  stand  again. 

Mr.  Lexow:  We  desire  Mr.  H.  O.  Havemeyer  here  again  as 
soon  as  we  can  get  him. 

Mr.  Mazet:  He  said  he  might  be  in  town  to-day. 

Mr.  Parsons:  I may  be  able  to  find  him  by  telephone. 

Mr.  Mazet:  He  said  that  he  would  be  in  town  and  if  desired  he 
would  be  here. 

Arbuckle,  John,  recalled. 

By  Mr.  Lexow: 

Q.  Is  there  anything  that  you  desire  to  change  in  the  testi- 
mony that  you  gave  here  yesterday?  A.  I desire  to  make  a 
statement;  Mr.  H.  O.  Havemeyer  said  that  the  reason  that  they 
had  gone  into  the  coffee  business  was  that  we  were  making 
three  or  four  cents  per  pound  profit;  it  is  false;  I desire  to  make 
a statement  of  the  profits  in  the  year  1896. 

Q.  Where  did  you  get  that  statement  that  you  are  now  mak- 
ing? A.  We  take  the  price  of  coffee  from  William  Scott  & Sons’ 
circular  every  Tuesday  and  figure  what  the  cost  is  on  that  day; 
then  we  average  the  year  on  that  basis;  in  the  year  1896,  cal- 
culated on  that  basis,  our  profits  on  roasted  coffee  was  a little 
less  than  three-quarters  of  a cent  per  pound;  in  1895,  a little 
less  than  six-tenths — why  I say  a little  less  is  because  we  do  not 
take  into  calculation  what  the  bad  debts  will  be;  we  cannot  tell 
what  these  will  be  at  the  time;  in  1S94,  six-tenths;  in  1893,  a lit- 
tle less  than  six-tenths  per  pound  of  roasted  coffee;  Mr.  Have- 
meyer said  that  they  are  now  making  a profit  of  a cent  per 
pound  on  coffee,  which  I doubt  very  much. 


10 


146 


[Senate, 


Mr.  Lexow:  He  stated  that  bis  investigation  of  the  subject 
led  him  to  the  conclusion  that  the  profit  was  three  cents,  and 
that  his  competition  had  forced  it  down  to  one  cent?  A.  We 
are  not  making  anything  iiowt;  we  are  not  making  any  profit; 
they  are  selling  their  coffee  at  half  a cent  less  than  ours;  I think 
they  are  losing  from  $500  to  $1,000  per  day;  they  claim  that 
their  package  coffee  is  composed  of  Java,  Mocha  and  Eio,  a com- 
bination of  three  kinds  of  coffee. 

Q.  What  do  you  mean  by  package  coffee?  A.  Put  up  in  one 
pound  packages;  a great  deal  of  this  coffee  is  sold  in  pound 
packages  to  the  trade;  now  they  claim  that  their  coffee  contains 
a combination  of  Java,  Mocha  and  Rio;  the  lowest  price  on  the 
market  to-day  for  Java  is  twrenty-one  cents;  the  lowest  price  of 
Mocha  is  tweDty-one  cents,  the  same  as  Java;  and  the  Rio  nine 
and  seven-eighths,  about  the  grade  they  are  using;  so  if  these 
things  are  true  they  must  be  losing  several  cents  per  pound  on 
their  Rio  coffee. 

By  Mr.  Mazet: 

Q.  At  what  price  are  they  selling  packages?  A.  At  thirteen 
cents. 

By  Mr.  Lexow: 

Q.  You  are  selling  at  the  same  price?  A.  At  thirteen  and 
one-half  cents  per  pound;  ours  has  no  Java  or  Mocha  either. 

Q.  The  fact  is  that  they  do  not  wTant  your  firm  to  manufacture 
sugar  in  competition  with  them,  and  you  do  not  want  them  to 
manufacture  coffee  in  competition  with  you?  A.  Not  exactly, 
as  long  as  they  carry  on  their  business  in  a legitimate  way. 

Q.  What  do  you  mean  by  that?  A.  It  means  that  we  are 
working  for  a profit,  and  not  a loss;  everybody  is  in  business  in  a 
legitimate  way  to  make  money. 

Q.  Your  original  venture  was  designed  for  the  purpose  of  aid- 
ing you  in  the  sale  of  coffee;  I mean  that  your  sugar  interests  aid- 
ed you  in  the  sale  of  coffee  in  the  market  and  was  subsidiary  to 


No.  49.] 


147 


.your  general  product?  A.  Well,  we  expected  to  make  a profit;  I 
don't  think  that  had  much  to  do  with  it;  each  stood  on  its  own 
basis 

Q.  You  were  using  that  as  an  agency  through  which  to  estab- 
lish the  sale  of  your  coffee  and  to  make  a profit  on  sugar  as  well? 
A.  Yes,  sir. 

Q.  Your  conclusion  is  that  they  wanted  to  destroy  all  com- 
petition against  them  in  sugar?  A.  That  is  my  belief. 

Q.  You  heard  the  testimony  of  Mr.  Jarvie  given  here  yester- 
day? A.  Yes,  sir. 

Q.  Have  you  any  desire  to  change  the  testimony  that  you  gave 
on  the  same  subject?  A.  No,  sir;  we  shall  present  before  you, 
Monday,  testimony  taken  in  this  trial,  which  I think  is  very  con- 
clusive that  that  stock  is  really  owned  by  the  American  Sugar 
Refining  Company. 

Q.  I don't  think  that  there  is  much  question  about  that;  it  has 
been  practically  admitted;  while  not  in  particular  terms,  the  cir- 
cumstances all  point  that  way. 

Q.  Is  that  all  the  testimony  that  you  want  to  introduce?  A. 
Mr.  Jarvie  is  here  if  you  wish  to  call  him. 

Mr.  Barry:  We  are  to  understand  that  the  American  Sugar 
Refining  Company  is  in  the  business  to  drive  you  out  of  it?  A. 
That  is  our  belief;  if  we  would  say  to-day  that  we  would  stop 
building  our  refinery  I think  they  would  stop  roasting  coffee. 

By  Mr.  Lexow : 

Q.  When  did  this  competition  between  you  and  the  American 
Sugar  Refining  Company  indicate  itself?  Did  they  first  put  down 
the  price  of  coffee  and  did  you  follow,  or  did  you  put  down  the 
price  of  coffee  and  they  follow?  A.  I think  it  was  about  the 
17th  of  December  that  we  got  our  telegrams  that  the  Woolson 
Spice  Company  had  reduced  the  price  of  coffee;  we  heard  later 
that  the  American  Sugar  Refining  Company  had  bought  a con- 
trolling interest  in  that  company;  we  did  not  change  our  price 
and  then  they  put  it  down  another  half  cent;  and  then  we  did  not 
reduce  our  price  until  about  the  first  of  the  year. 


148  [Senate, 

Q.  Then  how  much  did  you  reduce  the  price?  A.  One  cent  a 
pound. 

Q.  That  put  you  a half  cent  under  them?  A.  No,  sir;  that 
brought  it  to  the  same  level;  then  they  immediately  reduced 
their's  another  half  cent  a pound  less  than  our  price  to-day. 

Q.  You  assert  that  it  is  not  fair  business  competition,  but  for 
the  purpose  of  destroying  you  as  a competitor  against  them  in 
the  sugar  line?  A.  No  matter  at  what  price  we  might  put  our 
coffee  they  would  put  a lower  price;  they  intended  to  drive  us  out 
of  the  market. 

Q.  Have  you  any  further  information  or  knowledge  of  the 
circumstances  leading  to  the  purchase  of  the  stock  in  the  Wool- 
son  Company  by  the  Sugar  Refining  Company?  A.  Mr.  Jarvie 
can  give  that  much  clearer  than  I could. 

Q.  Additionally?  A.  I think  so. 

Jarvie,  James  N.,  recalled. 

By  Mr.  Lexow: 

Q.  Do  you  wish  to  add  to  the  testimony  that  you  gave  yester- 
day, Mr.  Jarvie?  A.  1 was  told  to  bring  here  memoranda  of  the 
purchases  from  the  different  refineries.  We  have  received  them 
from  our  brokers  this  morning. 

Q.  Purchases  from  sugar  refineries?  A.  From  B.  H.  Howell 
& Co.,  agents  for  two  outside  refineries,  and  for  the  American 
Sugar  Refining  Company. 

Q.  Will  you  explain  that  paper;  what  is  it?  A.  This  is  a 
memorandum  of  the  purchases  by  Arbuckle  Brothers  in  New 
York,  and  Arbuckle  & Co.,  in  Pittsburg,  to  January,  1807;  from 
the  American  Sugar  Refining  Company  we  bought  in  September, 
1200  barrels;  Pittsburg  bought  1180;  in  October  New  York 
bought  1100  barrels;  Pittsburg  bought  1075;  in  November  New 
York  bought  200;  Pittsburg  725;  in  December  and  January,  New 
York  bought  none;  in  the  same  months  Pittsburg  bought  727  1-2 
barrels  and  325  barrels. 

Q.  Making  a total  of  what?  A.  6,532  1-2  barrels. 


No.  40.] 


149 


Q.  Then  you  discontinued,  so  far  as  New  York  purchases  were 
concerned — you  had  discontinued  trading  with  the  American 
Sugar  Refining  Company  in  December  and  January,  1896  and 
1897?  A.  So  far  as  New  York  is  concerned;  from  outside  refin- 
eries we  bought  in  that  time  4,500  barrels  and  Pittsburg  bought 
1,080,  making  a total  of  5,5S0. 

Q.  How  about  purchases  of  your  company  in  New  York  during 
December  and  January?  A.  700  barrels  in  December  and  1,800 
barrels  in  January. 

Q.  From  what  company?  A.  B.  H.  Howell  Sons  & Co.,  as 
agent. 

Q.  So  that  practically  in  December  and  January — December, 
1896,  and  January,  1897,  you  had  discontinued  your  trade  with, 
the  American  Sugar  Refining  Company  and  transferred  it  to  H. 
B.  Howell  Sons  & Co.?  A.  So  far  as  the  New  York  office  is  con- 
cerned; yes,  sir. 

Q.  Is  there  anything  further  that  you  wish  to  state  with  refer- 
ence to  the  communication  received  by  you  from  the  American 
Sugar  Refining  Company?  A.  I have  nothing  at  the  moment. 

By  Mr.  Mazet: 

Q.  In  regard  to  the  purchase  of  the  Woolson  mill?  A.  All  that 
I can  say  in  regard  to  that  is  as  to  the  profitableness  of  the  busi- 
ness as  spoken  of  here  yesterday;  I desire  to  call  the  committee’s 
attention  to  the  fact  that  the  stock  of  the  Woolson  Spice  Com- 
pany sold  for  $1,500  per  share  in  1S94. 

By  Mr.  Lexow: 

Q.  Par  of  what?  A.  Par  of  $100;  in  December,  1896,  the  Amer- 
ican Sugar  Refining  Company  were  supposed  to  have  paid  for 
eleven-eighteenths  of  the  stock  at  $1,150  per  share;  after  buying 
that  stock  it  got  noised  abroad  for  what  purpose  it  was  bought; 
the  seven-eighths,  less  61  shares  which  we  won,  was  sold  for  $950 
per  share. 

Q.  Then  this  additional  value  of  the  stock  represents  a surplus 
in  the  Woolson  Company?  A.  That  I am  not  able  to  answer. 


150 


[Senate, 


Q.  You  say  that  you  bought  61  shares;  have  you  not  familiar- 
ized yourself  with  the  condition  of  the  Woolson  Company?  A. 
We  believe  that  the  stock  is  worth  on  the  books  $950;  our  belief 
of  that  comes  from  statements  which  we  have  heard  in  Toledo. 

Q.  Based  upon  the  surplus  in  the  treasury?  A.  I presume  so; 
yes. 

Q.  Could  it  be  in  any  other  form?  A.  It  might  be  machinery 
acquisition.  f 

Q.  That  would  be  a surplus  in  the  treasury  whether  repre- 
sented by  machinery,  material  or  cash?  A.  I should  say  it  was  In 
the  treasury. 

Q.  That  would  indicate  very  strongly,  wouldn’t  it,  that  there 
is  some  profit  in  the  coffee  business?  A.  I should  think  it  would 
indicate  that  during  the  last  three  years  there  has  been  no  profit. 

Q.  How  old  is  the  Woolson  Company?  A.  I imagine  it  is  20  or 
25  years  old. 

Q.  At  what  period  of  its  history  was  it  that  it  was  able  to  ac- 
cumulate this  surplus,  so  far  as  you  know?  A.  1887  was  an  ex- 
traordinary year  in  coffee;  we  had  great  fluctuations;  in  1891-92- 
93;  those  were  other  years  when  there  were  great  fluctations  in 
the  coffee  trade;  and  if  they  hit  the  market  it  would  not  be  at  all 
surprising  if  they  made  a great  deal  of  money. 

Q.  You  mean  buying  the  raw  material  and  selling  the  finished 
product  at  high  prices?  A.  At  an  advance  upon  the  raw  mater- 
ial, based  on  the  advances  of  the  market;  coffee  has  fluctuated 
during  the  last  ten  years  at  pretty  nearly  an  average  of  six  cents 
per  pound  per  year;  some  years  a great  deal  more  than  that. 

Q.  What  is  the  capital  of  the  Woolson  Company?  A.  Nominal 
capital,  $800,000;  paid  in  $180,000,  I believe. 

Q.  What  distinction  do  you  draw  between  nominal  and  paid  In 
capital?  Do  you  mean  that  there  are  unissued  shares  in  the 
treasury  that  have  not  been  paid  for,  or  that  the  stock  was  issued 
originally  at  lower  figures  than  the  face  value?  A.  I am  not  able 
to  answer  that. 

Q.  When  you  acquired  your  original  share  in  that  company — 
what  year  was  that?  A.  I think  in  March,  1896. 


No.  40.] 


151 


Q.  Do  you  know  whether  there  was  any  surplus  in  the  treasury 
of  that  company  represented  by  any  assets,  cash  or  otherwise,  as 
early  as  1887?  A.  I could  not  answer  that  question. 

Q.  What  dividends  have  been  paid  on  the  stock?  A.  I can  an- 
swer for  the  last  year;  50  per  cent. 

Q.  On  profits  made  during  the  current  year  or  division  of  part 
of  the  already  existing  surplus?  A.  I have  heard  from  the  sur- 
plus; I have  no  definite  knowledge. 

Q.  Don’t  it  strike  you  that  50  per  cent,  is  a fairly  large  divi- 
dend for  an  investing  public?  A.  Not  on  the  value  of  the  shares; 
that  would  only  be  about  five  per  cent,  if  the  shares  are  sold  for 
$1,000. 

Q.  That  surplus  represents  earnings  that  have  been  made  by 
the  company  during  the  period  it  has  been  operating,  not  divided 
among  the  stockholders?  A.  I presume  so. 

Q.  During  the  period  of  time  covered  by  the  creation  of  this 
surplus  the  company  was  earning  far  in  excess  of  what  would  be 
a reasonable  dividend  to  its  shareholders,  assuming  50  per  cent, 
was  a reasonable  dividend  on  the  invested  capital;  that  is  a fact, 
is  it  not?  A.  I presume  so. 

Q.  Don’t  you  think,  then,  that  Mr.  Havemeyer's  statement  of 
yesterday  that  coffee  was  a fairly  lucrative  business  was  well 
founded?  A.  It  has  been  a lucrative  business. 

Q.  Is  your  company  a firm  or  a corporation?  A.  We  are  a 

firm. 

Q.  Are  there  outside  of  the  Woolson  Company  competitive  cor- 
porations in  the  coffee  field?  A.  Yes,  sir;  firms  and  corporations 

both. 

Q.  How  many  are  there  in  the  field;  I mean  in  the  roasting  cof- 
fee business?  A.  I cannot  answer  that. 

Q.  Generally?  A.  There  may  be  a thousand;  almost  every 
wholesale  grocer  in  the  West  has  a little  plant  of  his  own  where 
he  can  roast  one  bag  or  five  bags. 

Q.  I mean  reasonably  large  concerns?  A.  There  are  three 
concerns  that  are  looked  upon  as  being  large  in  the  package  line, 
the  Woolson  Spice  Company,  W.  F.  McLaughlin  of  Chicago  and 
ourselves. 


152 


[Senate, 


Q.  That  Mr.  McLaughlin  was  referred  to  by  you  in  your  testi- 
mony yesterday  ? A.  Yes,  sir. 

Q.  How  do  you  compare  the  three,  relatively,  to  each  other? 
A.  We  are  the  leading  house  in  coffee;  I think  the  other  two  con- 
cerns do  about  the  same. 

Q.  Relatively  to  yourself  what  proportion  of  the  business  do 
they  do?  A.  I should  think  more  than  half. 

Q.  The  others  that  you  have  mentioned  are  individual  roasters 
that  roast  small  quantities  for  the  use  of  their  particular  locali- 
ties, the  localities  in  which  they  transact  their  business?  A. 
Yes;  but  they  compete  for  our  business. 

Q.  I am  speaking  of  small  concerns?  A.  I have  reference  to 
that. 

Q.  They  compete  with  you?  A.  Yes,  sir. 

Q.  But  not  beyond  the  localities  in  which  they  have  their  of- 
fices? A.  Practically  not. 

Q.  Is  it  a fact  that  you,  the  McLaughlin  Company  and  the 
Woolson  Company  can  practically  handle  the  roast  coffee  busi- 
ness in  the  United  States?  A.  In  packages;  yes,  sir. 

Q.  What  distinction  is  there  between  coffee  in  package  and 
other  coffee  in  the  way  of  sale?  A.  Coffee  in  packages,  when  we 
speak  of  that  we  mean  pound  packages,  100  pounds,  or  60  pounds, 
or  36  pounds  in  a case;  the  other  coffee  we  speak  of  as  bulk  coffee. 

Q.  That  is  in  bags?  A.  Yes,  sir. 

Q.  Is  there  any  competition  against  you  in  what  is  called  bulk 
coffee?  A.  Yes,  sir. 

Q.  To  what  extent?  A.  There  are  firms  that  do  a larger  bulk 
business  than  we  do. 

Q.  Relatively  to  your  package  business  are  there  persons  or 
concerns  engaged  in  the  bulk  coffee  business  who  do  as  large  or  a 
larger  business  than  you  do  in  the  package  quality?  A.  No,  sir. 

Q.  What  proportion  of  the  business  does  the  bulk  coffee  show 
as  compared  with  the  package  coffee?  A.  That  is  a pretty  hard 
question  to  answer. 

Q.  Is  it  half  or  quarter?  A.  I should  think  so;  yes,  sir. 

Q.  Half  of  the  business?  A.  Yes,  sir. 


No.  40.] 


153 


Q.  Is  tliat  simply  a guess  or  is  it  fairly  approximate?  A.  I 
was  startled  at  the  figures  that  I heard  yesterday  about  the  mag- 
nitude of  it;  and  probably  that  is  the  reason  why  I am  not  capa- 
ble of  judging  accurately. 

Q.  Have  you  got  any  figures  that  you  can  present  to  this  com- 
mittee showing  the  condition  of  the  coffee  business  as  to  the 
number  of  concerns  engaged  in  it,  whether  bulk  coffee  or  package 
coffee,  and  the  prices  obtained  from  1S87  down  to  the  present 
time?  A.  It  would  take  a very  long  time  to  get  up  those  kind  of 
statistics. 

Q.  Have  they  been  gotten  up?  A.  No,  sir. 

Q.  Is  there  anybody  who  gets  up  statistics  of  that  character? 
A.  No,  sir;  not  that  I am  aware  of;  I can  give  you  the  quotations 
of  the  Coffee  Exchange;  that  is  about  all. 

Q.  I understood  Mr.  Arbuckle  to  say  that  you  handle  neither 
Java  nor  Mocha  coffee?  A.  No,  sir;  he  didn’t  make  that  state- 
ment; he  said  that  we  used  no  Java  and  Mocha  in  packages. 

Q.  Then  you  use  it  only  in  bulk,  which  is  a small  proportion? 
A.  Yes,  sir. 

Q.  How  does  Java  and  Mocha  get  on  the  market;  through  what 
medium?  A.  It  is  shipped  by  different  importers;  we  import 
somewhat  ourselves. 

Q.  What  large  concerns  handle  it?  A.  There  are  several. 

Q.  Will  you  name  them?  A.  I would  rather  go  to  the  office 
and  look  them  up  before  attempting  to  name  them. 

Q.  Will  you  endeavor  to  furnish  this  committee  substantially 
the  same  statistics  with  reference  to  the  coffee  business  that  we 
have  requested  those  interested  in  the  sugar  business  to  furnish 
with  reference  to  refined  sugar?  A.  I do  not  know  what  those 
were. 

Q.  The  names  of  all  important  concerns  engaged  in  the  busi- 
ness; second,  the  price  of  the  raw  product  with  its  variations 
from  1887  down  to  the  present  time;  the  price  at  which  the  re- 
fined or  manufactured  product  has  been  disposed  of,  with  its  vari- 
ations during  that  period  of  time';  will  you  be  able  to  furnish  that 
statistical  information?  A.  It  will  take  some  time;  it  is  only 


154 


[Senate, 


fair  to  say  about  coffee  that  Brazil  coffee  sells  at  eight  cents  per 
pound;  some  Java  coffees  at  thirty  cents  per  pound;  there  is  a 
great  range  in  the  price  of  coffee;  if  you  ask  for  the  price  of  any 
one  grade  I can  give  it  to  you;  but  for  all  the  grades  I cannot;  it 
would  be  the  work  of  months. 

Q.  How  have  the  prices  in  the  coffee  line  been  maintained  dur- 
ing this  period  of  time,  by  understandings,  arrangements  or 
agreements  between  the  various  coffee  houses?  A.  I will  speak 
for  ourselves;  we  have  no  agreement  nor  understanding  what- 
ever with  anybody. 

Q.  With  none  of  those  competing  concerns?  A.  None  what- 
ever. 

Q.  With  the  Woolson  Spice  Company?  A.  None  whatever. 

Q.  Have  they  agreements  between  themselves?  A.  That  I 
don’t  know. 

Q.  Have  you  any  information  on  the  subject?  A.  I have  no  in- 
formation on  the  subject. 

Q.  Do  the  prices  that  they  sell  their  product  for  agree  precisely 
with  the  prices  at  which  you  sell  your  product  with  reference  to 
the  various  grades  disposed  of?  A.  I have  never  compared  the 
prices  of  the  different  grades;  I can  speak  of  standard  package 
coffee,  which  they  have  usually  followed  up  or  down;  up  to  the 
middle  of  December,  with  the  exception  of  one  instance,  where 
they  advanced  their  price  and  we  didn’t;  that  was  some  years  ago. 

Q.  Is  the  McLaughlin  concern  a corporation  or  a partnership? 
A.  I believe  it  it  a partnership  or  an  individual  concern. 

Q.  Have  you  any  of  the  annual  statements  or  reports  of  the 
Woolson  Company?  A.  I have  not. 

Q.  Have  you  seen  any?  A.  I have  not. 

Q.  What  was  the  price  of  the  grade  of  coffee  that  you  dealt 
in  most  largely  at  the  time  that  the  American  Sugar  Refining 
Company  went  into  the  coffee  business  through  the  Woolson 
Spice  Company?  A.  I should  say  about  ten  cents. 

Q.  Do  you  mean  that  that  was  the  purchasing  price  or  the 
selling  price?  A.  I mean  to  say  that  it  was  the  purchasing 
price  of  the  Rio  coffee. 


No.  40.] 


155 


Q.  To  the  consumer?  A.  No;  that  was  the  purchasing  price 
for  us. 

Q.  What  was  the  selling  price  to  the  consumer?  A.  I 
couldn’t  tell  you. 

Q.  Do  you  know  what  that  grade  of  coffee  sold  for  in  the 
market?  A.  Not  to  the  consumer;  we'  do  not  sell  to  consumers. 

Q.  Well,  to  the  middle  men?  A.  I think  our  net  price  at  that 
time  to  the  jobber,  through  whom  we  sell  our  goods,  was  fifteen 
cents. 

Q.  Fifteen  cents  net?  A.  Less  cash  discount. 

Q.  With  or  without  rebates?  A.  Less  cash  discount. 

Q.  How  much  would  that  amount  to?  A.  Two  per  cent. 

Q.  Cash  within  thirty  days?  A.  Cash  within  seYen  or  ten 
days. 

Q.  Within  thirty  days  after  the  American  Sugar  Kefining  Com- 
pany went  into  operation  as  a coffee  producing  influence,  what 
was  the  price  to  the  consumer  of  that  same  grade  of  coffee  to 
the  middleman?  A.  Do  you  haYe  reference  now  to  green  coffee 
or  roasted  coffee? 

Q.  The  coffee  that  you  bought  for  ten  and  sold  for  fifteen?  A. 
I should  say  it  was  about  ten  cents  then. 

Q.  And  sold  at  what?  A.  They  are  to-day  selling  coffee  at 
thirteen  cents;  their  price  has  been  about  the  same  since  Jan- 
uary first;  I may  be  wrong. 

Q.  Your  price  is  half  a cent  higher  than  theirs,  thirteen  and 
one-half  cents?  A.  Yes,  sir. 

Q.  You  are  not  charging  now  to  the  middleman  thirteen  and 
a half  cents  per  pound  for  the  same  product  that  three  months 
ago  you  were  selling  to  him  for  fifteen  cents?  A.  No,  sir;  I 
cannot  say  that. 

Q.  What  do  you  mean?  Three  months  ago  I am  talking 
about;  from  the  15th  of  December,  which  is  six  or  seYen  weeks; 
that  is  a still  shorter  time;  what  you  sold  six  weeks  ago  to  the 
middleman  at  fifteen  cents  you  are  now  selling  to  him  for  thir- 
teen and  one-half  cents?  A.  Yes,  sir. 

Q.  And  the  Woolson  Spice  Company  for  thirteen?  A.  Correct. 


156 


[Senate, 


Q.  Does  that  difference  between  ten  and  thirteen  and  one-half 
cents  or  ten  and  thirteen  cents  represent  profit,  or  does  it  repre- 
sent increase  in  roasting  the  coffee?  How  much  of  it,  if  any,  is 
profit?  A.  It  represents  the  cost  of  doing  the  business,  the 
maunfacturing  cost  and  its  selling. 

Q.  Is  there  not  profit  in  addition?  A.  We  cannot  figure  it 
to-dayi 

Q.  Then  at  thirteen  cents  if  you  cannot  figure  a profit  with 
thirteen  and  one-half  cents  there  must  be  a loss  to  the  Woolson 
Spice  Company?  A.  I judge  that. 

Q.  And  a corresponding  gain  to  the  consumer?  That  is  true 
is  it  not?  A.  Yes,  sir.  I presume  so. 

Q.  What  period  of  the  year  does  this  50  per  cent,  dividend  of 
the  Woolson  Spice  Company  cover?  A.  I am  not  able  to  say 
that. . , 

Q.  When  is  it  declared?  A.  I couldn’t  tell. 

Q.  Is  it  declared  in  lump  or  in  fractions?  A.  I am  under  the 
impression  that  it  is  declared  semi-annually;  it  may  be  quar- 
terly; I cannot  answer  that. 

Q.  25  per  cent?  A.  If  it  is  semi-annually,  yes;  if  quarterly, 
12  1-2  per  cent. 

Q.  When  was  the  last  part  of  this  dividend  declared?  A.  I 
am  unable  to  answer  that. 

Q.  Was  it  this  year  or  last  year?  A.  Last  year. 

Q.  First  of  January?  A.  No,  sir. 

Q.  Can  you  remember  any  more  definitely  than  you  have 
stated?  A.  I cannot. 

Q.  You  must  have  received  your  proportion  of  that  dividend 
on  the  amount  of  stock  that  you  held?  A.  Yes;  $50;  it  was  not  a 
very  large  amount  and  I did  not  follow  it. 

Q.  You  had  not  secured  the  60  shares  at  the  time  of  the  dec- 
laration of  the  last  dividend?  A.  No,  sir. 

Q.  When  did  you  secure  those  60  shares?  A.  I am  under  the 
impression  that  it  was  the  last  week  in  December  or  the  first 
week  in  January,  the  first  few  days  in  January. 

Q.  Since  that  time  no  dividend  has  been  declared?  A.  I be- 
lieve not. 


No.  40.] 


157 


Q.  Now,  as  to  the  difference  between  the  13  cents  now  charged 
by  the  Woolson  Spice  Company  and  the  15  cents  which  you  say 
was  the  prevailing  price  heretofore — would  that  difference 
amount  to  a 50  per  cent,  dividend  on  the  basis  of  the  business 
done  by  the  Woolson  Spice  Company?  A.  I am  not  able  to  an- 
swer that. 

Q.  From  your  knowledge  of  the  business  of  that  company,  you 
have  knowledge  of  the  amount  produced  and  the  amount  sold,  in 
a general  way — would  the  difference  of  two  cents  per  pound  on 
their  output  justify  a dividend  of  50  per  cent,  in  one  year?  A.  I 
presume  it  would. 

Q.  Do  you,  Mr.  Jarvie,  consider  that  a reasonable  and  fair  com- 
mercial profit?  A.  What? 

Q.  A 50  per  cent,  dividend  on  the  original  stock  of  the  com- 
pany, one  half  of  which  was  paid  in.  which  means  a 100  per  cent, 
dividend  upon  the  original  capital  invested?  A.  The  business 
has  largely  increased  and  it  would  be  impossible  for  them  to  do 
the  business  that  they  do  to-day  on  the  capital  stock  of  the  com- 
pany. 

Q.  But  the  original  capital  contributed,  say  50  per  cent,  of  the 
nominal  capital  stock;  whatever  else  there  is  in  the  treasury,  ac- 
cording to  your  statement,  has  been  an  undivided  profit,  a sur- 
plus made  during  the  period,  practically  between  1887  and  now, 
a period  of  ten  years — do  you  think  it  is  a fair  commercial  profit 
to  be  able  within  practically  ten  years  to  reach  a situation  where 
a corporation  can  pay  in  earnings  and  dividends  to  its  stock- 
holders yearly  the  whole  amount  of  the  capital  stock  originally 
contributed?  A.  Well,  I want  to  correct  the  impression  that  you 
evidently  have;  I did  not  make  the  statement  that  only  50  per 
cent,  of  the  capital  stock  had  been  paid;  I said  the  capital  nom- 
inally was  |300,000;  I understand  that  their  cash  capital  is  $180,- 
000 ; I am  not  so  sure  that  that  amount  was  paid  in ; I do  not  know 
the  affairs  of  the  company  close  enough  to  make  a positive  state- 
ment in  regard  to  that. 

Q.  Do  you  mean  that  the  capital  stock  has  been  increased  from 
the  original  capital  stock  contributed  of  $150,000  to  $180,000? 


158  [Senate, 

A.  I do  not  know  what  the  original  capital  was;  it  has  been  in- 
creased from  time  to  time;  I know  what  it  is  to-day. 

Q.  What  is  it?  A.  $180,000;  those  share  were  issued  to  that 
extent;  the  nominal  capital  was  $300,000. 

Q.  Then  there  has  been  an  increase  over  the  original  invest- 
ment of  $30,000?  Now  I ask  you,  do  you  think  that  that  is  a 
fair  commercial  profit  to  make;  to  create  a situation  whereby  the 
consumer  is  bound  to  pay  to  the  manufacturer  a profit  which  will 
enable  him  to  divide  in  dividends  practically  100  per  cent,  of  the 
investment  yearly?  A.  I probably  can  answer  for  our  own  busi- 
ness better  than  theirs. 

Q.  I am  asking  you  whether  in  your  opinion  as  a manufacturer, 
is  it  fair  to  create  a situation  such  as  I have  named?  Do  you  ex- 
pect the  people  to  tolerate  it  for  any  considerable  length  of  time? 
A.  I should  think  that  the  earning  capacity  of  the  plant  should 
be  based  on  the  value  of  its  certificates;  and  according  to  my  fig- 
ures it  is  only  five  per  cent,  on  the  value  of  the  stock  as  shown 
by  the  treasury;  it  is  about  $950  per  share. 

Q.  That  is  the  market  value  of  the  stock  reached  by  the  calcu- 
lation of  its  face  at  this  time;  now  the  question  I want  to  ask 
vou  and  want  you  to  answer,  if  you  will,  is,  whether  you,  as  a 
manufacturer,  think  a condition  should  be  maintained  which  per- 
mits a corporation  within  ten  years  to  accumulate  from  the  con- 
sumers a profit  upon  the  original  investment  which  enables  that 
corporation  to  pay  100  per  cent,  upon  the  original  investment  an- 
nually back  to  the  stockholders?  A.  It  is  a very  profitable  cor- 
poration, I should  judge. 

Q.  Don’t  you  think  it  is  that  tendency,  that  desire  to  secure 
money,  that  brings  corporations  in  the  bad  odor  and  grace  in 
which  they  stand  to-day?  A.  I presume  so. 

Q.  You  are  a large  manufacturer,  Mr.  Jarvie,  and  don’t  you 
think  the  present  situation,  the  attacks  upon  corporations,  the 
attacks  upon  the  money  power,  are  due  to  the  development  and 
the  knowledge  by  the  people  by  just  such  situations,  where  the 
necessaries  of  life  are  made  the  subject  of  barter,  enabling  those 
who  deal  in  them  to  make  enormous  profits  that  could  not  be 


No.  40.] 


159 


made  in  any  other  department  of  business?  A.  Judging  from 
our  own  business,  we  do  not  make  such  profits. 

Q.  I am  not  criticising  your  business;  I am  criticising  the  busi- 
ness of  this  Woolson  Company?  A.  It  shows  that  it  has  been 
well  managed  and  well  handled;  they  must  have  able  men  in  the 
corporation,  because  others  have  not  made  that  money. 

Q.  Don't  it  show  that  they  have  been  charging  for  ten  years  an 
unreasonable  price  upon  their  product  to  the  consuming  public? 
A.  No,  sir;  not  necessarily. 

Q.  You  assert  the  proposition  that  this  company  not  only  pays 
50  per  cent,  dividends  upon  the  original  capital  invested  yearly, 
but  in  addition  to  that  accumulates  a surplus  which  makes  its 
stock  worth  $950?  A.  I do  not  say  that;  I say  that  they  have 
shown  extraordinary  ability,  probably  in  the  purchasing  of  their 
raw  material;  as  the  market  price  of  the  raw  material  has  ad- 
vanced. they  have  been  able  to  get  more  than  ordinary  profit  on 
the  cost  of  their  raw  material;  owing  to  the  action  of  the  market 
the  value  of  the  raw  material  ou  hand  advances  or  declines. 

Q.  How  long  do  you  carry  raw  material  in  stock  before  you 
realize  upon  it?  A.  I can  answer  for  ourselves;  not  for  the  Wool- 
son  Spice  Company,  if  you  want  to  know  that;  we  have  some- 
times had  coffee  in  store  for  three  or  four  years. 

Q.  That  is  to  say,  you  buy  the  raw  product  at  a low  price  and 
keep  it  in  stock  until  you  can  sell  it  at  a profit?  A.  We  have 
sometimes;  and  sometimes  we  manufacture  it  the  very  day  it  ar- 
rives. 

Q.  So  that  your  margin  of  profit  consists  not  only  in  the  differ- 
ence between  the  cost  of  roasting,  but  also  between  the  market 
price  of  the  raw  product  purchased  at  a lower  price  and  the  pre- 
vailing market  price?  A.  A great  many  times,  I am  sorry  to 
say,  we  could  have  bought  coffee  on  the  spot  cheaper  than  the 
cost  of  importation;  it  is  not  on  every  purchase  that  money  is 
made. 

Q.  Then  you  have  been  less  fortunate  than  the  Woolson  Com- 
pany? A.  I would  not  say  that;  I desire  to  say  that  it  is  not 
every  roast  coffee  concern  that  has  made  money  during  the  last 


160 


[Senate, 


ten  years;  it  is  not  universally  so,  because  everybody  would  come 
into  it.  i 

Q.  The  situation  is:  that  the  Woolson  Spice  Company  would 
not  have  been  able  to  make  the  money  that  it  did  make  if  it 
charged  a fair  commercial  profit  instead  of  charging  a high  and 
arbitrary  price  to  the  consumer;  and  all  the  other  coffee  concerns 
would  have  come  down  in  their  price  to  meet  that  competition, 
and  the  price  of  coffee  would  have  been  much  less  to  the  con- 
sumer than  it  was?  A.  I don’t  think  that  they  charged  an  arbi- 
trary price  or  high  price;  they  have  gotten  a fair  return  on  the 
cost  of  the  raw  material  at  the  time  in  which  that  was  manu- 
factured. 

Q.  You  don't  wish  to  be  understood  that  the  accumulation  of 
a surplus  nine  times  as  large  as  the  original  capital  and  the 
making  of  50  per  cent,  dividends  in  the  meantime  is  nothing 
but  a fair  profit  upon  the  investment?  A.  Not  where  the  in- 
vestment is  worth  $1,000  per  share. 

Q.  I am  speaking  of  the  Woolson  Company?  A.  I do  not 
think  it  is  too  much — 5 per  cent. 

Q.  I understand  you, that  you  claim  you  have  paid  $1,000,  and 
that  it  would  be  only  a fair  return  upon  that  amount?  But  so 
far  as  the  original  investment  is  concerned,  you  don’t  claim  that 
that  is  a fair  profit,  do  you?  A.  I don’t  want  to  express  an 
opinion  of  a competitor’s  business. 

Q.  You  would  rather  not  answer  that  question?  A.  I will 
answer  it  in  that  way,  that  I do  not  want  to  express  an  opinion 
of  a competitor’s  business. 

Q.  Have  any  coffee  concerns  been  forced  out  of  business  by 
the  competition?  A.  I do  not  recall  any. 

Q.  Have  any  failed?  A.  Several. 

Q.  Recently?  A.  I don’t  think  within  the  last  year. 

Q.  How  long  ago  was  the  last,  do  you  remember?  A.  Two  or 
three  years  ago. 

Q.  What  concern?  A.  In  the  West;  I prefer  not  to  mention 
any  names  until  I can  look  over  a book  which  I have,  which  will 
give  the  names. 


No.  40.] 


161 


Q.  Wliat  is  the  price  of  Java  coffee?  A.  There  are  various 
grades;  I should  saj  from  twenty-one  to  thirty  cents. 

Q.  Mocha?  A.  About  twenty-one  to  twenty-two  cents  and  a 
half  or  twenty-three  cents. 

Q.  Rio?  A.  Rio  varies  from  nine  to  fourteen  or  fifteen  cents. 

Q.  I believe  that  Mr.  Arbuckle  stated  that  the  package  put 
up  by  the  American  Sugar  Refining  Company  consisted  of  Java, 
Mocha  and  Rio — in  what  proportion?  A.  I cannot  answer. 

Q.  Do  you  know  what  proportion?  A.  I have  no  idea. 

Q.  Isn't  it  a fact  that  they  are  putting  up  at  less  price  a better 
grade  or  brand  of  coffee  than  you,  or  more  expensive  coffee,  and 
selling  it  at  a less  price  for  the  purpose  of  driving  you  out  of  the 
business?  A.  On  the  face  of  the  package  it  says  “ This  coffee  is 
a compound  of  Java,  Mocha  and  Rio;”  they  will  have  to  answer 
whether  it  is  or  not.  , 

Q.  Have  you  examined  it?  A.  Yes,  sir. 

Q.  Don’t  you  know  about  what  the  ingredients  are?  A.  I 
may  be  wrong  in  my  opinion. 

Q.  What  would  judge  to  be  the  actual  value  of  the  package 
put  up  by  them  in  competition  with  you?  A.  Well,  I presume 
ours  is  better;  we  think  it  is;  better  value  for  the  money;  gives 
the  consumer  more  satisfaction ; drinks  better. 

By  Mr.  Warner: 

Q.  Has  your  company  any  contract  with  the  American  Sugar 
Refining  Company  providing  that  you  will  not  sell  their  product 
for  less  than  a stated  price?  A.  We  are  a factor  for  the  Ameri- 
can Sugar  Refining  Company. 

Q.  You  have  a contract  with  them  to  that  effect?  A.  I think 
there  was  handed  in  yesterday  an  agreement  which  all  factors 
or  agents  sign. 

Q.  Did  you  see  that?  A.  I have  seen  it;  I presume  it  is 
correct. 

Q.  You  have  a similar  contract?  A.  I presume  that  we  have. 

Q.  Has  your  company  such  a contract  with  your  factors  as  an 
agent?  A.  We  are  not  a company. 

11 


162 


[Senate, 


Q.  Well,  partnership;  have  you  any  such  contract  for  the  sale 
of  coffee?  A.  I think  the  American  Sugar  Refining  Company 
copy  their  factor’s  agreement  from  ours;  they  certainly  get 
copies  of  ours. 

Q.  Will  you  let  the  committee  have  a copy  of  your  contract? 
A.  Yes,  sir;  there  is  no  reason  why  I should  not. 

Mr.  Lexow: 

Q.  Will  you  produce  it  Monday?  A.  I will,  or  send  if. 

AFTERNOON  SESSION. 

NEW  YORK,  SATURDAY,  FEBRUARY  6, 1897. 

Mr.  Lexow:  Mr.  Parsons,  the  committee  have  decided  to  defer 
the  conclusion  or  decision  of  the  question  presented  by  Mr. 
Searles’  absence  until  Monday  at  ten  o’clock,  when  the  committee 
will  reconvene  with  the  expectation  that  Mr.  Searles  will  then 
appear  before  the  committee  and  give  his  own  reasons  for  his 
absence. 

Henry  O.  Havemeyer  recalled. 

Examined  by  Mr.  Lexow. 

Q.  Mr.  Havemeyer,  certain  questions  were  put  to  Mr.  Theodore 
A.  Havemeyer  with  regard  to  the  discharge  of  labor  from  the  re- 
fineries in  this  State  at  the  time  of  the  organization  of  the  origi- 
nal Sugar  Trust;  can  you  state  how  many  refineries  closed  down 
at  that  time  and  the  number  of  workingmen  who  were  dis- 
charged? A.  I think  he  was  in  errpr  about  that;  I do  not  think 
there  were  any  refineries  closed. 

Q.  Are  you  sure  about  that?  A.  I think  the  only  two  refin- 
eries in  New  York  State  that  did  not  continue  work  were  the  De 

Castro  & Donner  and  the  Oxnard,  and  my  recollection  is  that 

* 

both  of  those  were  closed  before  the  formation  of  the  Trust. 

Q.  There  was  the  North  River  Sugar  Refining  Company?  A. 
That  was  not  in  operation. 


No.  40.] 


163 


Q.  That  was  dismantled,  was  it  not?  A.  In  process. 

Q.  In  process  of  dismantling?  A.  So  I understand;  was  not 
working. 

Q.  At  that  time?  A.  Yes. 

Q.  The  Oxnard  Bros.  Co.?  A.  I do  not  think  they  were  work- 
ing. 

Q.  They  were  also  in  process  of  dismantlement?  A.  No;  I 
think  that  they  discontinued  operations  for  some  reason. 

Q.  How  long  previous  to  the  organization  of  this  Trust?  A.  I 
cannot  say. 

Q.  Give  your  best  recollection?  A.  Oh,  I have  no  knowledge. 

Q.  A year?  A.  I have  no  knowledge. 

Q.  Absolutely  none  as  to  time?  A.  Absolutely  none. 

Q.  But  they  were  concerns  that  were  taken  into  the  Trust, 
were  they  not?  A.  Yes. 

Q.  So  that  they  were  in  life  to  the  extent  of  forming  part  of 
the  assets  of  the  Trust,  although  they  had  been  practically  aban- 
doned and  dismantled  previous  to  the  organization  of  the  Trust? 
A.  Oh,  no;  they  had  just  discontinued  operations;  suspended 
operations. 

Q.  Have  they  ever  undertaken  operations  since?  A.  No,  sir. 

Q.  How  about  Moller  & Sierck  Company?  A.  I don’t  think 
they  were  working. 

Q.  Does  the  same  criticism  apply  to  them  as  to  the  others— the 
same  state  of  facts?  A.  I think  they  were  in  suspension;  the 
business  was  very  ruinous  just  immediately  prior  to  the  Trust, 
and  I think  these  refineries  were  laying  idle. 

Q.  How  about  the  Boston  Sugar  Refining  Company?  A.  That 
is  the  Boston  corporation? 

Q.  Yes.  A.  I think  that  was  in  operation  and  subsequently 
closed. 

Q.  How  long  after  the  organization  of  the  Trust?  A.  Imme- 
diately. 

Q.  Immediately?  A.  Yes. 

Q.  It  was  closed  simultaneously  with  the  organization  of  the 
Trust?  A.  About  that. 


164 


[Senate. 


Q.  How  about  tlie  Forest  City  Sugar  Refining  Company?  A. 
I have  no  recollection  of  that  ever  being  worked;  it  is  so  many 
years  ago;  that  was  a sort  of  defunct;  they  had  valuable  property 
up  there,  but  it  had  not  been  in  operation,  I think,  for  some  years 

Q.  That  became  part  of  the  Trust,  did  it  not  A.  Yes. 

Q.  Was  it  in  operation  at  the  time  of  the  organization  of  the 
Trust?  A.  I think  not. 

Q.  And  was  not  operated  after  the  organization  of  the  Trust? 
A.  No. 

Q.  How  about  the  St.  Louis  Sugar  Refining  Company?  A.  I 
think  we  operated  that. 

Q.  How  long?  A.  I believe  it  was  a year;  sufficient  to  see 
that  it  could  not  live  in  competition  with  the  Eastern  refineries 
and  then  we  discontinued  it  altogether. 

Q.  About  one  year?  A.  I believe  so. 

Q.  And  it  has  not  been  put  in  operation  since?  A.  No. 

Q.  What  was  the  number  of  workingmen  employed  in  these 
six  refineries  which  you  have  testified  to  were  closed  at  the  time 
of  the  organization  of  the  Trust,  or  immediately  after  its  organi- 
tion?  A.  I am  unable  to  state  that. 

Q.  Were  there  as  many  as  10,000  operatives  employed?  A. 
Oh,  I should  not  think  there  were  over  3,000. 

Q.  Is  that  upon  a guess  or  is  it  upon  facts  that  you  know  of? 
A.  It  is  a good  deal  of  a guess. 

Q.  What  was  the  total  product,  output  or  capacity  of  all  the 
refineries  forming  part  of  the  original  Sugar  Trust?  A.  I am 
unable  to  say  that  now. 

Q.  Was  it  32,300  barrels  daily  at  that  time?  A.  I am  unable 
to  state  that  accurately. 

Q.  What  is  your  best  recollection  as  to  the  amount — would 
that  about  cover  it?  A.  Do  you  mean  the  output  or  the  total 
capacity? 

Q.  The  capacity?  A.  I should  think  it  would. 

Q.  What  was  the  capacity  of  those  that  after  the  organization 
of  the  Trust  were  permitted  to  operate — I mean  immediately  af- 
ter the  organization  of  the  Trust;  let  me  give  you  figures;  was 


No.  40.] 


165 


Iheir  total  capacity  28,500  barrels  daily?  A.  I could  not  tell  you 
what  the  capacity  was. 

Q.  Would  that  be  about  the  capacity?  A.  I could  not  at  this 
time  tell  you  anywhere  near  whether  that  was  so  or  not. 

Q.  Were  the  four  refineries  subsequently  acquired  by  the  Sugar 
Refineries  Company  in  Philadelphia  closed  after  the  acquisi- 
tion or  permitted  to  operate?  A.  They  continued  operations. 

Q.  All  of  them?  A.  Yes. 

Q.  And  do  yet?  A.  Yes. 

Q.  All  of  them?  A.  Yes. 

Q.  To  the  same  extent  as  before?  A.  To  a greater;  very  much 
greater. 

Q.  The  demand,  output  and  product  has  increased  since  the 
organization  of  the  Trust?  A.  Some. 

Q.  With  the  increase  of  population?  A.  Yes,  sir;  increase  of 
consumption. 

Q.  To  what  extent  of  the  average  increase  as  the  result  of  the 
increase  of  population,  comparing  1887  to  1896?  A.  I have  not 
those  figures. 

Q.  Have  you  no  idea  of  the  sum?  A.  I should  think  the  in- 
crease was  at  least — in  how  many  years? 

Q.  From  1887  until  now?  A.  Ten  years — well,  roughly  guess- 
ing I should  think  it  was  20  per  cent. 

Q.  Now,  notwithstanding  this  increase  of  20  per  cent,  in  the 
demand,  you  have  not  reopened  any  of  those  refineries  that  were 
closed  at  the  time  of,  or  immediately  after,  the  organization  of  the 
Sugar  Trust,  have  you?  A.  No,  sir. 

Q.  How  many  men  did  you  employ  in  the  State  of  New  York 
in  the  refining  of  sugar  and  its  various  branches  at  the  time  of 
the  organization  of  the  Trust?  A.  I am  unable  to  state  that. 

Q.  Did  you  employ  as  many  as  about  10,000  operatives  on  the 
east  side  of  the  East  river?  A.  I should  not  think  so. 

Q.  About  that?  A.  Actual  working  men?  I should  not  think 
so. 

Q.  I mean  all  employes  taken  together.  A.  I should  not  think 
so. 


106 


[Senate, 


Q.  Is  it  not  true  that  after  the  organization  of  the  Sugar  Trust 
you  discharged  about  7,000  men  on  the  East  side  of  the  river  and 
only  a few ‘of  those  7,000  have  been  re-employed?  A.  That  is 
absolutely  false;  there  never  were  7,000  men  employed  by  the 
Sugar  Company  in  the  State  of  New  York  and  in  all  its  collateral 
interests. 

Q.  We  are  asking  to  get  at  the  facts,  Mr.  Havemeyer;  how 
many  in  your  best  judgment?  A.  Well,  I am  unable  to  state;  I 
am  able  to  state,  however,  in  my  judgment,  that  there  is  at  least 
25  per  cent,  now  more  employed  in  the  State  of  New  York  than 
there  ever  was  before  the  Trust,  owing  to  the  increase  in  the 
business  carried  on  in  New  York. 

Q.  You  cannot  give  the  figures,  though?  A.  No,  sir. 

Q.  Will  Mr.  Searles  be  able  to  furnish  these  figures?  A.  He 
would  not  unless  he  has  an  opportunity  to  compile  them. 

Q.  You  have  this  data?  A.  If  the  books  are  in  existence  dat- 
ing back  to  ten  years;  I don’t  know  that. 

Q.  It  is  not  your  custom  to  destroy  the  books?  A.  It  is  not 
our  custom  to  destroy  the  books  whatever — but  you  can  arrive 
at  it  in  the  same  way — the  number  of  laborers  employed  is  gen- 
erally in  proportion  to  the  amount  melted,  and  you  can  easily 
get  at  the  meltings  for  that  time  and  to-day,  and  a comparison 
of  which  will  be  a guide  as  to  the  number  of  men  employed  in 
the  same  period. 

Q.  Have  you  not  introduced  improved  machinery  that  to  some 
extent  takes  the  place  of  labor?  A.  I don’t  think  we  have,  ex- 
cept on  the  docks,  where  it  is  done  by  an  electric  motor  instead 
of  by  hand. 

Q.  You  stated  yesterday  that  the  difference  between  the  value 
of  the  raw  product  and  the  added  percentage  or  increment  at 
which  you  sold  the  refined  averaged  about  one  per  cent.  A. 
What  did  I say? 

Q.  One  cent  per  pound.  A.  No,  no;  I said  the  profit — exist- 
ing profit. 

Q.  The  existing  profit?  A.  Yes. 

Q.  Between  the  value  of  the  raw  product  and  the  cost  of  the 
refined?  A.  And  the  market  price  of  the  refined  to-day. 


No.  40.] 


167 


Q.  Would  be  what?  A.  Would  be  one  cent  a pound  profit. 

Q.  What  was  it  in  1886?  A.  I don’t  know. 

Q.  Do  you  know  whether  or  not  it  was  an  average  of  about 
seven-tenths?  A.  No,  I know  nothing  about  it. 

Q.  Have  you  never  looked  at  the  figures?  A.  Never. 

Q.  Do  you  know  whether  in  1887,  immediately  prior  to  the 
organization  of  the  Trust,  it  was  .68?  A.  Are  you  speaking  of 
coffee  or  sugar?  I understood  it  was  coffee. 

Q.  I am  speaking  of  sugar  now?  A.  Well,  then,  you  will  have 
to  scratch  that  testimony  of  mine  out,  because  I presumed  it 
alluded  to  coffee— I understood  you  to  say  the  difference  between 
the  price  of  raw  sugar — and  raw  coffee  and  roasted  coffee. 

Q.  Raw  sugar?  A.  Oh,  excuse  me;  then  be  kind  enough  to  re- 
peat the  question. 

Q.  Do  you  remember  whether  in  1886  that  increment  of  profit 
was  six  hundred  and  eight  one-thousandths?  A.  No;  but  I have 
a table  here  that  gives  the  wdiole  business. 

(Witness  produces  publication  of  Willet  & Gray  “Analysis  of 
Sugar  Refining  Business  for  1888-89.”) 

Q.  Well,  will  you  look  at  .that  table  and  see  whether  it  was — 
what  is  the  date,  Mr.  Stenographer? 

Q.  1886?  A.  Sixty-eight  one-hundredths  cent;  sixty-eight  and 
a half  one-hundredths  cent. 

Q.  1887?  A.  One  cent  and  twenty-six  one-hundredths. 

Q.  1887?  A.  Yes;  no,  no — six  hundred  and  seventy-three  one- 
thousandths  cent. 

Q.  Now  after  the  formation  of  the  Trust  and  in  1888  what  was 
it?  A.  One  cent  and  twenty-six  one-hundredths. 

Q.  1889?  A.  One  cent  and  twenty-one  one-hundredths. 

Q.  1890?  A.  Seven  hundred  and  nine  one-thousandths  cent. 

Q.  1891?  A.  Eighty-four  one-hundredths  cent. 

Q.  1892?  A.  One  cent  and  three-tenths. 

Q.  1893?  A.  One  cent  and  fifteen  one-hundredths. 

Q.  1894?  A.  Eight  hundred  and  eighty-four  one-thousandths 
cent. 

Q.  1895?  A.  Eight  hundred  and  eighty-two  one-thousandths 

cent. 


108 


[Senate, 


Q.  Have  you  got  the  figures  for  1890?  A.  Ninety-eight  one- 
hundredths  cent;  now  I have  got  the  average  for  the  nine  years 
preceding  the  Trust  and  nine  years  since. 

Q.  Yes?  A.  One  cent  and  nine-tenths — and  for  the  nine  years 
preceding  the  Trust,  and  nine  years  of  the  Trust,  and  the  Ameri- 
can Sugar  Refining  Company  of  New  Jersey  ninety-eight  one- 
hundredths. 

Q.  Now — A.  Do  you  want  to  mark  this? 

I would  like  to  have  it  marked  if  }7ou  wall  let  me  have  it  one 
moment,  Mr.  Havemeyer,  before  it  is  marked.  (Witness  hands 
paper  to  Chairman.) 

Q.  Now  that  difference  has  been  made,  notwithstanding  tne 
fact  that  in  the  meanwhile  new  improvements,  better  machinery 
and  economies  in  business  transportation  and  other  directions 
have  prevailed;  that  is  so,  is  it  not?  A.  Yes,  sir;  that  difference. 

Q.  Do  you  regard  Willet  & Gray  as  an  authority  upon  this 
question;  upon  statistics?  A.  Yes,  sir;  I think  so. 

Q.  They  are  so  regarded  in  the  business  world?  A.  In  the 
sugar  community;  yes. 

“Analysis  of  Sugar  Refining  Business  for  1888-89  by  Willet  & 
Gray,  Sugar  Statisticians,”  marked  “Exhibit  A,”  Feb.  6,  1897. 

Q.  Will  you  look  at  this  so-called  deed  and  state  whether  It  is 
the  deed  or  agreement  referred  to  in  your  testimony  of  yesterday, 
a true  copy  of  it  (indicating).  A.  Yes;  it  is. 

Deed  of  Sugar  Trust  put  in  evidence. 

DEED. 

The  Sugar  Refineries  Company. 

The  undersigned,  namely:  Havemeyer  & Elder,  the  De  Cas- 
tro & Donner  Sugar  Refining  Company,  F.  O.  Matthiessen  & 
Wiechers  Sugar  Refining  Company,  Havemeyer  Sugar  Refining 
Company,  Brooklyn  Sugar  Refining  Comany,  the  firm  of  Dick  & 
Meyer,  the  firm  of  Moller,  Sierck  & Co.,  North  River  Sugar  Re- 
fining Company,  the  firm  of  Oxnard  Brothers,  the  Standard  Sugar 
Refinery,  the  Bay  State  Sugar  Refinery,  the  Boston  Sugar  Re- 
fining Company,  the  Continental  Sugar  Refinery  and  the  Revere 


No.  40.]  169 

Sugar  Refinery,  for  the  purpose  of  forming  the  board  hereinafter 
provided  for,  and  for  the  other  purposes  hereinafter  set  forth, 
enter  into  the  following  agreement: 

NAME. 

The  board  herein  provided  for  shall  be  designated  by  the  name 
of  the  Sugar  Refineries  Company. 

OBJECTS. 

The  objects  of  this  agreement  are: 

1.  To  promote  economy  of  administration  and  to  reduce  the 
cost  of  refining,  thus  enabling  the  price  of  sugar  to  be  kept  as  low 
as  is  consistent  with  reasonable  profit. 

2.  To  give  to  each  refinery  the  benefit  of  all  appliances  and  pro- 
cesses known  or  used  by  the  others  and  useful  to  improve  the 
quality  and  diminish  the  cost  of  refined  sugar. 

3.  To  furnish  protection  against  unlawful  combinations  of 
labor. 

4.  To  protect  against  inducements  to  lower  the  standard  of  re- 
fined sugars. 

5.  Generally  to  promote  the  interests  of  the  parties  hereto  in 
all  lawful  and  suitable  ways. 

BOARD. 

The  parties  hereto  who  are  not  corporations  shall  become  such 
before  this  deed  takes  effect. 

Each  corporation  subscribing  hereto  agrees,  and  the  parties 
hereto  who  are  not  corporations  agree  as  to  the  corporations 
which  they  are  to  form,  that  all  the  shares  of  the  capital  stock  of 
all  such  corporations  shall  be  transferred  to  a board  consisting 
of  eleven  persons,  which  may  be  increased  to  thirteen  by  a vote 
of  the  majority  of  the  members  of  the  entire  board,  and  two  addi- 
tional members  to  belong  respectively  to  the  first  and  second 
classes  hereinafter  provided  for. 

Any  member  of  the  board  may  be  removed  by  vote  of  two- 
thirds  of  the  members  of  the  entire  board  in  case  of  incapacity 
or  neglect  or  refusal  to  serve. 


170  [Senate, 

Any  member  may  resign  by  filing  written  notice  of  his  resigna- 
tion with  the  secretary  of  said  board. 

Vacancies  during  the  term  of  office  of  members  shall  be  filled 
by  appointment  by  vote  of  the  majority  of  the  members  of  the 
entire  board. 

A member  appointed  to  fill  a vacancy  shall  hold  office  until  the 
expiration  of  the  term  of  the  member  in  whose  place  he  is  ap- 
pointed, which  new  appointee  shall  succeed  to  all  the  rights, 
duties  and  obligations  of  his  predecessor  under  this  deed. 

Vacancies  by  expiration  of  office  shall  be  filled  at  the  annual 
meeting  of  the  holders  of  certificates  herein  provided  for,  or  at 
such  other  times  as  shall  be  prescribed  by  the  board. 

Such  annual  meetings  shall  be  held  in  the  city  of  New  York  in 
the  month  of  June,  and  notice  shall  be  given  to  each  certificate 
holder  of  record  of  every  meeting  of  certificate  holders  by  mail- 
ing to  him,  at  least  seven  days  before  said  meeting,  a notice  of 
the  time,  place  and  objects  of  such  meeting.  Holders  of  certifi- 
cates shall  vote  according  to  the  number  of  shares  for  which 
they  hold  certificates.  They  may  vote  by  proxy. 

The  board  may  make  by-laws.  All  arrangements  for  meetings, 
elections  and  all  details  not  herein  specifically  provided  for,  shall 
be  made  by  the  board.  A member  of  the  board  may  act  by  proxy 
for  any  other  member  with  like  effect  as  if  he  were  present  and 
acting. 

A majority  of  the  members  of  the  board  shall  constitute  a 
quorum  for  the  transaction  of  business.  The  action  of  the  board 
meeting,  by  a majority  vote  of  such  meeting,  shall  have  the  same 
effect  as  the  unanimous  action  of  the  board  except  as  herein 
otherwise  provided,  and  that  to  authorize  the  appropriation  of 
money,  or  shares  shall  require  the  assent,  either  written  or  ex- 
pressed, by  vote  at  a board  meeting,  of  at  least  a majority  of  the 
members  of  the  entire  board. 

No  member  of  the  board  shall,  during  the  time  that  he  holds 
office,  buy  or  sell  sugar  or  be  interested  directly  or  indirectly  in 
the  purchase  or  sale  of  sugar,  whether  for  the  purpose  of  specu- 
lation or  otherwise,  without  a vote  of  a majority  of  the  members 
of  the  entire  board.  For  any  violation  of  this  provision  he  may 


No.  40.] 


171 


be  removed  as  a member  of  tbe  board,  and  shall  be  liable  to  ac- 
count for  all  profits  which  shall  be  realized  by  him  to  the  board 
for  the  purpose  of  pro  rata  benefit  of  the  certificate  holders. 

As  it  is  desirable  that  the  board  shall  consist  of  members  who 
are  largely  interested  in  the  properties  and  the  business  contem- 
plated it  is  hereby  agreed  that  all  members  of  the  board  shall  be 
free  to  join  in  or  become  parties  to  agreements  and  transactions 
which  the  several  Boards  of  Directors  hereinafter  referred  to,  or 
this  board  may  arrange,  to  the  same  extent  and  in  the  same  man- 
ner and  with  like  effect  as  if  they  were  not  members  of  the  board. 

This  board  may  transfer,  from  time  to  time,  to  such  persons  as 
it  may  be  desired  to  constitute  trustees,  or  directors  or  other  of- 
ficers of  corporations,  so  many  of  the  shares  as  may  be  necessary 
for  that  purpose,  to  be  held  by  them  subject  to  the  provisions  of 
this  instrument.  Such  transfers  may  be  executed  by  the  presi- 
dent and  treasurer  of  the  board  in  behalf  of  and  as  attorneys  for 
the  board  for  that  purpose,  and  be  re-transferred  when  so  re- 
quested by  the  board. 

The  first  board  shall  consist  of  the  persons  hereinafter  men- 
tioned; they  shall  hold  office  as  follows,  and  until  their  success- 
ors shall  be  elected: 

Members  of  the  First  Class. — Harry  O.  Havemeyer,  F.  O. 
Matthiessen,  John  E.  Searles,  Jr..  Julius  A.  Stursberg;  to  hold 
office  for  seven  years. 

Members  of  the  Second  Class. — Theodore  A.  Havemeyer,  Jo- 
seph B.  Thomas,  John  Jergensen,  Hector  C.  Havemeyer,  to  hold 
office  five  years. 

Members  of  the  Third  Class. — Charles  H.  Senff,  William  Dick; 
to  hold  office  three  years. 

At  the  expiration  of  the  terms  of  the  third  class,  and  of  eacti 
successive  class,  their  successors  as  members  of  such  class  shall 
be  elected  for  seven  years. 


OFFICERS. 

The  board  shall  appoint  from  its  members  a president,  vice- 
president  and  treasurer,  and  it  shall  also  appoint  a secretary. 


172 


[Senate, 


who  may  or  may  not  be  a member  of  the  board.  The  board  may 
from  time  to  time  create  other  offices,  and  appoint  the  persons  to 
fill  them.  It  may  appoint  committees.  It  shall  designate  the 
duties  and  prescribe  the  powers  of  the  several  officers  and  com- 
mittees. 


PLANS. 

The  several  corporations,  parties  to  this  agreement,  shall  main- 
tain their  separate  organizations,  and  each  shall  carry  on  and  con- 
duct its  own  business. 

The  capital  of  each  corporation  shall  be  transferred  to  the 
board,  and  in  lieu  of  the  same,  certificates  not  exceeding  $50,- 
000,000,  divided  into  500,000  shares,  each  of  $100  shall  be  issued 
by  the  board  and  distributed  as  hereinafter  provided. 

The  certificate  shall  be  in  the  following  form: 

No ) (Shares 

(Shares  One  Hundred  Dollars  Each.) 

THE  SUGAR  REFINING  COMPANY. 

This  is  to  certify  that is  entitled  to 

shares  of  the  Sugar  Refineries  Company. 

This  certificate  is  issued  under  and  subject  to  the  provisions  of 
a d ied  dated  the  16th  day  of  August,  1887. 

The  shares  represented  by  this  certificate  are  transferable  by 
the  bolder  and  his  personal  representatives  in  person  or  by  attor- 
ney, upoE  the  books  of  the  board  and  not  otherwise,  and  only 
upon  the  surrender  of  this  certificate. 

They  entitle  the  holder  to  the  rights  and  are  subject  to  the  pro- 
visions mentioned  in  the  deed. 

The  interest  of  the  holder  is  in  the  proportion  of  the  number 
of  shares  represented  by  this  certificate  to  the  entire  number  of 
shares  outstandiug.  The  total  amount  represented  by  outstand- 
ing certificates  and  the  terms  of  the  deed  may  be  changed  from 
time  to  time  by  a majority  in  interest  as  therein  provided. 


No.  40.] 


173 


In  witness  whereof  the  board  has  caused  this  certificate  to  be 
s'gned  by  its  President  and  Treasurer,  and  the  seal  of  the  board 
to  be  affixed  hereto,  the day  of , 188. . 

For  value  received do  hereby  assign,  transfer 

and  set  over  unto shares  of 

those  represented  by  the  within  certificate,  and 

do  hereby  constitute  and  appoint attorney 

irrevocable  for and  in 

name  and  stead  to  transfer  the  said  shares  upon  the  books  kept 
for  the  purpose  under  the  direction  of  the  within  board. 

The  assignee,  by  accepting  this  transfer,  assents  to  the  terms  of 
the  deed  referred  to  in  the  certificate  as  the  same  shall  be 
changed  frcm  time  to  time. 

Witness  my  hand  and  seal  this day  of 188 . . 

TITLE. 

The  shares  of  the  capital  stock  of  the  several  corporations  to 
be  transferred  to  the  board  as  herein  provided  shall  be  trans- 
ferred to  the  names  of  the  board  as  trustees,  to  be  held  by  them 
and  b.y  their  successors  as  members  of  the  board  strictly  as  joint 
tenants. 

By  the  death,  resignation  or  removal  of  any  member  of  the 
board,  the  whole  title  shall  remain  in  the  others.  All  members 
ceas’ng  to  be  such  shall  execute  such  instrument  as  may  be  neces- 
sary, if  any,  to  keep  the  title  vested  in  the  persons  who  from  time 
to  time  shall  be  members  of  the  board. 

The  board  shall  hold  the  stock  transferred  to  it  with  all  the 
rights  and  powers  incident  to  stockholders  in  the  several  corpo- 
rations, and  subject  only  to  purposes  set  forth  in  this  deed. 

DIVISION  OF  INTEREST. 

The  several  corporations  shall  be  entitled  to  the  shares  in  the 
following  proportions  of  the  $50,000,000,  viz: 

Havemeyer  & Elder. 

De  Castro  & Donner  Sugar  Refining  Company. 

F.  O.  Matthiessen  & Wiecher’s  Sugar  Refining  Company. 


174 


[Senate, 


The  Havemeyer  Sugar  Refining  Company, 

The  Brooklyn  Sugar  Refining  Company. 

Dick  & Meyer. 

Moller,  Sierck  & Co. 

Oxnard  Brothers. 

North  River  Sugar  Refining  Company. 

Standard  Sugar  Refinery. 

Bay  State  Sugar  Refinery. 

Boston  Sugar  Refining  Company. 

Continental  Sugar  Refinery. 

Revere  Sugar  Refinery. 

Each  refinery  and  the  corporation  to  which  it  belongs  shall  be 
freed  from  liability  and  indebtedness  by  the  parties  interested 
in  it;  or  such  parties,  if  the  board  shall  approve,  may  provide  in 
cash  for  such  indebtedness  or  liability,  leaving  the  same  to  stand 
at  the  pleasure  of  the  board,  except  that  the  employes’  contracts 
shown  in  the  schedules  hereto  annexed,  and  the  contracts  with 
Havemeyer  & Elder  and  the  F.  O.  Matthiessen  & Wiecher's  Sugar 
Refining  Company,  and  the  Bay  State  Sugar  Refinery  pending 
for  improvements  and  enlargements  shall  continue  as  liabili- 
ties. 

Annexed  hereto  are  scheduled  in  general  terms  of  the  proper- 
ties of  the  several  refineries.  The  properties  are  guaranteed  to 
correspond  with  the  schedule  by  the  parties  interested  therein, 
who  are  to  make  good  any  deficiency.  On  the  complete  execu- 
tion of  this  agreement  each  of  the  said  parties  shall  make  a full 
inventory  of  the  property  not  embraced  in  such  schedules,  and 
useful  for  the  conduct  of  the  business,  on  hand  or  contracted  for, 
including  raw  and  refined  sugars,  molasses,  sugars  in  process, 
syrups,  bone-black,  fuel,  barrels,  packages,  charcoal  and  other 
supplies;  and  such  inventory  is  to  be  examined  and  the  articles 
appraised  at  their  present  cash  value  (except  as  to  sugar  and 
molasses  to  arrive,  which  are  to  be  appraised  at  their  market 
value  on  arrival)  by  a committee  of  five  persons,  as  follows: 

Theodore  A.  Havemeyer. 

F.  O.  Matthiessen. 

Julius  A.  Stursberg. 


No.  40.] 


175 


John  E.  Searles,  Jr. 

Joseph  B.  Thomas. 

The  value  of  such  property  as  fixed  by  four-fifths  of  the  ap- 
praisers shall  be  paid  for  in  cash  by  the  said  board  to  the  treas- 
urer of  each  corporation. 

Bone-black  may  at  the  option  of  the  said  board  be  paid  for  in 
cash  or  in  bonds  hereinafter  provided  for  or  in  certificates  at  a 
rate  for  bonds  or  certificates  to  be  fixed  by  vote  of  a majority  of 
the  members  of  the  entire  board. 

The  property  shall  remain  with  the  refinery,  where  it  is  to  be 
used  by  it,  except  as  such  refinery  shall  make  a different  disposi- 
tion of  it. 

In  consideration  of  the  transfer  of  their  stock  to  the  board,  the 

board  shall  also  pay  to  Havemeyer  & Elder  the  sum  of 

to  the  F.  O.  Matthiessen  & Wiecher’s  Sugar  Refining  Company 

the  sum  of  , and  to  the  Bay  State  Sugar  Refining 

Company  the  sum  of on  account  of  payments  already 

made  on  pending  contracts  for  improvements  and  enlargements. 

Additional  shares  to  the  amount  of  $400,000,  less  15  per  cent., 
to  be  left  with  the  board  as  hereinafter  provided,  shall  be  re- 
ceived by  Moller,  Sierck  & Co.  for  improvements  and  enlarge- 
ment of  capacity  of  their  refinery  now  in  progress,  when  said  im- 
provements are  completed  and  the  increased  capacity  demon- 
strated. 

The  shares  assigned  to  the  several  refineries  shall  be  distrib- 
uted by  them  to  and  among  the  parties  interested  therein. 

Each  holder  of  stock  in  a refinery  company  shall  be  entitled 
to  so  many  of  the  shares  allotted  to  such  refinery  as  shall  be  in 
proportion  of  his  stock  to  the  capital  of  his  company. 

Shares  for  stockholders  of  any  refining  company  who  shall  not 
surrender  their  stock,  may,  under  the  direction  of  the  board,  be 
deposited  for  their  account,  with  the  right  to  receive  the  same 
upon  the  surrender  of  their  stock. 

Of  the  shares  allotted  to  the  several  refineries  they  shall  leave 
15  per  cent,  with  the  board  and  these  shares  and  any  shares  not 
allotted  of  the  $50,000,000,  except  as  herein  otherwise  provided 


176 


[Senate, 


shall  be  subject  to  be  disposed  of  by  the  board  either  for  the  ac- 
quisition of  other  refineries  to  become  parties  to  this  deed,  pay- 
ment for  additional  capacity,  or  by  appropriations  to  the  several 
refineries. 

But  in  no  case  shall  any  appropriation  be  made  to  or  any  ac- 
tion taken  by  any  corporation  without  the  approval  of  its  Board 
of  Directors,  and  no  action  be  taken  by  the  board  which  shall 
create  liability  by  it  or  by  its  members. 


PROFITS. 

The  profits  arising  from  the  business  of  each  corporation  shall 
be  paid  over  by  it  to  the  board  hereby  created,  and  the  aggregate 
of  said  profits,  or  such  amount  as  may  be  distributed  by  said 
board,  at  such  time  as  it  may  determine,  to  the  holders  of  the 
certificates  issued  by  said  board  for  capital  stock,  as  hereinbefore 
provided. 


FISCAL  ARRANGEMENTS. 

The  funds  necessary  to  enable  the  said  board  to  make  the  pay- 
ments herein  provided  to  be  made  by  it  may  be  raised  by  mort- 
gage to  be  made  by  the  corporations,  or  either,  any  or  all  of  them, 
in  their  property,  and  by  such  other  means  as  shall  be  satisfactory 
to  such  board. 

In  case  any  mortgage  shall  be  paid  on  the  property  of  any  cor- 
poration by  its  directors  or  stockholders,  the  holders  of  certifi- 
cates shall,  within  a time  to  be  fixed  by  said  board,  have  the 
right,  at  such  uniform  rates  as  said  board  shall  arrange,  to  have 
the  bonds,  certificates,  or  other  evidence  of  debt  or  interest  in 
proportion  to  their  respective  holdings.  Any  parts  which  shall 
not  be  thus  taken  may  be  disposed  of  by  said  board. 


CHANGES. 

The  number  of  shares  and  the  total  amount  thereof  issuable 
by  said  board  may  from  time  to  time  be  increased  or  diminished 


No.  40.] 


177 


by  deeds  executed  by  a majority  in  value  of  the  certificate  hold- 
ers. 

The  provisions  of  this  deed  may  from  time  to  time  be  changed 
by  deed  executed  by  uoi  less  than  a majority  in  intere-c;  of  the 
certificate  holders,  provided  no  change  shall  be  made  which  shall 
discriminate  to  the  disadvantage  of  the  certificate  holders  as  be- 
tween themselves.. 


ACQUISITION  OF  OTHER  REFINERIES. 

The  capital  stock  of  other  sugar  refining  companies  and  of  com- 
panies whose  business  relates  directly  or  indirectly  to  sugar  re- 
fining (in  every  instance  to  be  incorporated)  may  be  transferred  to 
said  board  with  the  consent  of  a majority  thereof  at  valuation 
and  upon  terms  satisfactory  to  it,  to  be  held  by  said  board 
under  and  subject  to  all  the  terms  of  this  deed  and  certificates 
may  be  issued  therefor  by  said  board,  and  may  be  sold  by  it  to 
provide  funds  for  such  purchase  or  purchases,  and  any  such  cor- 
poration or  corporations  shall  thereupon  become  a party  to  this 
deed  upon  causing  the  same  to  be  duly  signed  in  its  behalf. 


CUSTODY  OF  DEEDS. 

This  deed,  when  executed  by  the  parties  hereto,  shall  be  de- 
livered to  the  president  of  the  board,  who  shall  have  the  sole 
and  independent  custody  and  control  of  the  same,  and  the  said 
deed  shall  not  be  shown  or  delivered  to  any  corporation,  firm, 
person,  or  persons  whatsoever,  except  by  the  express  direction 
and  order  of  the  board. 

A copy  of  the  said  deed  shall  also  be  lodged  with  a member 
of  the  board  residing  in  Boston,  Mass.,  which  shall  be  held  by 
him  under  the  same  condition  and  in  the  same  manner  as  the 
original  deed. 

In  witness  whereof  the  parties  have  hereto  set  their  seals  and 
affixed  their  names,  these  presents  to  become  binding  when  com- 

12 


178  [Senate, 

pletely  executed  by  all  the  parties  and  to  take  effect  from 
October  1,  1897. 

Dated  August  16,  1887. 

HAVEMEYER  & ELDER. 

DONNER  & DE  CASTRO  SUGAR  REFG.  CO. 

Per  H.  O.  Havemeyer,  Manager  (subject  to  confimation 
stock  and  scrip  holders). 

E.  O.  31 ATTHI ESSEN  & WIECHERS  SUGAR  REFG.  CO. 
F.  O.  Matthiessen,  P. 

HAVEMEYER  SUGAR  REFINING  COMPANY, 

John  E.  Searles,  Jr.,  Treas. 

DICK  & MEYER. 

NORTH  RIVER  SUGAR  REFINING  CO., 

Geo.  H.  Moller,  Secretary. 

OXNARD,  BROS. 

MOLLER,  SIERCK  & CO. 

BROOKLYN  SUGAR  REFINING  CO., 

Henry  Offerman,  Treas. 

STANDARD  SUGAR  REFINING  CO., 

By  Charles  O.  Foster,  Pres. 

BAY  STATE  SUGAR  REFG.  CO., 

Per  Edwin  F.  Atkins,  Pres. 

CONTINENTAL  SUGAR  REFINERY, 

By  Silas  Piree,  Pres. 


The  undersigned  hereby  agree  to  become  parties  to  the  fore- 
going deed  in  accordance  with  the  terms  and  condition  therein 


No.  40.] 


179 


stated,  they  to  receive  without  discount  the  amounts  in  certifi- 
cates set  opposite  their  respective  signatures : 

FOREST  CITY  SUGAR  REFINING  CO., 

By  H.  J.  Libby,  President. 

Geo.  S.  Hunt,  Treas. 

ST.  LOUIS  SUGAR  REFINING  CO., 

By  W.  L.  Noott,  President; 

A.  D.  Cunningham,  Sect,  and  Treasurer. 

PLANTERS’  SUGAR  REFINING  CO.,  New  Orleans, 
John  Barkley,  Prest. 

LOUISIANA  SUGAR  REFINING  CO., 

John  S.  Wallis,  President. 

Q.  Will  you  look  at  page  78  of  this  record  in  the  case  of  the 
United  States  against  the  E.  C.  Knight  Company  and  state 
whether  or  not  that  is  a copy  of  a contract  entered  into  between 
the  parties  named,  the  American  Sugar  Refineries  Company  and 
Harrison?  A.  I believe  it  to  be. 

Q.  You  have  no  doubt  that  it  is?  A.  1 have  not  the  slightest 
doubt  about  it. 

Contract  of  purchase  of  Franklin  Refinery  put  in  evidence. 

CONTRACT  OF  THE  AMERICAN  SUGAR  REFINING  COM- 
PANY WITH  CHARLES  C.  HARRISON,  REPRESENT- 
ING THE  STOCKHOLDERS  OF  THE  FRANKLIN  SUGAR 
REFINING  COMPANY. 

New  York,  March  10,  1892. 

Gentlemen : 

Having  heretofore  proposed  to  buy  the  refinery  and  all  build- 
ings, wharves  and  plant  connected  with  the  establishment  of  the 
Franklin  Sugar  Refining  Company,  of  which  you  are  owners  of  all 
the  stock,  in  order  that  we  might  take  the  title  as  stockholders  of 
the  corporation  which  owns  the  property,  instead  of  directly,  as 
originally  proposed,  but  not  varying  in  substance  the  property 
intended  to  be  sold  and  that  intended  not  to  be  sold,  the  Ameri- 
can Sugar  Refining  Company  offers  to  purchase  from  you  the  en- 
tire capital  stock  of  the  Franklin  Company  for  the  sum  of  $10,- 


180 


[Senate, 


000,000,  payable  in  shares  of  the  American  Company  at  par,  one- 
half  common  and  one-half  preferred.  Provided  that  the  consent 
which  is  required  to  authorize  an  increase  in  the  capital  of 
llie  American  Company  of  $25,000,000  is  obtained.  This  offer,  sub- 
ject to  the  above  proviso,  is  to  become  a binding  contract  upon 
the  acceptance  of  the  same  by  Mr.  Chas.  C.  Harrison  in  behalf  of 
himself  and  his  associates,  owners  of  all  the  stock  of  the  Frank- 
lin Sugar  Refining  Company,  when  the  American  Company  will, 
with  all  reasonable  despatch,  proceed  to  complete  the  required 
consent  for  the  increase  of  capital. 

No  property  is  intended  to  pass  by  this  sale  of  shares  for  f!10,- 
000,000,  payable  in  shares  other  than  real  estate,  plant  and  bone 
black. 

(142).  The  title  to  the  real  property  of  the  Franklin  Company 
shall  be  marketable  and  clear  of  all  encumbrances  and  liens.  In- 
cluded in  this  property  is  a wharf,  the  title  to  which  stands  in  the 
name  of  Win.  W.  Frazier  (the  title  to  be  transferred  to  the  Frank- 
lin Company),  and  excluded  from  this  sale  is  the  title  to  the  prop- 
erty south  of  Almond  street  and  west  of  Swanson  street,  and  two 
houses  north  of  Bainbridge  street,  618  Swanson  street,  and  619 
Tenn  street,  standing  in  the  name  of  the  Franklin  Company, 
which  we  understand  to  have  been  placed  in  the  name  of  that 
company  by  mistake. 

The  bone-black  that  shall  have  been  received  at  the  refinery  on 
the  5th  of  March,  1892,  will  pass  as  property  of  the  Franklin 
Company  to  the  American  Company. 

All  running  contracts  connected  with  the  business  for  the  year 
1892,  or  any  part  of  it,  such  as  those  for  coal,  bone-black,  pack- 
ages tight  or  slack,  blood,  hauling  and  all  similar  contracts  for 
supplies  will  be  assumed  and  performed  by  the  American  Com- 
pany, the  sellers  paying  all  liabilities  under  said  contracts  so  far 
as  the  same  shall  have  been  executed  by  delivery  or  performance, 
and  also  paying  wages  and  salaries  up  to  the  5th  of  March,  in- 
stant, which  is  to  be  the  day  on  which  the  transfer  takes  effect, 
if  this  contract  is  completed,  the  account  of  stock  having  been 
taken  on  that  day.  There  will  also  pass  by  the  sale  the  lease  of 
the  city  wharf  at  the  foot  of  Almond  street  and  the  Philadelphia 
office  of  the  company  at  No.  101  South  Front  street.  The  Ameri- 


No.  40.] 


181 


can  company  will  also  perform  all  existing  contracts  for  1892, 
for  the  sale  of  the  empty  hogsheads,  bags  and  packages,  or  things 
of  a similar  nature,  and  the  contract  with  C.  A.  Brinley  for  ser- 
vices. All  contracts  for  future  delivery  of  bone-black,  all  mer- 
chandise and  supplies  on  hand,  to  be  payable  as  of  the  5th  of 
March.  1892,  at  cost,  and  the  price  of  the  future  deliveries  to  be 
cost,  as  required  by  contracts  with  the  respect)  re  sellers.  Re- 
fined sugar  and  sugar  in  the  process  of  manufacturing  will  be 
paid  for  on  the  basis  of  the  market  value  of  refined  sugar  at  rlie 
close  of  business  on  Saturday,  March  5,  1892,  when  an  account  of 
stock  was  taken  and  the  price  will  be  payable,  as  of  that  day;  and 
all  expenses,  rents,  insurance  and  taxes  shall  be  apportioned  as 
of  that  date. 

All  property  of  the  Franklin  Company  not  intended  to  pass  by 
the  sale  of  the  shares  shall  be  deemed  to  be  the  property  of  Mr. 
Harrison  and  his  associates,  and  shall  be  transferred  to  them  by 
the  Franklin  Company  immediately.  Included  in  the  property 
which  is  thus  to  pass  to  Mr.  Harrison  and  his  associates  shall  be 
all  debts  due  the  Franklin  Company  and  all  bills,  notes,  open  ac- 
counts, bank  and  bankers  deposits  and  securities,  and  all  books 
of  accounts,  records  and  the  minute  book  of  the  Franklin  Com- 
pany, and  a quantity  of  machinery  intended  for  experimental  pur- 
pose; these  are  to  be  retained  by  Mr.  Harrison  and  his  associates 
as  their  property. 

Mr.  Harrison  and  his  associates  shall  pay  and  shall  protect  the 
Franklin  Company  against  all  the  debts  and  liabilities  of  that 
company  down  to  the  5th  of  March,  1892.  All  the  debts  and  lia- 
bilities which  shall  be  incurred  by  the  Franklin  Company  from 
and  after  that  date  shall  be  paid  by  the  American  Company;  and 
that  company  shall  protect  Mr.  Harrison  and  his  associates  from 
all  liability  by  reason  thereof. 

Taxes  on  real  property  of  the  Franklin  Company  for  the  year 
1892,  shall  be  apportioned  between  Mr.  Harrison  and  his  associ- 
ates and  the  purchaser  of  the  shares  to  the  5th  of  March,  1892,  as 
between  vender  and  vendee.  Mr.  Harrison  and  his  associates  will 
continue  to  transact  the  business  of  the  Franklin  Company,  in- 
cluding works  and  office  for  one  month  after  the  purchase  money 


182 


[Senate, 


is  payable,  for  account  of  the  purchasers,  and  all  the  business 
from  and  after  the  5tli  of  March  will  be  conducted  for  account 
and  at  the  risk  of  the  purchasers.  But  until  the  purchase  money 
is  paid  Mr.  Harrison  and  his  associates  are  to  have  the  right  to 
keep  the  refinery  fully  supplied  with  all  things  requisite  for  the 
fullest  operation  of  the  same  and  to  continue  the  business  of  sell- 
ing in  their  discretion.  After  the  payment  of  the  purchase 
money,  the  raw  sugar  will  be  supplied  by  the  American  Company 
on  notice  of  the  requirements  by  the  managers  of  the  Franklin 
Company  and  sales  made  as  directed  by  the  American  Company, 
and  all  then  existing  contracts  of  sale  made  after  that  time 
will  be  filled  by  the  American  Company  at  the  contract  prices. 

At  any  time  after  one  year  after  the  completion  of  this  pur- 
chase by  the  payment  of  the  purchase  money  the  American  Com- 
pany.will  upon  thirty  days  written  notice,  from  Mr.  Harrison  and 
his  associates,  or  a majority  of  such  of  them  as  may  then  be  liv- 
ing, dissolve  the  Franklin  Company  and  surrender  its  present 
charter  and  will  secure  the  performance  of  this  contract  by 
stamping  upon  the  certificates  of  the  stock  of  the  Franklin  Com- 
pany notice  that  the  same  are  subject  to  this  provision,  so  that 
Mr.  Harrison  and  his  associates  can  enforce  this  and  the  next  stip- 
ulation of  the  contract  there  will  also  be  given  to  Mr.  Harrison 
and  his  associates  a covenant  by  the  American  Company  that 
all  debts  incurred  by  the  Franklin  Company,  or  obligations  for 
which  it  may  be  liable,  which  debts  or  obligations  shall  be  cre- 
ated or  incurred  after  the  acceptance  of  this  proposal  will  be  dls 
charged  or  extinguished  at  any  time  upon  request  of  Mr.  Har- 
rison and  his  associates  or  any  of  them  representing  a majority 
in  interest  of  the  sellers. 

Until  payment  has  been  made  to  Mr.  Harrison  and  his  associ- 
ates of  the  purchase  money  all  the  property  covered  by  this  of- 
fer and  the  proprietorship  of  the  same  shall  be  and  remain  In 
them  and  they  shall  be  at  liberty  to  conduct  its  operations  as 
though  this  agreement  had  not  been  made.  All  said  operations 
in  case  of  payment  as  herein  provided  shall  be  at  the  risk  and  for 
account  of  the  American  Company. 


No.  40.] 


183 


Within  ten  days  after  the  consent  to  the  increase  of  the  capital 
Stock  of  the  American  Company  shall  have  been  obtained  the 
purchase  money  which  will  be  due  as  of  the  5th  of  March,  1892, 
will  be  paid  by  the  American  Company  and  at  the  same  time  set- 
tlement of  all  other  stipulations  in  this  contract  will  be  made 
and  the  amounts  due  to  or  by  Mr.  Harrison  and  his  associates 
will  be  paid  as  if  the  sale  had  been  completed  on  the  5th  of 
March.  1892 

If  the  American  Company  fail  in  obtaining  the  assent  to  the 
increase  of  capital  hereinbefore  provided  for  within  thirty  days 
from  the  time  this  offer  becomes  a contract  Mr.  Harrison  and  his 
associates  or  a majority  in  interest  of  them  who  shall  then  be 
living,  may  terminate  the  same  on  thirty  days’  written  notice  to 
the  American  Company  unless  before  the  time  named  in  such 
notice  the  American  Company  has  completed  the  payment  of  the 
ten  million  dollars  in  shares  as  above  staed. 

Whenever  the  American  Company  by  this  contract  agrees  that 
tho\  will  perform  a contract  tff-il  has  been  made  by  the  Franklin 
Company  it  is  intended  dial  the  American  Company  undertakes 
that  the  Franklin  Company  will  perform  the  contract. 

(Signed)  THE  AMERICAN  SUGAR  REFINING  COMPANY, 
By  Jno.  E.  Searles,  Jr.,  Secretary. 

To  Mr.  CHAS.  C.  HARRISON  and  others: 

10th  March,  1892.  We  accept  the  above 

(Signed)  CHAS.  C.  HARRISON, 

For  self  and  associates. 

Any  amount  which  shall  be  actually  paid  to  F.  C.  Newhall  in 
case  of  breach  of  his  contract  with  F.  Company  shall  be  borne  in 
equal  shares  by  American  Company  and  C.  C.  Harrison  and  his 
associates.  10th  March,  1892. 

(Signed)  CHAS.  C.  HARRISON, 

For  self  and  associates. 

(Signed)  THE  AMERICAN  SUGAR  REFINING  COMPANY, 

By  John  E.  Parsons. 


184 


[Senate, 


By  Mr.  Bedell: 

Q.  Will  you  look  at  this  contract  which  is  on  page  81  in  this 
book  and  state  whether  that  is  a copy  of  the  contract  between 
the  parties  therein  named?  A.  I believe  it  to  be. 

Contract  of  purchase  of  the  E.  C.  Knight  Refinery  put  in  evi- 
dence. ' 

CONTRACT 

Of  John  E.  Searles,  Jr.,  with  E.  C.  Knight  and  E.  C.  Knight,  Jr. 

The  undersigned,  Edward  C.  Knight  and  Edward  C.  Knight, 
Jr.,  being  the  sole  owners  of  the  entire  capital  stock  of  the  E.  C. 
Knight,  comprising  the  entire  plant  used  by  said  company  and  the 
firm  of  E.  C.  Knight  & Co.  in  carrying  on  the  business  of  sugar 
refining  in  the  city  of  Philadelphia  and  comprising  the  property 
described  in  a general  way  as  follows: 

The  two  blocks  of  ground  bounded  by  Delaware  avenue,  Bain- 
bridge  street,  Penn  street  and  South  street,  with  the  exception 
of  that  portion  of  block  on  Penn  street  and  Bainbridge  street, 
owned  by  the  Franklin  Sugar  Refining  Company  (but  to  include 
the  lot  on  the  corner  of  Penn  street  and  South  street  now  owned 
by  said  company,  but  to  be  purchased  by  them  and  delivered  with 
the  beforenamed  property),  together  with  lot  on  Penn  street,  run- 
ning to  Front  street,  and  two  piers  and  bulkheads  connected  with 
the  same,  opposite  property,  together  with  all  appurtenances,  in- 
cluding whatever  has  been  used  in  connection  with,  or  part  of, 
the  beforenamed  refinery,  hereby  agree  in  consideration  of  the 
sum  of  one  dollar  to  each  of  them  in  hand  paid  to  sell  to  John  E. 
Searles,  Jr.,  for  account  of  whom  it  may  concern  all  the  above 
named  property  for  the  sum  of  two  million  and  fifty  thousand 
dollars  in  the  stock  of  the  American  Sugar  Refining  Company, 
one-half  common  and  one-lialf  preferred,  upon  condition  that  the 
requisite  assents  to  the  twenty-five  millions  increase  of  the  capital 
of  the  company  are  obtained  and  upon  the  following  conditions: 

1.  The  sale  shall  be  consummated  on  or  before  March  the  31st, 
at  the  option  as  to  the  time  of  the  purchaser  if  the  assents  are 
obtained,  and  if  not,  as  soon  thereafter  as  they  are  obtained. 


No.  40.] 


185 


2.  The  title  to  the  real  property  shall  be  a good  title  in  fee,  free 
from  all  liens  and  incumbrances,  except  taxes  of  1892. 

3.  With  the  sale  shall  be  included  all  bone  black  in  use,  trade 
marks  and  patents,  rights  belonging  to  the  said  company  or  said 
firm  and  used  in  connection  with  said  refinery. 

4.  The  sale  shall  be  consummated  either  by  a deed  conveying 
the  property  or  by  a transfer  of  the  stock  of  the  E.  C.  Knight 
Company,  or  both,  at  the  option  of  the  purchaser;  if  by  transfer 
of  stock  the  seller  shall  guarantee  the  buyer  against  all  debts  and 
liabilities  of  the  company  and  shall  have  the  right  to  withdraw 
and  retain  all  property  not  coming  within  the  foregoing  descrip- 
tion. 

5.  It  is  a further  condition  of  this  sale  that  the  purchaser  shall 
also  purchase  at  their  cash  value  on  the  day  of  the  consummation 
of  the  sale  all  raw’  and  refined  sugars,  including  sugars  in  pro- 
cess, and  all  new  supplies  such  as  barrels,  new  filter  bags,  fuel, 
etc.,  and  shall  assume  all  contracts  of  the  said  E.  C.  Knight  Com- 
pany or  E.  C.  Knight  & Company  for  raw  sugar’s,  barrels,  bone 
black  and  such  other  supplies  as  are  contracted  for  delivery  dur- 
ing the  year  1894. 

6.  Mr.  Searles,  for  account  as  aforesaid,  hereby  agrees  upon 
the  foregoing  conditions  to  make  said  purchase.  From  the  time 
that  the  sale  shall  be  consummated  Messrs.  Knight  shall  for  thir- 
ty days  continue  if  desired  to  carry  on  the  business  for  account 

of  the  purchaser., 

E.  C.  KNIGHT, 

E.  C.  KNIGHT,  JR., 

JNO.  E.  SEARLES,  JR. 

Philadelphia,  March  4,  A D.,  1892,  J.  M.  B. 

Contract  of  purchase  of  the  Delaware  Refinery  put  in  evidence 

CONTRACT. 

John  E.  Searles,  Jr.,  with  J.  Vaughn  Merrick  and  others,  stock- 
holders in  the  Delaware  Sugar  House. 

The  undersigned  stockholders  of  the  Delaware  Sugar  Refinery, 
in  consideration  of  the  sum  of  one  dollar  to  each  of  them  in  hand 


186 


[Senate, 


paid,  hereby  agree  with  Jno.  E.  Searles,  Jr.,  for  account  of  whom 
it  may  concern,  to  exchange  the  number  of  shares  of  Delaware 
Sugar  Refinery  stock  set  opposite  their  respective  names  for 
shares  in  the  American  Sugar  Refinery  Company,  they  to  receive 
for  each  of  said  shares  of  the  Delaware  Sugar  Refinery  (said 
shares  being  of  the  par  value  of  one  thousand  dollars  each),  twen- 
ty-two and  one-half  shares  of  the  stock  of  the  American  Sugar 
Refining  Company,  one-half  each  in  common  and  preferred  stock, 
the  stock  of  both  companies  to  be  full  paid  and  non-assessable 
upon  the  following  terms  and  conditions 

1.  The  said  Delaware  Sugar  Refinery  stock  is  guaranteed  by 
the  sellers  to  comprise  the  entire  plant  used  by  said  company  in 
the  carrying  on  of  the  business  of  sugar  refining  in  the  city  of 
Philadelphia,  and  comprising  the  property  described  in  a general 
way  as  follows: 

The  buildings  and  sheds  and  lots  of  ground  bounded  by  Reed, 
Swanson  and  Meadow  streets  and  the  Pennsylvania  Railroad 
Company  yard,  and  all  the  machinery  and  apparatus  contained 
therein,  known  as  “The  Delaware  Sugar  House,”  together  with 
all  appurtenances,  including  whatever  has  been  used  in  connec- 
tion with,  or  part  of,  the  beforenamed  refinery. 

2.  The  sale  shall  be  consummated  on  or  before  March  31,  at  the 
option  as  to  time  of  the  purchaser,  if  the  necessary  assents  of  the 
Stockholders  of  the  Delaware  Sugar  House  are  obtained,  and  if 
not,  as  soon  thereafter  as  they  are  obtained. 

3.  The  title  to  the  real  property  shall  be  a good  title  in  fee,  free 
from  all  incumbrances,  except  the  ground  rent  of  Twelve  Hun- 
dred Dollars  per  annum,  which  is  to  be  assumed  by  the  pur- 
chaser. 

4.  The  sale  shall  include  all  bone  black,  trade  marks  and  patent 
rights  belonging  to  the  said  company  and  used  in  connection  with 
the  said  refinery. 

5.  The  sellers  shall  guarantee  the  buyer  against  all  debts  and 
liabilities  of  the  Company  and  shall  have  the  right  to  withdraw 
and  retain  all  property  not  coming  within  the  foregoing  descrip- 
tion. 


No.  40.] 


187 


6.  It  is  a further  condition  of  this  sale  that  the  purchaser  shall 
also  purchase,  at  their  cash  value  on  the  day  of  the  consummation 
of  the  sale,  all  raw  and  refined  sugars,  including  sugars  in  pro- 
cess, and  all  new  supplies,  such  as  barrels,  new  filter  bags,  fuel, 
etc.,  and  shall  assume  all  contracts  of  the  said  company  for  raw 
sugars,  barrels,  bone  black  and  such  other  supplies  as  are  con- 
tracted for  delivery  during  the  year  1892;  also  a contract  for  the 
sale  of  empty  bags  for  1892  and  1893,  and  a lease  of  a lot  west  of 
Swanson  street,  until  July,  1893,  and  then  at  Two  Thousand  dol- 
lars per  annum. 

7.  It  is  further  agreed  by  the  sellers  that  from  the  time  that 
the  sale  shall  be  consummated,  George  E.  Bunker  shall  for  thirty 
days  continue,  if  desired,  to  carry  on  the  business  for  account  of 
the  purchaser. 

8.  Mr.  Searles  for  account  as  aforesaid  hereby  agrees  upon  the 
foregoing  conditions,  to  make  the  said  exchange  subject  only  to 
the  condition  that  the  requisite  assents  to  the  Twenty-five  Mill- 
ions increase  of  the  capital  stock  of  the  American  Sugar  Refining 
Company  are  obtained. 

J.  Vaughn  Merrick,  35  shares. 

W.  H.  Merrick  per  J.  V.  Merrick,  attorney,  35  shares. 

The  Philadelphia  Trust  Safe  Deposit  and  Insurance  Company, 
trustees  under  will  John  E.  Cope,  deceased,  W.  L.  Debois,  secre- 
tary and  treasurer,  30  shares. 

Helen  T.  Cope,  per  J.  V.  Merrick,  5 shares. 

Dated  Philadelphia,  Geo.  R.  Bunker,  14  shares. 

March  8,  A.  D.,  1892,  S.  Georgiana  Crabb,  by  Geo.  R.  Bunker, 
25  shares. 

Cassine  G.  Wilson,  by  George  R.  Bunker,  12  shares. 

Geo.  R.  Bunker,  guardian  of  Wilson  Minels,  12  shares. 

Albert  Bunker,  4 shares. 

Estate  of  John  Birkbeck,  Herbert  Worth,  executor,  22  shares. 

R.  H.  Howell,  4 shares. 

Thomas  A.  Howell,  4 shares. 

F.  H.  Howell,  by  T.  A.  Howell,  attorney,  4 shares. 

Henry  B.  Howell,  1 share. 


188 


[Senate, 


James  H.  Post,  4 shares. 

Accepted  on  conditions  above  stated, 

JOHN  E.  SEARLES,  JR. 

“Case  on  Appeal  from  Judgment,  The  People  of  the  State  of 
New  York,  Respondents,  against  The  North  River  Sugar  Refining 
Company,  Appellant,”  printed  book,  1890,  marked  “Exhibit  B, 
February  6,  1897” — containing  previously  inserted. 

Book  “Transcript  of  Record  U.  S.  Circuit  Court  of  Appeals  for 
the  Third  Circuit,  March  Term,  1894,  No.  15,  U.  S.  of  America, 
and  E.  C.  Knight  Company,  etc.,  marked  “Exhibit  C,  Feb.  G, 
1897” — containing  contracts  previously  inserted. 

Q.  And  will  you  also  look  at  the  one  on  Page  83  of  this  book 
and  see  if  that  is  a correct  copy  of  the  contract  between  the  par- 
ties therein  named?  A.  I believe  it  to  be. 

(Being  Contract  of  Purchase  of  Delaware  Refinery.) 

By  Mr.  Lexow: 

Q.  So  that  there  may  be  no  misapprehension,  Mr.  Havemeyer, 
we  understand,  as  regards  questions  of  value  of  the  original  prop- 
erties, with  regard  to  contracts  and  questions  of  statistics,  that 
Mr.  Searles  is  posted  with  reference  to  these  matters  and  the 
proper  person  to  inquire  of?  A.  I think  as  to  values  I have 
already  testified;  I thing  I am  qualified  to  testify  to  that  as  much 
as  Mr.  Searles;  as  to  statistics  and  the  capital  stocks  of  these 
constituent  companies  of  the  Trust,  Mr.  Searles  has  the  data;  1 
have  not. 

Q.  Well,  who  can  give  the  committee  information  as  to  the 
capital  stocks  of  the  original  companies  forming  the  Trust?  A. 
Mr.  Parson  has  it  in  preparation  now. 

Q.  All  right?  A.  It  has  to  be  obtained  from  the  certificates  of 
incorporation. 

Q.  Yes;  and  also  the  amount  of  taxes  paid  the  State  of  New 
York  on  the  corporate  property,  whether  real  or  personal?  A. 
For  how  long  a time? 

Q.  For  the  last — since  the  organization  of  the  company  in 
1891?  A.  In  1891?  Well,  we  will  furnish  that  likewise. 


No.  40.] 


189 


John  Bergin,  having  been  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow. 

Q.  Were  you  employed  by  the  American  Sugar  Refining  Com- 
pany? A.  I was,  sir. 

Q.  When?  A.  Well,  I started  in  to  work  for  them  some  time 
around  in  the  Fall  of  ’76 — in  the  cooper  shop. 

Q.  In  the  cooperage  department?  A.  Yes,  sir. 

Q.  In  what  capacity?  A.  A laborer. 

Q.  Laborer?  A.  Working  in  the  cooper  shop. 

Q.  Is  that  a branch  of  the  American  Sugar  Refineries  Com- 
pany? A.  Yes,  sir. 

Q.  How  long  did  you  remain  there?  A.  About  five  or  six 
years. 

Q.  Until  when?  .A.  I should  say  1S84. 

Q.  Until  1884?  A.  I think  so;  some  time  around  that. 

Q.  Were  you  then  dismissed  from  the  employ  of  the  company? 
A.  No,  I was  not  dismissed;  I found  employment  elsewhere  for 
a time,  and  then  I returned  to  the  sugar  refinery. 

Q.  When  was  that?  A.  That  was  sometime  around  1886,  I 
should  say — 1885  or  1886. 

Q.  That  is  to  say  you  were  in  the  department  of  refining  sugar? 
A.  Yes,  sir. 

Q.  How  long  did  you  stay  there??  A.  Until  1892,  in  the  ca- 
pacity of  foreman  on  the  docks. 

Q.  Of  foreman  on  the  docks?  A.  Yes,  I was  a portion  of  that 
time — I should  say  about  six  years — a foreman  on  the  docks. 

Q.  Did  you  then  leave  the  company’s  employ  or  were  you  dis- 
charged? A.  I was — I should  say  I was  discharged. 

Q.  How  many  were  discharged  with  you?  A.  Oh,  between 
four  and  six  hundred  men. 

Q.  In  what  refinery?  A.  The  American  Sugar  Refining  Com- 
pany. ! 

Q.  What  particular  one?  A.  Havemeyer’s ; formerly  it  was. 

Q.  Do  you  mean  Havemeyer  & Elder,  so-called?  A.  Yes,  sir, 
the  one  that  is  running  there  now. 


190 


[Senate, 


Q.  Can  you  give  the  precise  number  of  men  discharged  at  the 
same  time  you  were?  A.  Well,  I could — I have  not — I could  not 
give  them  to  you  now,  but  I could  later  on. 

Q.  How  many  men  were  discharged  altogether?  A.  Well,  I 
should  say  there  were  four  hundred. 

Q.  From  all  the  refineries?  A.  All  at  that  time. 

Q.  On  the  East  side  of  the  river?  A.  I don’t  understand  that. 

Q.  Were  there  others  discharged  at  the  same  time?  A.  Oh, 
no;  only  from  this  particular  house  at  that  time. 

Q.  Do  you  recollect  any  other  time  when  labor  was  discharged 
in  number?  A.  I — only  when  the  formation  of  the  Trust  took 
place. 

Q.  And  how  many  were  discharged  at  the  time  of  the  forma- 
tion of  the  Trust?  A.  Well,  I should  say  there  was — so  many 
refineries  closed  down,  I should  say  there  was  between  5,000  and 
0,000  left  unemployed  after  the  formation  of  the  Trust. 

Q.  Do  you  remember  what  the  year  was?  A.  I don’t  exactly 
remember,  but  I think  it  was  around  1887  or  1888. 

Q.  Do  you  remember  whether  it  was  at  the  time  of  the  forma- 
tion of  this  so-called  Sugar  Trust?  A.  Yes. 

Q.  You  were  in  the  sugar  refiner’s  business,  then?  A.  Yes, 
sir. 

Q.  Engaged  then?  A.  Yes,  sir, 

Q.  You  were  not  discharged  at  that  time?  A.  No;  I remained  in 
the  house  that  is  working  now  and  was  there  emploj^ed  at  that 
time. 

Q.  That  house  continued  operations?  A.  Continued  opera- 
tions. 

Q.  Now,  do  you  remember  the  number  of  refineries  that  were 
closed  down  at  the  time  of  the  organization  of  the  Sugar  Trust? 
A,.  Well,  I remember  all  there  was  on  the  water  front  for  the 
past  twenty-six  years;  they  were  all  closed  down;  all  but  one — 
that  is  the  one  that  is  continuously  running. 

Q.  They  were  all  closed  down  but  one?  A.  Yes,  sir. 

Q.  Had  they  been  in  operation  prior  to  the  formation  of  the 
Trust?  A.  Yes,  sir. 


No.  40.] 


191 


Q.  Employing  how  many  hands  to  your  best  recollection?  A. 
Oh,  I suppose  on  an  average  they  must  have  employed  eight  hun- 
dred men  in  each  of  the  refineries  that  were  closed  down ; eight  or 
nine  hundred  men. 

Q.  And  what  is  you  recollection  of  the  number  of  refineries? 
A.  Well,  I should  say  there  was — I guess  seven  or  eight. 

Q.  Have  those  men  been  re-employed?  A.  No,  sir. 

Q.  What?  A.  No,  sir. 

Q.  They  were  discharged  permanently  do  you  mean?  A. 
Were  left  unemployed;  there  was  no  place  to  give  them  when  the 
refineries  closed  down. 

Q.  And  have  not  since  been  employed?  A.  I suppose  they 
took  their  places  along  with  all  the  rest  of  the  employed;  that 
was  the  only  way  I can  see. 

Q.  Well,  what  became  of  them?  A.  They  must  have  scattered, 
I suppose,  over  the  country  to  tramp  and  look  for  employment 
when  they  could  not  seek  it  in  the  sugar  industry. 

Q.  Have  you  any  personal  knowledge  that  they  were  not  re- 
employed elsewhere — I mean  by  the  American  Sugar  Refineries 
Company?  A.  WTell,  I have  nothing;  only  in  Brooklyn  for  the 
refinery  that  was  running;  they  were  not  employed  there;  that 
was  the  only  one  left  running. 

Q.  Has  anything  been  done  to  reopen  these  refineries  in  Brook- 
lyn? A.  No,  sir. 

Q.  Does  this  property,  do  you  know,  still  belong  to  the  Ameri- 
can Sugar  Refinery  Company  that  was  closed  down  then?  A. 
That  is  what  I understand. 

Q.  How  many  men  are  employed  there  now?  A.  None  what- 
ever, except  a watchman,  I suppose. 

Q.  Well,  do  they  employ  men  in  Havemeyer  & Elder’s?  A. 
Oh,  yes;  the  one  that  is  running,  yes. 

Q.  How  many?  A.  Oh,  I could  not  give  you  the  exact  number. 

Q.  About,  we  are  asking?  A.  Oh,  I suppose  they  employ  any- 
how 2,500  to  3,000  men. 

Q.  Twenty-five  hundred  or  3,000?  A.  Something  that  way. 

Q.  Don’t  they  employ  as  many  as  were  in  Havemeyer  & Elder’s 


192  [Senate, 

principal  factory  at  the  time  these  others  were  closed  down?  A. 
Well,  that  I could  not  say. 

Q.  Well  what  do  you  think  about  that;  do  you  know  the  num- 
ber that  were  employed?  A.  That  I could  not  answer. 

Q.  Don’t  you  know  how  many  were  employed  in  the  factory 
of  Havemeyer  & Elder  at  that  time,  which  factory  is  now  in  oper- 
ation? A.  No,  I could  not. 

Q.  You  were  employed,  were  you  not?  A.  Yes,  sir. 

Q.  Well,  don’t  you  remember  how  many  were  employed  there 
at  the  time  you  were  employed?  A.  Well,  I always  understood 
there  was  at  least  about — always  something  over  2,000  employed; 
2,300,  something  that  way;  that  is  what  I always  understood. 

Q.  Well,  you  mean  to  say,  then,  that  they  employ  to-day  about 
the  same  number  they  employed  then,  in  the  Havemeyer  & Elder? 
A.  I don’t  know  if  they  engaged  any  more  men  or  employed 
them;  I don’t  think  so. 

Q.  Your  recollection  is  that  they  employed  about  twenty-three 
to  twenty-live  hundred  men?  A.  That  is  what  I understood  al- 
ways when  I worked  there. 

Q.  Do  these  factories  lay  along  the  water  front?  A.  Yes,  sir. 

Q.  From  what  street  to  what  street  on  the  other  side  of  the 
river?  A.  Well,  there  has  two  of  them  been  dismantled  since 
and  the  rest  of  them  are  in  South  Seventh  street  and  North 
Third,  and  Greenpoint. 

Q.  Is  that  all?  A.  That  is  all,  belonging  to  the  two  that  is 
taken  away. 

Q.  And  with  the  exception  of  the  two  that  have  been  disman- 
tled, the  original  factories  are  standing  there  as  they  were,  but 
closed?  A.  Yes,  sir. 

Q.  Are  they  doing  any  other  business  on  these  properties? 
A.  Why — only  what  I know  from  the  newspapers,  that  they  are 
starting  a coffee  mill  in  one  of  them ; I don’t  know  anything  to  my 
own  knowledge. 

Q.  I mean  is  any  other  business  being  transacted  on  the  spot 
of  those  manufactories?  A.  No,  sir. 


No.  40.] 


193 


By  Mr.  Barry: 

Q.  After  all  those  other  factories  were  closed,  don’t  you  know 
whether  they  ever  employed  the  men  in  the  factory  they  kept 
running?  A.  I never  knew  that  they  did. 

Q.  You  would  come  pretty  near  knowing  it,  if  they  did?  A. 
I would  sir;  yes,  sir. 

By  Mr.  Lexow: 

Q.  You  keep  yourself  posted  on  labor  matters?  A.  Yes,  sir; 
very  wTell  posted  for  a number  of  years. 

Arbuckle  recalled. 

By  Mr.  Lexow: 

Q.  I understand  that  you  desire  to  make  some  explanation; 
will  you  take  the  stand  again?  You  stated  you  desired  to  make 
some  explanation  of  the  testimony  that  was  given?  A.  Oh,  it 
was  about  that  50  per  cent.;  I thought  you  might  get  a wrong  im- 
pression; that  company  has  only  been  pajfing  5 per  cent.,  really, 
on  the  market  value,  and  I dont  really  think  that  all  that  money 
was  accumulated  in  the  manufactory;  the  coffee  business,  as 
everyone  knows,  has  its  ups  and  downs;  sometimes  you  strike  a 
lucky  streak  and  make  a great  deal  of  money,  and  others  it  must 
go  against  you,  occasionally;  and  that  is  the  only  way;  while  I 
don’t  know  anything  of  the  interest  of  their  business,  they  must 
have  met  with  great  success  or  they  could  not  have  run  up  that 
capital  from  a hundred  dollars  to  fifteen  hundred  dollars  at  one 
time,  and  then  drop  back  to  nine  hundred  and  fifty  dollars. 

Q.  You  mean  in  the  market  value  of  the  stock?  A.  Yes;  I say 
the  ups  and  downs  are  so  great;  some  find  it  to  improve;  here, 
now,  for  instance,  I remember  one  time  coffee,  No.  7,  was  5 3-4,  and 
it  ran  up  and  up  and  a pound  of  the  same  coffee  was  worth  27  1-2; 
there  was  between  three  and  four  hundred  per  cent,  advance; 
another  time,  I remember,  it  started  from  8 and  went  up  to  23; 
well,  now,  if  a person  was  lucky,  they  could  make  a great  deal 
of  money  by  the  advance  of  the  raw  material.  Of  course,  other 
13 


194 


[Senate, 


times  it  goes  down,  as  you  see  in  this  stock;  this  stock  was  selling 
at  1500  and  went  down;  they  were  seeking  buyers  at  1,000  and  we 
paid  1,000  for  that  first  stock  we  bought,  and  it  went  down  to  $950. 

Q.  Don’t  you  consider  that  that  explanation  rather  makes  the 
matter  worse  than  better?  A.  No;  I — 

Q.  Because  if  you  permit  speculation,  and  the  profits  made  out 
of  speculation  to  be  added  to  the  capitalization  of  a company  and 
then  pay  50  per  cent,  on  that  capitalization  it  becomes  still 
worse?  A.  No;  it  is  not  the  nature  of  the  coffee;  there  will  be  a 
failure  of  the  crops,  in  the  principal  growing  crops;  for  instance, 
in  Brazil,  and  the  price  will  run  way  up;  they  will  have  a big 
crop  and  it  goes  way  down;  the  fact  is,  since  I have  been  in  the 
business  here,  since  1870,  19-20  of  the  men  have  failed  on  that 
account;  it  is  such  a speculative  business  you  can’t — there  ap- 
pears to  be  no  help  for  it;  coffee  is  the  most  speculative  business 
in  the  world;  the  ups  and  downs  are  so  great. 

Q.  Well,  you  mean  that  they  have  capitalized  their  speculative 
profits?  A.  Yes;  they  have  been  fortunate;  yes. 

Q.  And  capitalized?  A.  That  is  my — 

Q.  I understand;  capitalized  fund;  speculative  profits;  profits 
made  in  speculation  instead  of  profits  made  by  roasting?  A.  Not 
necessarily. 

Q.  Or  selling  the  roasted  product?  A.  Not  necessarily  specula- 
tion ; you  have  to  have  a large  stock  to  carry  on  this  business. 

Q.  I understand.  A.  You  may  have  several  hundred  thousand 
bags,  and  if  the  value  appreciates  you  make  an  enormous  amount 
of  money;  then,  again,  it  may  go  against  you  and  you  cannot  help 
it;  they  have  to  make  some — 

Q.  I understand;  now,  the  situation  is  that  instead  of 
dividing  these  profits  as  made  among  the  stockholders, 
they  have  capitalized  those  profits  and  then  to  pay  a 
dividend  upon  those  profits  must  necessarily  increase  the  price 
to  the  consumer  in  paying  these  dividends?  A.  No;  not  necessa- 
rily; I think  for  a number  of  years  they  did  not  issue — did  not  pay 
any  dividends  at  all;  they  let  the  profits  accumulate;  that  is  my 
impression. 


No.  40.] 


195 


Q.  What  proportion  of  the  coffee  trade  of  the  United  States, 
Mr.  Arbuekle,  do  you  control?  A.  Well,  we  don't  control  any  of 
it;  we  do  about  one-quarter;  we  handle  about  a million  bags,  or 
have  been  handling  that,  and  the  consumption  is  between  four 
and  five  millions;  something  over  four  millions  I think  it  Weis 
last  year. 

Q.  Well,  does  this  handling  of  one-quarter  of  the  entire  demand 
enable  you  to  fix  the  price?  A.  No,  sir;  no,  sir. 

Q.  Or,  do  you  fix  the  price  by  agreement  with  your  personal 
competitors?  A.  We  have  no  agreement — never  have  had ; we  fix 
our  price. 

Q.  Are  the  prices  that  you  fix  from  time  to  time  followed  by 
the  other  concerns  in  the  same  business?  A.  They  generally  fol- 
low us,  yes,  sir;  as  we  are  the  largest  concern,  they  generally  fol- 
low us,  up  or  down. 

Q.  So,  whether  you  desired  to  control  the  price  or  not,  the  fact 
that  you  fixed  a price,  substantially  fixed  it  for  the  rest  of  those 
engaged  in  the  business?  A.  Well,  they  usually  set  the  same 
price;  sometimes  they  go  under  us,  but  usually  they  did  fix  the 
same  price;  yes,  sir. 

Q.  Do  you  have  to  keep  large  stocks  of  coffee  on  hand?  A. 
Yes,  sir;  we  have  houses  in  Eio  de  Janeiro,  we  have  houses  in 
Stantoz,  and  we  have  it  coming  all  the  time;  we  cannot  depend 
upon  this  market;  we  use  so  much  of  it  that  we  must  have  a large 
quantity  either  here  or  in  transit. 

The  Committee  here  adjourned,  to  meet  at  10  o’clock  on  Mon- 
day morning,  Feb.  8,  1S97,  in  the  Council  Chamber  of  the  City 
of  New  York. 


THIED  PUBLIC  HEAEING  OF  THE  COMMITTEE,  COUNCIL 
CHAMBEE,  NEW  YOEK,  N.  Y.,  FEB.  8,  1897,  10  A.  M. 

Mr.  Lexow:  A quorum  being  present  the  committee  will  now 
come  to  order.  The  Sergeant-at-Arms  will  call  John  E.  Searles. 
John  E.  Searles  appeared.  * 

Mr.  Lexow:  Mr.  Searles,  before  taking  the  stand  will  you  ex- 


196 


[Senate. 


plain  to  the  committee  the  reason  for  your  absence  from  Friday’s 
session  and  Saturday’s  session  of  the  committee? 

Mr.  Searles:  Mr.  Chairman,  I received  the  subpoena  of  this 
committee  after  leaving  my  office  to  leave  the  city  on  a very  im- 
portant business  engagement,  which  I did  not  feel  that  I had  the 
right  to  defer.  I called  upon  Mr.  Parsons,  my  counsel,  on  my 
way  to  the  train  and  explained  the  situation  to  him  and  asked 
him  to  appear  before  the  committee  and  make  my  excuse,  and 
state  that  I would  appear  before  the  committee  on  my  return  to 
the  city. 

Mr.  Lexow:  Your  name  has  been  called  both  at  the  Friday 
and  the  Saturday  sessions  of  the  committee,  and  it  seemed  to  the 
committee,  and  I think  this  goes  without  saying,  that  the  sub- 
poena of  this  committee,  representing  both  branches  of  the  Leg- 
islature of  the  State  of  New  York,  is  superior  to  any  private  busi- 
ness, and  stands  beyond  even  the  subpoena  of  a court  of  record. 
This  committee  do  not  wish  to  make  any  distinctions.  Before 
the  committee  the  millionaire  and  the  man  of  affairs  stand  ex- 
actly on  the  same  footing  as  the  poor  man  or  the  beggar,  and  we 
shall  insist  from  all  classes  of  the  people  the  same  respect  and 
obedience  to  the  process  of  this  committee,  as  we  have  a right  to 
do  under  the  circumstances. 

The  committee  will  not  pass  upon  the  question  of  disobedience 
until  the  end  of  the  witness’  testimony.  If  the  witness  gives  tes- 
timony that  is  helpful  to  the  general  subject  under  investigation 
and  answers  questions  put  by  the  committee,  as  he  is  bound  to  do 
under  the  law,  the  committee  will  then  consider  whether  the  wit- 
ness has  purged  himself  of  the  contempt. 

Mr.  Searles,  will  you  take  the  witness  stand? 

John  E.  Searles,  having  been  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow* 

Q.  What  is  your  age?  A.  Fifty-six. 

Q.  Your  occupation?  A.  Well,  sugar  refining  business. 

Q.  Any  other  occupation?  A.  Yes,  sir;  I am  a bank  president 
and  president  of  several  other  corporations. 


No.  40.] 


197 


Q.  You  are  a gentleman  of  large  affairs  in  this  city,  are  you 
not,  sir?  A.  I am  supposed  so  to  be. 

Q.  What  was  your  relation  to  the  so-called  Sugar  Trust  at  the 
time  of  its  organization?  A.  I was  one  of  its  organizers,  and 
from  the  commencement  the  secretary  and  treasurer  of  the — 

Q.  Of  the  Trust?  A.  What  was  called  the  Sugar  Trust. 

Q.  You  were  mentioned  in  the  body  of  the  Trust  deed  as  one  of 
the  trustees  under  that  deed?  A.  I was. 

Q.  Have  you  the  deed,  the  original  trust  deed?  A.  I have  not. 

Q.  Where  is  it?  A.  I have  no  knowledge  as  to  where  it  is. 

Q.  Where  did  you  last  see  it?  A.  The  last  I saw  of  it  was  in 
connection  with  the  North  River  case,  when  it  was  surrendered 
to  counsel  for  use  in  connection  with  that  litigation. 

Q.  Is  the  instrument  contained  in  the  papers  on  file  in  the 
North  Kiver  Sugar  Refining  case  a true  copy  of  the  original  trust 
deed?  A.  So  far  as  I know  it  is. 

Q.  Have  you  examined  it?  A.  I have  not  recently. 

Q.  Did  you  examine  it  at  the  time  of  the  trial  of  that  case?  A. 
I presume  I did. 

Q.  The  original  document  was.  produced  and  put  in  evidence 
in  that  case,  was  it  not?  A.  I think  it  was. 

Q.  Don’t  you  know  it  was,  Mr.  Searles?  A.  I think  the  origi- 
nal document  was  given  to  the  court  and  by  him  used  in  connec- 
tion with  that  case. 

Q.  And  as  part  of  the  evidence  in  that  case?  A.  That  is  my 
impression. 

Q.  Now,  what  was  your  relation  to  any  of  the  component  com- 
panies that  formed  the  Trust  prior  to  the  organization  of  the 
Trust?  A.  I was  an  officer  of  one  of  the  corporations. 

Q.  Which  one?  A.  The  Havemeyer  Sugar  Refining  Company. 

Q.  Had  you  any  relation  to  any  other  of  the  component  com- 
panies? A.  No. 

Q.  Are  you  certain  about  that?  A.  I am. 

Q.  I do  not  wish  to  mislead  you,  but  I ask  you  the  question, 
was  there  any  other  company  which  you  had  any  relation  to  that 
formed  part  of  the  Sugar  Trust?  A.  Well,  you  mean  prior  to  the 
■organization  of  the  Trust? 


198 


[Senate, 


Q.  And  at  the  time  of  the  organization  of  the  Trust?  A.  At 
the  time  of  the  organization  of  the  Trust  I was  also  interested  in 
the  North  River  Sugar  Refining  Company. 

Q.  You  held  stock  of  the  North  River  Sugar  Refining  Com- 
pany? A.  I did. 

Q.  How  did  you  obtain  that  stock?  A.  I purchased  it. 

Q.  You  purchased  it  from  the  old  holders?  A.  Yes,  sir. 

Q.  For  how  much?  A.  I disremember  the  figures — 

Q.  Was  it  $325,000?  A.  Could  not  testify  positively  as  to  the 
price. 

Q.  Was  it  $350,000?  A.  I could  uot  say. 

Q.  Is  it  not  a fact  that  you  paid  $325,000  for  the  stock  of  the 
North  River  Sugar  Refining  Company,  and  $25,000  for  its  real 
estate,  making  altogether  $350,000?  A.  I don’t  remember  the 
figures;  I purchased  the  entire  property. 

Q.  You  testified  in  the  North  River  Sugar  Refining  Company 
case,  didn't  you?  A.  I did,  I think. 

Q.  Didn’t  you  state  in  that  case  that  you  had  purchased  the 
property  for  these  figures?  A.  I can't  remember  as  to  what  fig- 
ures I did  testify  to. 

Q.  Do  you  remember  whether  or  not  an  agreement  was  drawn 
up  between  you  and  the  holders  of  the  interests  in  the  North 
River  Sugar  Refining  Company  for  a sale  of  its  stock  to  you? 
A.  Such  an  agreement  was  made. 

Q.  And  the  board  of  directors  of  the  North  River  Sugar  Re- 
fining Company  approved  the  agreement,  did  they  not?  A.  I 
think  they  did. 

Q.  And  desired  its  Secretary  to  execute  it  on  behalf  of  the  com- 
pany? A.  I so  remember. 

Q.  Is  that  an  agreement  reciting  that  you  purchased  the  entire 
plant  of  the  North  River  Sugar  Refining  Company  for  $325,000? 
A.  I do  not  remember  the  figures;  it  is  simply  a matter  of  mem- 
ory; that  is  nine  years  or  more — 

Q.  But  quite  a large  transaction,  Mr.  Searles?  A.  Yes,  a large 
transaction,  but — 

Q.  And  one  involving  a number  of  embarrassments  to  the 


No.  40.] 


199 


Sugar  Trust  afterwards — it  was  that  purchase,  was  it  not,  that 
destroyed  the  Sugar  Trust  in  the  Court  of  Appeals  in  this  state? 
A.  I was  not  aware  that  it  was  that  purchase. 

Q.  Was  it  not  the  decision  of  the  court?  A.  In  the  North 
River  case — - 

Q.  Of  that  transaction?  A.  I don't  remember  that  it  was 
based  upon  that  transaction. 

Q.  Well,  that  was  one  of  the  steps  leading  up  to  the  transac- 
tion, you  will  remember,  the  Sugar  Trust  secured  that  property, 
which  was  declared  to  be  illegal  by  the  Court  of  Appeals?  A. 
That  is  correct. 

Q.  I will  read  now  from  the  appeal  book  in  that  case:  “Where- 
as, John  E.  Searles,  Jr. — That  was  your  name  then,  was  it  not? 
A.  It  was. 

Q.  (Continued)  “ has  offered  to  purchase  all  the  capital  stock  of 
said  North  River  Sugar  Refining  Company  for  the  sum  of  $325,- 
000,  this  consideration  not  to  include  six  lots  of  land  on  the  South 
West  corner  of  Corlears  and  Water  streets,  for  which  $25,000  has 
been  allowed  out  of  the  consideration  of  $350,000  originally  men- 
tioned, the  property  known  as  No.  11  and  13 street, 

books  and  accounts,  bills  receivable,  and  all  other  personal  prop- 
erty belonging  to  the  refinery  of  the  North  River  Sugar  Refining 
Company,  and  the  lease  of  the  stables,  and  the  lease  of  office  No. 
92  First  street,  except  office  furniture  and  safes  at  the  refinery; 
Resolved,  That  Peter  Moller,  Jr.,  George  S.  Moller  and  Girt  Mar- 
tens be,  and  they  hereby  are,  appointed  a committee  to  deliver 
the  said  stock  to  said  John  R.  Searles,  Jr.,  or  at  his  request,  to 
John  E.  Parsons  John  R.  Dos  Passos  and  Franklin  Bartlett,  trus- 
tees, on  receipt  of  $325,000,  and  the  proceeds  to  be  divided  among 
the  stockholders  on  this  deed  according  to  their  respective 
shares.”  Now  I ask  you  to  refresh  your  recollection:  do  you  re- 
member that  that  was  the  transaction  that  was  carried  into  ef- 
fect by  you?  A.  I do. 

Q.  Now,  Mr.  Searles,  what  was  the  par  of  the  certificates  of  the 
Sugar  Trust  that  were  delivered  to  you  in  exchange  for  the  $350,- 
000  worth  of  property?  A.  I do  not  remember. 


200 


[Senate. 


Q.  You  have  testified,  have  you  not,  in  the  North  River  Sugar 
Refining  case  upon  that  question?  A.  I presume  I did. 

Q.  Let  me  refresh  your  recollection  in  the  decision  of  Judge 
Finch  in  that  case:  “Q.  What  organization?  A.  The  Sugar 
Refining  Company,  the  board;  well,  the  board  got  the  stock  from 
one  Searles,  a stockholder,  and  gave  in  exchange  certificates  for 
$700,000,  or  a little  more  than  double  the  purchase  price.”  Now, 
is  that  statement  true  or  false?  A.  I don’t  know  as  to  the  state- 
ment of  Judge  Finch;  my  testimony  in  that  case,  if  you  have  it, 
would  give  the  exact  figures. 

Q.  Don’t  you  remember,  Mr.  Searles,  whether  within  a short 
period  of  time  after  receiving  or  paying  for  property  of  the  value 
of  $325,000  you  received  Sugar  Trust  certificates  of  the  nominal 
face  of  $700,000?  A.  I presume  the  figure  is  correct,  but  I am 
not — I have  no  knowledge  of  it  except  what  you  have  read. 

Q.  Now  you  presume  the  figure  is  correct,  do  you  not,  from  the 
fact  that  this  transaction  was  typical  of  every  other  transaction 
concerned  with  the  formation  of  the  Sugar  Trust,  to  wit,  that 
the  original  properties  were  stocked  in  trust  certificates  at  just 
100  per  cent,  more  than  they  actually  stood  upon  the  books  in  the 
way  of  values?  A.  That  maybe  correct  in  connection  with  the 
North  River  Sugar  Refining  Company  without  being  true  con- 
cerning any  other. 

Q.  I know  it  may  be,  but  is  it?  A.  It  is  not. 

Q.  Was  this  North  River  transaction  typical  of  the  other  trans- 
actions with  reference  to  the  exchange  of  certificates  in  the  Sugar 
Trust?  A.  As  to  the  comparative  acounts,  no. 

Q.  Was  the  differene  between  the  value  of  the  properties  pur- 
chased and  the  Sugar  Trust  certificates  exchanged  therefor  larger 
in  other  cases?  A.  There  was  no  definite  relation  between  the 
capital  stock  in  any  of  the  subsidiary  corporations  and  the 
amount  of  certificates  they  received  in  exchange  for  that  stock. 

Q.  How,  then,  was  the  ratio  of  values  arrived  at?  A.  Each 
property  was  estimated  as  to  its  real  value  to  the  whole  regard- 
less of  its  capitalization. 

Q.  Then  in  estimating  the  value  of  the  North  River  Sugar  Re- 


No.  40.] 


201 


fining  Company  the  real  value  of  the  property  was  estimated  with 
reference  to  its  value  to  the  whole,  was  it  not?  A.  It  was. 

Q.  And  the  value  of  the  property  with  reference  to  the  whole 
issue  of  certificates  was  fixed  at  double  the  amount  of  the  cash 
paid  for  the  refinery?  A.  In  that  transaction,  yes. 

Q.  Well,  if  that  was  the  basis  of  valuation,  if  that  was  the 
measure  for  judgment,  and  you  say  that  applied  universally,  the 
same  process  of  mathematics  must  have  been  applied  to  all  the 
other  properties  that  went  into  the  Sugar  Trust,  must  it  not? 
A.  It  was  not. 

Q.  Do  you  mean  to  say,  then,  that  you,  receiving  property  of 
$350,000  cash  payment,  acting  as  trustee,  received  for  your  bene- 
fit more  proportionately  for  the  property  that  you  turned  in  as 
trustee  than  you  paid  for  property  that  was  turned  in  by  others 
for  which  you  were  not  trustee?  A.  if  you  will  Kindly  tepeat  that 
question ; I do  not  think  I got  the  full  meaning  of  it. 

(Question  read.) 

A.  The  purchase  of  the  North  River  property  was  an  individual 
purchase;  it  had  no  relation  whatever  to  the  value  of  the  property 
to  the  Sugar  Refineries  Company;  the  circumstances  under  which 
the  North  River  property  was  purchased  were  peculiar  and  did 
not  fix  the  real  value  of  the  property;  it  was  placed  in  the  Sugar 
Refineries  Company  at  its  estimated  value  to  that  company  in  cer- 
tificates. 

Q.  In  other  words,  immediately  after  paying  $325,000  for  the 
North  River  Sugar  Refineries  Company,  receiving  its  shares  as 
trustee,  you  estimated  its  value,  without  any  addition  to  the  pur- 
chase, without  any  lapse  of  time  after  that  purchase,  at  just 
double  in  certificates  than  you  paid  in  cash,  is  that  true?  A.  It 
is  not  true  that  the  property  was  received  for  $325,000  as  trustee; 
it  was  turned  over  to  trustees,  and  through  those  trustees  ex- 
changed for  certificates;  it  was  received  by  me  as  a personal 
transaction. 

Q.  Does  this  resolution  then,  of  the  North  River  Sugar  Refining 
Company  lie?  A.  I don’t  know  what  you  mean  by  that  question. 

Q.  Have  you  read  the  resolution?  A.  No;  the  resolution  pro- 


202  [Senate, 

vided,  as  I understood,  that  the  stock  should  be  turned  over  to 
me,  or  at  my  direction  to  certain  trustees. 

Q.  John  E.  Parsons,  John  R.  Dos  Passos,  Franklin  Bartlett, 
trustees?  A.  Yes,  sir;  I had  the  option  that  the  stock  should  be 
delivered  to  me,  or  should  be  delivered  to  them  under  my  direc- 
tion. 

Q.  You  were  a trustee  of  the  Sugar  Trust,  were  you  not?  A. 
A trustee — the  Sugar  Trust  was  not  at  that  time  organized. 

Q.  But  it  was  in  contemplation,  and  the  agreement  looking  to 
its  organization  had  already  been  formulated,  had  it  not?  A.  It 

had — 

Q.  Then  you  claim  that  as  trustee  of  the  Sugar  Trust  you  could 
nevertheless  act  as  a private  buyer  of  property,  and  water  its 
value  in  selling  it  to  the  concerns  of  which  you  were  trustee  100 
per  cent,  practically  over  night?  A.  No,  sir;  I do  not  admit  that 
in  that  statement. 

Q.  That  was  done,  wasn’t  it?  A.  I purchased  that  stock  as  a 
private  transaction  with  the  owners  of  the  property;  I bargained 
for  that  property  with  the  trustees  and  disposed  of  it  to  them 
under  an  agreement. 

Q.  When  you  speak  of  trustees,  do  you  speak  of  the  trustees 
mentioned  in  the  resolution?  A.  Yes,  sir. 

Q.  They  were  trustees  of  the  Sugar  Trust,  were  they  not?  A. 
They  were — represented  the  organization. 

Q.  They  represented  the  purchasing  trustees  of  the  organiza- 
tion of  which  you  were  also  a trustee,  did  they  not?  A.  Of  which 
I was  a contemplated  member. 

Q.  Yes;  the  agreement  had  already  been  signed,  had  it  not? 
A.  I think  not,  at  that  time. 

Q.  Was  it  in  contemplation?  A.  It  was. 

Q.  The  terms  of  it  had  been  fixed,  and  these  purchasers  of  out- 
side refineries  were  being  made  in  pursuance  of  the  terms  of  that 
agreement,  were  they  not?  A.  The  negotiations  were  in  prog- 
ress; I do  not  think  they  had  been  completed. 

Q.  Just  let  me  read  you  a few  more  lines — this  may  probably 
refresh  your  recollection  as  to  whether  or  not  it  had  been  con- 


No.  40.] 


203 


templated:  “Whereas,  on  or  about  the  5th  day  of  December, 
1SST,  George  H.  Moller,  secretary  of  the  North  River  Refining 
Company,  signed  a deed  of  consolidation  of  the  various  sugar  re- 
fining companies  of  the  United  States” — that  immediately  pre- 
cedes this  resolution  to  sell  this  stock  to  you ; now,  after  hearing 
that  embodied  in  that  resolution,  and  in  the  opinion  of  Judge 
Finch  of  the  Court  of  Appeals,  will  you  say  that  the  agreement 
of  organization  of  the  Sugar  Trust  had  not  been  signed  at  tfie 
time  that  you  contracted  for  the  purchase  of  these  shares?  A. 
What  was  the  date  of  that  resolution,  Mr. — 

Q.  25th  day  of  November,  1887?  A.  My  recollection  is  at  fault 
in  reference  to  the  date  if  that  is  correct;  I had  the  impression 
that  the  matter  was  consummated  prior  to  the  organization  of  the 
Sugar  Refineries  Company. 

Q.  Mr.  Searles,  was  not  the  agreement  looking  to  the  organi- 
zation of  the  Sugar  Trust  in  existence  as  early  as  the  22d  day 
of  April,  1887?  A.  No,  sir. 

Q.  Were  not  the  steps  looking  toward  the  perfection  of  an 
agreement  of  that  kind  being  taken  by  the  various  corporations 
as  early  as  the  22d  day  of  April,  1887?  A.  No  definite  steps  had 
been  taken ; the  matter  had  been  for  two  years  prior  to  the  organ- 
zation  of  the  Trust  discussed  under  various  forms,  but  nothing  of 
any  definite  character  took  place  at  as  early  a date  as  that. 

Q.  Let  me  read  now  from  the  record  of  that  case:  “Meeting  of 
the  stockholders  of  the  North  River  Sugar  Refining  Company, 
held  April  22,  1887.  Peter  Moller,  Jr.,  in  the  chair.  Mr.  Moller 
offered  the  following  preamble  and  resolution:  Whereas,  it  is 
contemplated  that  the  several  sugar  refineries  in  New  York  and 
other  states  shall  consolidate  their  several  refineries  in  one  large 
concern  or  company. 

“And  whereas,  it  may  be  for  the  interests  of  the  North  River 
Sugar  Refining  Company  to  participate  in  the  above  said  consol- 
idation, 

“Therefore,  be  it  resolved” — followed  by  the  appointment  of  a 
committee  to  take  the  steps  to  secure  the  consolidation  of  the 
North  River  Sugar  Refining  Company  with  that  contemplated 


, 204 


[Senate, 


concern — after  refreshing  your  recollection  upon  that  subject 
will  you  not  now  say  whether  or  not  the  Sugar  Trust  agreement 
was  being  brought  in  contemplation  as  early  as  the  22d  day  of 
April,  1887?  A.  No  definite  agreement  of  any  kind  had  been 
reached  at  that  time;  for  a year  previous  to  that  date  various 
projects  for  consolidation  had  been  discussed,  and  doubtless  one 
was  under  discussion  at  that  time;  but  the  matter  took  no  defi- 
nite form  in  the  shape  of  an  agreement  until  the  autumn  of  that 
year. 

Q.  That  is  your  answer  to  the  question,  Mr.  Searles;  I ask 
whether  or  not  as  early  as  the  22d  day  of  April,  1887,  the  Sugar 
Trust  consolidation  was  not  in  contemplation  and  understood 
between  you  and  the  several  refineries  of  the  United  States? 
A.  Efforts  to  bring  about  some  consolidation  were  doubtless  un- 
der discussion  at  that  time,  but  no  definite  plan  for  a consolida- 
tion; the  consolidation  which  was  subsequently  effected  had  not 
been  formed  at  that  time. 

Q.  Were  similar  resolutions  to  the  one  I have  read  not  adopted 
by  the  other  corporations  which  subsequently  formed  the  Sugar 
Trust  at  about  this  same  time?  A.  I think  no  other  was  ever 
taken  of  that  character. 

Q.  Are  you  prepared  to  swear  so  positively?  A.  I have  no 
knowledge  as  to  what  was  done  by  the  other  corporations  except 
that  there  being  at  that  time  no  definite  proposal,  and  there  be- 
ing no  proposal  subsequently  which  involved  corporate  action;  I 
have  no  knowledge  of  any  such  resolutions. 

Q.  Where  are  the  books  of  the  companies  which  afterward 
formed  part  of  the  Sugar  Trust?  A.  They  were  all  retained  by 
the  original  owners  of  these  corporations. 

Q.  Where  are  they  now?  A.  I have  not  the  slightest  idea. 

Q.  Where  are  the  books  of  the  Havemeyer  Sugar  Refining  Com- 
pany of  which  you  were  manager?  A.  I do  not  know. 

Q.  When  did  you  last  see  them?  A.  They  were  left  with  the 
president  of  that  company  at  the  time  the  consolidation  was  ef- 
fected. 

Q.  Who  was  he?  A.  Mr.  Hector  C.  Havemeyer. 


No.  40.] 


205 


Q.  Where  is  he?  A.  He  is  deceased. , 

Q.  Do  you  mean  to  say  that  at  the  time  of  the  consolidation  of 
the  various  companies  into  the  Sugar  Trust  each  separate  com- 
pany retained  its  books,  its  minute  books,  books  of  account  and 
all  other  books  showing  the  assets  and  transactions  of  each  of 
the  several  companies?  A.  I do. 

Q.  What  became  of  them  upon  the  formation  of  the  American 
Sugar  Refineries  Company  of  New  Jersey?  A.  The  books  of  the 
corporate  companies? 

Q.  Of  the  subsidiary  companies  whose  interests  were,  as  I un- 
derstand, bought  out  by  the  American  Company?  A.  They,  I 
presume,  are  in  the  hands  of  the  former  officers  of  those  subsi- 
diary companies.^ 

Q.  Not  turned  over  to  the  American  Sugar  Refining  Company 
of  New  Jersey?  A.  Some  of  them  may  have  been  placed  in  its 
archives;  others,  I do  not  think,  were;  I think  they  are  still  re- 
tained in  the  places  where  the  properties  are  located. 

Q.  Mr.  Havemeyer  testified  that  all  the  assets  of  the  companies 
forming  the  original  Sugar  Trust  were  bought  by  the  American 
Sugar  Refining  Company  of  New  Jersey;  did  those  assets  not  in- 
clude the  books  of  account?  A.  They  did. 

Q.  Therefore  those  books  of  account  are  now  the  property — the 
minutes  of  the  old  companies  are  now  the  property  of  the  Ameri- 
can Sugar  Refining  Company?  A.  Properly  so. 

Q.  Are  you  their  custodian?  A.  I am  not. 

Q.  Well,  what  is  you  official  relation  to  the  American  Sugar 
Refining  Company  of  New  Jersey?  A.  I am  its  secretary  and 
treasurer. 

Q.  Is  not  the  secretary  and  treasurer  the  custodian  of  the  books 
of  the  corporation  in  which  he  occupies  that  office?  A.  I have 
the  custody,  under  the  direction  of  the  Directors,  of  the  books  of 
the  American  Sugar  Refining  Company. 

Q.  Does  that  not  include  the  books  of  the  constituent  com- 
panies? A.  It  does  in  so  far  as  they  are  accessible. 

•Q.  Well,  now,  do  not  let  us  misunderstand  each  other,  Mr. 
Searles;  if  this  committee  has  to  ask  the  Legislature  for  an  in- 


206 


[Senate, 


crease  of  time  we  propose  to  know  what  was  paid  for  those  origi- 
nal companies;  now  you  might  just  as  well  tell  us;  we  want  to 
know  the  price  that  was  paid  and  see  whether  the  same  ratio  ob- 
tained, and  the  same  price  was  added  to  the  actual  value  of  the 
property  of  the  various  companies,  as  obtained  in  the  North 
River  Sugar  Refining  Company’s  case;  we  want  that  testimony; 
we  want  that  evidence;  we  do  not  want  to  put  you  to  unnecessary 
trouble,  but  we  are  going  to  have  it  if  it  is  in  this  world?  A. 
Well— 

Q.  Now,  can’t  you  tell  us — A.  (Interrupting)  Is  that  a ques- 
tion? 

Q.  I ask  you,  can’t  you  tell  us  what  the  transaction  was,  what 
the  prices  of  actual  value  of  these  old  companies  was,  and  the 
amount  of  Sugar  Trust  certificates  issued  for  them?  A.  I have 
no  figures  at  the  present  time  from  which  I could  give  you  the 
accounts  of  certificates  received  by  the  stockholders  of  the  corpo- 
rations which  formed  the  Sugar  Refineries  Company;  the  capi- 
talization of  those  companies  did  not  represent  their  value;  the 
property — the  company’s  property  in  each  case  was  taken  over 
at  its  estimated  value  in  certificates;  in  the  case  of  the  North 
River  Company — if  you  will  allow  me  to  explain  this  transaction 
—the  North  River  Company  were  to  receive  $700,000 — now  that 
you  have  given  me  those  figures  it  comes  to  me — in  the  certifi- 
cates for  their  property;  that  was  its  estimated  value;  the  direc- 
tors of  that  company  subsequently,  were  unwilling  to  accept  the 
certificates,  because  they  were  doubtful  as  to  the  value  of  the  cer- 
tificates, and  stated  that  they  would  only  sell  their  property  for 
cash;  on  their  own  estimate  of  the  value  of  the  certificates  I pur- 
chased their  property  and  took  the  certificates  to  which  they 
were  entitled. 

Q.  Personally?  A.  Yes. 

Q.  Personally;  although  at  that  time,  Mr.  Searles,  you  were 
trustee  of  the  Sugar  Trust  issuing  those  certificates?  A.  I was 
one  of  the  trustees  of  the  Sugar  Refiners  Company,  or  was  to  be  if 
it  was  prior  to  that  date. 

Q.  And  represented  under  your  trust  the  interests  of  the  other 
stockholders  forming  the  Sugar  Trust?  A.  Yes,  sir. 


No.  40.] 


207 


Q.  Is  that  transaction  typical  of  the  other  transactions  that 
culminated  in  the  perfected  Sugar  Trusts,  or  does  it  stand  on 
its  own  bottom?  A.  It  stands  on  its  own  bottom;  and  for  the 
reason  that  the  owners  of  the  North  River  property  placed  a dif- 
ferent estimate  upon  the  value  of  these  certificates  from  that  of 
other  parties  who  were  surrendering  other  property  in  exchange 
for  certificates. 

Q.  Now,  Mr.  Searles,  if  your  recollection  of  that  is  true,  and  I 
assume  that  you  know  whether,  as  trustee  of  a company,  you 
made  an  individual  profit  over  night  of  $350,000 — if  that  is  true, 
why  did  this  resolution  read:  “or  at  your  request  to  John  E. 
Parsons,  John  R.  Dos  Passos  and  Franklin  Bartlett,  trustees?” 
A.  For  this  reason:  The  representatives  of  the  North  River 
Sugar  Refining  Company  had  agreed  to  transfer  their  property  to 
these  trustees  and  receive  in  exchange  for  same  these  certificates 
— they  had  subsequently  refused  to  do  this. 

Q.  Who  had?  A.  Some  of  the  members  of  this  North  River 
Sugar  Refining  Company,  stating  that  they  were  not  satisfied  as 
to  the  value  of  the  certificates  they  were  to  receive;  I therefore 
agreed  that  I would  take  the  certificates  and  give  them  a certain 
amount  of  money  for  their  property;  I estimated  the  value  of  the 
certificates  at  a higher  value  than  they  did,  which  was  the  only 
difference  in  the  transaction;  if  there  was  no  market  value — you 
said  that  I made  $350,000  over  night;  it  is  not  correct,  for  the 
reason  that  you  assume  that  this  $50,000,000  of  certificates  which 
were  issued  were  wmrth  their  par  value. 

Q.  I ask  what  you  stated,  Mr.  Searles,  only  in  your  testimony, 
and  that  is  that  this  issue  of  $700,000  of  certificates  to  the  North 
River  Sugar  Refining  Company  bore  the  same  ratio  to  the  whole 
issue  of  Sugar  Refining  certificates  that  the  other  property  did; 
hence,  that  if  the  $50,000,000  Sugar  Refining  certificates  issued 
were  issued  for  actual  values  that,  therefore,  you  had  made  an 
actual  profit  of  $350,000  over  night  on  the  transaction;  that  is 
proper,  is  it  not?  A.  You  must,  however,  remember  that  those 
certificates  had  no  market  value,  and  were  not  convertible  into 
cash;  that  the  matter  of  their  value  was  purely  prospective,  and 


208  [Senate, 

depended  upon  the  faith  of  the  various  parties  in  the  success  of 
the  company. 

Q.  Did  I understand  you  to  say  that  you  considered  the  actual 
value  of  the  North  River  Sugar  Refining  Company’s  property 
$700,000  in  relation  to  the  certificates  of  this  company?  A.  I 
considered  it  was  worth  that. 

Q.  Then  you  considered  the  certificates  of  this  company  were 
watered  about  50  per  cent.?  A.  No,  sir;  I did  not. 

Q.  You  say  now  you  consider  the  property  worth  about  $350,- 
000,  valuable  in  proportion  to  the  ratio  of  certificates  issued, 
didn’t  you?  A.  I don’t  think  that  I stated  it  in  that  form. 

Mr.  Lexow:  Mr.  Stenographer,  just  read  the  statement  of  the 
witness.  The  stenographer  reads  the  following  testimony: 

“ Answer.  For  this  reason,  the  representatives  of  the  North 
“ River  Sugar  Refining  Company  had  agreed  to  transfer  their 
“ property  to  these  trustees  and  receive  in  exchange  for  same 
“ these  certificates;  they  had  subsequently  refused  to  do  this. 

“ Question.  Who  had? 

“ Answer.  Some  of  the  members  of  this  North  River  Sugar 
“ Refining  Company,  stating  that  they  were  not  satisfied  as  to 
“ the  value  of  the  certificates  they  were  to  receive.  I therefore 
“ agreed  that  I would  take  the  certificates  and  give  them  a certain 
u amount  of  money  for  their  property.  I estimated  the  value  of 
“ the  certificates  at  a higher  value  than  they  did,  which  was  the 
“ only  difference  in  the  transaction.  There  was  no  market  value 
“ — you  said  that  I made  $350,000  over  night.  It  is  not  correct, 
“ for  the  reason  that  you  assume  that  this  $50,000,000  of  certifi- 
■“  cates  which  were  issued  were  worth  their  par  value.” 

Q.  I have  assumed  that  those  $50,000,000  certificates  were 
worth  their  par  value,  not  that  the  law  of  the  state  had  been  dis- 
obeyed; but  you  say  in  making  this  transaction  you  issued  certi- 
ficates to  a greater  extent  than  the  actual  value  of  the  properties 
as  you  understood  them?  A.  No,  sir. 

Q.  Then  I repeat  my  question:  Then  you  concede  that  the  cer- 
tificates which  you  received  represented  the  true  and  actual  value 
of  the  properties  of  the  North  River  Sugar  Refining  Company,  to 
wit,  $700,000?  A.  Yes,  sir. 


No.  40.] 


209 


Q.  And  that  you  were  paving  one-half  of  the  real  value  of  the 
North  River  Eefining  Company  property?  A.  I was  buying  their 
certificates  with  faith. 

Q.  (Interrupting)  You  say  the  certificates  were  worth  $700,000? 
A.  In  my  judgment  they  were. 

Q.  You  paid  $350,000  for  the  property?  A.  Yes. 

Q.  Can  you  dispute  now  that  you  considered  that  you  were 
making  $350,000  over  night  on  that  transaction?  A.  I do. 

Q.  You  dispute  that?  A.  Yes;  for  the  reason  that  my  $700,000 
was  not  convertible  into  cash  for  $700,000 — my  recollection  is  be- 
tween 70  and  80 — somewhere  in  the  neighborhood  of  SO,  and  I 
could  not  dispose  of  this  $700,000;  I had  to  hold  them  for  a 
future  value;  that  is  what  these  North  River  directors  were  un- 
willing to  do. 

Q.  You  are  talking  now  of  speculative  values  of — A.  (Inter- 
rupting) I am  talking  about  realizing  on  the  stock  exchange  at 
that  time;  I am  talking  about  realizable  values. 

Q.  I am  speaking  now  of  actual  values;  we  assume  for  the  pur- 
poses of  this  question  that  the  trustee  of  a company  don’t  buy 
the  capital  stock  of  his  company  to  sell  it  on  the  stock  exchange 
within  a day  or  two,  or  a week,  or  a year,  but  does  it  as  a trustee, 
as  an  investment;  now  I ask  you,  didn’t  you  consider  in  taking 
the  $700,000  worth  of  Sugar  Trust  certificates  that  you  were  get- 
ting $700,000  in  the  equivalent  of  money  or  property?  A.  In  its 
iuture  value,  yes;  but  not  in  its  present  convertible  value. 

Q.  Then,  Mr.  Searles,  in  the  issue  by  you  as  trustee  of  the  Sugar 
Trust,  you  did  not  issue  certificates  which  honestly  represented 
the  present  actual  values  of  the  property,  but  the  future  specu- 
lative values  of  that  property  in  your  judgment?  A.  We  had  no 
relation  to  the  speculative  value. 

Q.  Are  you  not  now  speaking  entirely  of  realizable  or  speculat- 
ive values,  values  in  the  future,  as  your  own  terms  express  it? 
A.  I spoke  of  the  value  of  this  property  in  certificates  as  being 
part  of  this  general  property;  that  as  part  of  that  property  these 
certificates  would  be  worth  the  $700,000  they  represented. 


14 


210 


[Senate, 


Q.  That  is  future  value,  is  it  not?  A.  It  would  be  their 
value  when  they  became  a part  of  this  consolidated  company. 

Q.  That  was  speculative,  was  it  not;  dependent  upon  the  suc- 
cess of  the  scheme  that  you  then  had  in  mind?  A.  If  you  may  so 
characterize  it. 

Q.  Well,  isn’t  that  right?  A.  I do  not  so  estimate  it  myself. 

Q.  Were  you  not  speculating  on  these  Sugar  Trust  certificates 
received  by  you  being  for  their  face  value  at  such  time  as  the 
scheme  which  you  had  in  mind  would  bear  fruit?  A.  It  was 
with  my  faith  in  their  ultimate  value  that  I was  willing  to  take 
them. 

Q.  Not  in  their  present  value?  A.  Well,  it  was  their  present 
value  for  the  purposes  of  this  consolidation. 

Q.  Do  you  insist  that  you  can  stand  on  both  alternatives;  that 
you  took  them  because  of  their  ultimate  value,  and  that  you  took 
them  because  of  their  present  value,  relying  upon  the  ultimate 
success  of  the  scheme?  Which  is  true?  A.  They  are  both  the 
same  in  my  judgment. 

Q.  That  is  speculative,  is  it  not?  A.  It  might  be  so  considered. 

Q.  And  the  real  value  of  the  certificates  that  you  had  in  mind 
was  the  ability  that  the  trustees  of  the  Sugar  Trust  would  have 
to  dispose  of  those  certificates  afterwards  to  the  public?  A.  No, 
sir;  it  had  nothing  to  do  with  the  public;  it  was  based — 

Q.  How  did  you  realize  on  them  except  by  selling  them  to  the 
public?  A.  It  would  be  based  on  their  value  as  to  earning  capa- 
city. 

Q.  And  a property  that  you  paid  $350,000  for,  you  put  in  the 
form  of  certificates  representing  $700,000  then,  believing  that  you 
could  give  an  earning  power  to  that  company  that  would  enable 
you  pay  dividends  not  upon  the  original  investment  of  $350,- 
000,  but  upon  the  nominal  face  of  seven  hundred;  is  that  right? 
A.  Not  exactly, 

Q.  Where  is  the  fallacy  in  the  argument?  A.  The  fallacy  lies 
in  this,  Mr.  Chairman;  I purchased  the  North  River  property  at 
less  than  its  real  value  in  cash,  because  its  directors  desired  to 
sell  their  property;  the  real  value  of  the  property  was  more 


No.  40.] 


211 


nearly  represented  by  the  certificates,  but  these  gentlemen  were 
very  desirous  to  sell  their  property;  they  were  unwilling  to  ac- 
cept the  certificates  which  they  had  agreed  to  accept,  but  were 
very  desirous  to  realize  what  they  could  in  cash,  and  I agreed  to 
take  their  certificates  off  their  hands. 

Q.  And  you  then,  occupying  the  relation  of  trustee  of  the  Sugar 
Trust,  those  certificates  were  issued,  received  for  a cash  payment 
of  $350,000  certificates  upon  which  the  Sugar  Refining  Company 
is  now  paying  dividends  at  the  rate  of  12  per  cent,  on  $700,000,  or 
24  per  cent,  upon  the  original  investment;  is  that  true?  A.  The 
amount  received,  in  the  first  place,  was  not  $700,000;  15  per  cent, 
of  that  amount  was  retained  in  the  treasury  of  the  company. 

Q.  I understand  that?  A.  So  that  the  real  amount  that  was 
received  was  $595,000  in  certificates. 

Q.  Say  $600,000?  A.  Well,  a trifle  less  than  $600,000. 

Q.  Now  the  same  question  applies  to  the  $600,000;  you  are  re- 
ceiving, if  you  have  not  parted  with  the  stock,  or  if  you  have  the 
holders  of  those  certificates  are  receiving  the  12  per  cent,  upon 
$600,000  annually,  besides  an  extra  dividend  of  10  per  cent,  in  1894 
paid  in  cash,  and  have  been  so  receiving  eversineethe  formation  of 
the  SugarTrust  and  the  American  Sugar  Refineries  Company  upon 
an  investment  of  $350,000;  is  that  true?  A.  What  originally 
cost  me  $350,000  was  represented  by  $595,000  in  certificates, 
which  have  received  variable  dividends  from  8 per  cent,  per  an- 
num and  10  per  cent,  per  annum,  finally  to  an  average  of  about 
9 1-2  per  cent,  per  annum,  which  is  the  most  they  have  received. 

Q.  Part  was  preferred  stock,  was  it?  A.  There  was  no  pre- 
ferred stock  at  that  time;  but  when  the  American  Sugar  Refin- 
eries Company  was  organized  the  certificates  of  the  Sugar  Re- 
fineries Company  .received  one-half  common  and  one-half  pre- 
ferred; the  preferred  receiving  only  7 per  cent. 

By  Mr.  Bedell : 

Q.  Will  you  tell  me  in  what  year  prior  to  1891  the  Sugar  Trust 
paid  less  than  10  per  cent,  dividend?  A.  My  impression  is  that 
they  paid  only  8 per  cent,  the  first  year. 


212  [Senate, 

Q.  The  first  year?  A.  That  is  my  impression;  I am  not  abso- 
lutely certain  as  to  the  date,  but  that  is  my  impression. 

By  Mr.  Mazet: 

Q.  They  have  a surplus  besides?  A.  Yes,  sir. 

By  Mr.  Lexow : 

Q.  And  that  surplus  is  applicable  proportionately  to  this  cer- 
tificate issue  that  you  received?  A.  Certainly. 

Q.  In  1891  on  the  formation  of  the  American  Sugar  Refineries 
Company  of  New  Jersey  the  issue  of  $50,000,000  of  Sugar  Trust 
certificates,  in  which  was  contained  this  $595,000  worth  of  cer- 
tificates issued  for  your  purchase  of  $350,000  worth  of  property, 
were  exchanged  par  for  par  for  the  stock  of  the  New  Jersey  Com- 
pany to  take  in?  A.  One-half  in  common  and  one-half  in  pre- 
^erred;  yes,  sir. 

Q.  Par  for  par?  A.  Par  for  par. 

Q.  So  that  this  $595,000  worth  of  Sugar  Trust  certificates  was 
exchanged  for  one-half  in  preferred  stock  and  one-half  in  common 
stock  of  the  New  Jersey  Company?  A.  That  is  correct. 

Q.  And  dividends  have  been  apportioned  to  that  stock  upon 
the  basis  of  its  nominal  value  since  that  time?  A.  That  is  cor- 
rect. 

Q.  Equally  with  all  the  other  stock  of  the  company?  A.  Cer- 
tainly. 

Q.  Did  your  associates  in  the  Sugar  Trust  know  at  the  time  of 
this  independent  personal  transaction  of  yours  in  regard  to  the 
North  River  Sugar  Refining  Company  property?  A.  It  was 
known  to  every  person  interested  in  the  transaction. 

Q.  And  it  was  done  with  their  acquiescence?  A.  It  was  done 
with  their  full  knowledge  and — 

Q.  And  acquiescence — 

Q.  And  acquiescence — A.  And  acquiescence. 

Q.  And  these  $700,000  Sugar  Refining  Trust  certificates  were 
issued  by  you  and  your  associates  to  yourself  individually,  with 


No.  40.] 


213 


the  full  knowledge  of  all  jour  associates  of  the  details  of  the- 
transaction?  A.  They  were  of  the  $595,000. 

Q.  I understand;  now,  did  they  object  to  it?  A.  Not  at  all. 

Q.  They  did  not  object  to  it  because  they  were  getting  the  same 
for  their  own  property,  proportionately,  were  they  not?  A.  No, 
sir,  that  had  no  influence  in  the  matter,  I think;  they  did  not  ob- 
ject to  it,  because  it  was  simply  carrying  out  the  agreement  of  the 
North  Eiver  Company,  or  the  stockholders  of  that  company,  and 
it  was  a matter  to  them  of  indifference  as  to  whether  the  North 
Eiver  directors  or  myself  received  those  certificates;  any  one  else 
would  have  had  a right  to  purchase  them  if  they  had  seen  fit. 

Q.  Do  you  dispute  the  veracity  of  this  resolution  of  the  North 
Eiver  Sugar  Eefining  Company?  A.  What — which  resolution? 

Q.  The  resolution  commanding  the  trustees  to  take  $325,000  in 
cash?  A.  Not  at  all. 

Q.  Then  why  do  you  say  that  the  agreement  proposed  a trans- 
fer to  the  North  Eiver  Sugar  Eefining  Company  of  $700,000  of 
Sugar  certificates?  A.  I mean  to  say  that  a prior  agreement  had 
been  entered  into  by  one  of  the  officers  of  that  company  to  accept 
$595,000  in  certificates  for  the  stock  of  their  corporation  on  be- 
half of  their  several  stockholders;  my  recollection  is — 

By  Mr.  Bedell: 

Q.  With  whom?  A.  With  those  three  trustees  that  have  been 
named.  Parsons  and  the  others. 

Q.  But  I thought,  Mr.  Searles,  that  you  testified  in  the  early 
part  of  your  examination,  that  this  was  an  individual  transaction 
of  yours  that  took  place  before  the  formation  of  this  so-called 
Sugar  Trust?  A.  This  is  the  difference — the  point  is  this:  the 
negotiations  had  been  going  on  for  some  time;  preliminary  ne- 
gotiations— to  see  whether  this  proposition  could  be  gotten  to- 
gether; during  these  negotiations  the  North  Eiver  directors,  or 
stockholders — the  North  Eiver  stockholders,  through  one  of  their 
officers,  had  agreed  that  if  the  negotiations  were  consummated, 
they  would  turn  over  the  stock  of  their  company  on  receipt  of 
$700,000  less  15  per  cent,  in  certificates;  when  it  came  to  the  com 


214 


[Senate, 


summation  of  tlie  arrangement  one  of  their  directors  who  had 
been  absent  in  Europe  at  the  time  that  agreement  had  been  made, 
having  returned,  objected  to  carrying  out  the  transaction,  and  he 
being  a considerable  stockholder,  the  officer  of  the  company  who 
had  made  the  negotiations  reported  that  he  was  unable  to  comply 
with  his  agreement  on  behalf  of  his  stockholders;  and  it  was  at 
that  time  that  they  came  in  and  said  that  if  they  could  sell  their 
property  for  cash — the  firm  having  been  unsuccessful  and  losing 
money  for  two  years — that  they  would  entertain  a whole  cash  of- 
fer for  their  property  in  lieu  of  accepting  these  certificates  con- 
cerning the  value  of  which  they  seemed  to  feel  doubtful;  with 
the  knowledge  of  other  gentlemen  who  were  connected  with  the 
matter,  it  having  come  to  this  point,  I proposed  that  I would  pur- 
chase the  stock  of  that  company  and  accept  in  lieu  all  the  cer- 
tificates to  which  they  would  have  been  entitled  if  it  was  carried 
out,  their  agreement;  and  that  negotiation  resulted  in  the  pur- 
chase for  $350,000  of  their  property,  and  my  taking  the  $595,000 
in  certificates. 

By  Mr.  Lesow: 

Q.  But  the  fact  was  that  the  North  River  Sugar  Refining  Com- 
pany considered  the  certificates  receivable  by  them  as  worth  50 
cents  on  the  dollar,  or  rather  that  they  were  getting  two  for  one 
in  value  of  nominal  value  of  Sugar  Trust  certificates?  A.  Well,  I 
don’t  think  that  is  a fair  statement  of  the  case;  the  facts  are: 
One  of  the  largest  owners  unwilling — retiring  from  business  and 
unwilling  to  put  his  property  or  money  into  Sugar  certificates, 
was  willing  to  make  a sacrifice  on  his  property  and  take  an 
amount  of  cash  in  lieu  of  those  certificates. 

Q.  Well,  do  you  mean  to  say  then,  that  you  were  pressing  and 
forcing  the  North  River  Sugar  Refining  Company  out  of  the  mar- 
ket as  competitors,  by  compelling  them  to  take  a low  cash  value 
for  their  property,  or  receiving  your  certificates  at  twice  the 
nominal  of  the  cash  offered?  A.  Not  by  any  means;  there  was  no 
compulsion  about  it;  it  was  simply  a question  of  their  volition  in 
the  matter;  they  had  preferred  to  go  out  of  the  business;  to  sell 


No.  40.] 


215 


tlieir  property  for  a casla  valuation,  and  named  this  figure  them- 
selves. 

Q.  Was  not  the  preference  that  you  speak  of  due  to  the  fact 
that  there  was  a sugar  war  on,  and  that  your  company  and  the 
other  companies  were  respectively  cutting  each  other’s  throats, 
and  that  sugar  had  gone  down  to  a price  where  no  money  was 
being  made,  and  that  that  situation  was  made  use  of  by  the 
stronger  sugar  men  to  press  the  weak  ones  to  the  wall?  A.  That 
is  not  true. 

Q.  That  15  per  cent,  that  you  have  referred  to  was  not  that 
issued  as  a stock  dividend  a year  afterward?  A.  It  was  not. 

Q.  Was  not  a 15  per  cent,  cash  dividend  declared?  A.  No,  sir; 
there  was  15  per  cent,  of  the  original  $50,000,000  retained  in  the 
treasury  for  improvements  to  the  properties,  for  the  purchase  of 
any  additional  property  which  might  be  deemed  in  the  interest 
of  the  company;  it  wTas  by  the  direction  of  the  counsel. 

Q.  Wasn’t  it  divided  afterward  either  by  stock  scrip  or  cash 
dividends  among  the  stockholders?  A.  That  probably  was  not; 
no,  sir;  no,  sir;  I think  not. 

Q.  That  was  not?  A.  No,  sir. 

Q.  Well,  is  it  because  you  paid  so  many  dividends  that  you 
cannot  now  tell  which  particular  class  of  property  it  came  from? 
A.  My  recollection  is  that  that  stock  was  issued  for  the  purchase 
of  additional  properties  and  for.  the  improvements  to  the  proper- 
ties of  the  company., 

Q.  Where  is  it  now?  A.  It  was  issued  in  payment  for  addi- 
tional properties  and  improvements. 

Q.  What  additional  properties  were  purchased  that  were  not 
paid  for  by  increased  issue  of  the  capital  stock  of  the  company 
whereby  your  capital  stock  was  raised  $75,000,000?  A.  I think 
that  at  that  time  the  St.  Louis  property  had  not  been  purchased 
and  neither  the  New  Orleans  properties. 

By.  Mr.  Mazet: 

Q.  Was  the  North  River  Company  a corporation?  A.  A cor- 
poration under  the  laws  of  this  State;  yes,  sir. 


216 


[Senate,. 


Q.  Were  you  a Director  or  stockholder  in  that  company?  A. 
Not  prior  to  the  purchase  of  the  stock. 

By  Mr.  Lexow : 

Q.  Not  prior  to  the  purchase  of  this  stock;  but  were  these  com- 
panies not  taken  into  the  original  Sugar  Trust  agreement  at  the 
time  of  the  final  formation  of  the  Sugar  Trust?  A.  I think  it 
was  subsequent  to  the  organization  of  the  Trust. 

By  Mr.  Mazet: 

Q.  Were  there  any  of  the  stockholders  in  the  North  River  Com- 
pany the  same  as  were  interested  in  the  Havemeyers  & Elder 
Company?  A.  No,  sir. 

Q.  It  was  a rival  concern?  A.  Yes,  sir. 

Q.  A competitor?  A.  It  was  owned  by  half  a dozen  people, 
all  in  one  family  or  two. 

By  Mr.  Warner: 

Q.  Isn’t  it  a fact  that  the  St.  Louis  Company  was  one  of  the 
first  fifteen  companies  that  went  into  that  Trust?  A.  It  was  in 
the  fifteen  companies,  but  I don’t  think  the  fifteen  companies 
were  in  at  the  time  of  our  organization;  my  recollection  is  that 
neither  of  the  two  companies,  the  New  Orleans  nor  the  St.  Louis 
Company  were  in  at  the  time. 

Q.  How  soon  after  the  formation  of  the  Trust  were  they  taken 
in?  A.  I think  within  about  sixty  days,  to  my  memory. 

By  Mr.  Lexow: 

Q.  Did  they  contribute  also  15  per  cent?  A.  On  the  same 
basis;  that  is  to  say,  the  values  of  their  properties  were  fixed 
with  that  in  view. 

Q.  Now,  Mr.  Searles,  you  say  that  all  your  associates  knew  the 
details  of  this  North  River  Sugar  Refineries  transaction,  and  that 
none  of  them  objected  to  the  issue  to  you  of  Sugar  Trust  certifi- 
cates representing  about  twice  the  amount  of  the  cash  purchase; 


No.  40.] 


217 


were  these  associates  of  yours  and  you  representing  others  than 
yourselves  in  the  making  of  these  transactions  and  the  issue  of 
those  certificates?  A.  I do  not  think  I understand  who  you  mean 
by  “others;”  each  one  of  these  parties  who  represented  the  stock- 
holders of  the  various  corporations  was  informed  of  the  fact  that 
the  North  River  Company  had  declined  to  accept  the  certificates. 

Q.  Were  informed  of  the  details?  A.  Of  the  details,  yes  sir. 

Q.  I ask  you  again — they  and  you  represented  stockholders  of 
the  various  companies  which  composed  the  Sugar  Trust?  A. 
Yes,  sir. 

Q.  Were  the  stockholders  informed  of  the  details  of  that  trans- 
action? A.  There  were  no  stockholders  of  the  Sugar  Trust  at 
this  time. 

Q.  But  there  were  stockholders  of  the  various  companies  that 
composed  the  Sugar  Trust?  A.  Oh,  they  did  belong  to  the  com- 
panies. 

Q.  Were  those  stockholders  informed  of  the  details  of  this 
North  River  Company’s  transaction?  A.  They  were. 

Q.  How  many  stockholders  were  there?  A.  But  very  few. 

Q.  How  many?  A.  Well,  I don’t  know  exactly  how  many 
stockholders  there  were  in  the  various  corporations,  but  in  many 
of  them,  two  or  three,  or  four  stockholders;  at  the  time  of  the  or- 
ganization of  the  Sugar  Refineries  Company,  Mr.  Chairman,  the 
sugar  refining  business  was  all  in  the  hands  of  a few  people;  these 
large  interests,  take  the  largest  interests,  they  were  represented 
sometimes  by  half  a dozen  persons  who  were  the  only  persons  in- 
terested in  these  large  properties;  in  some  of  the  smaller  compan- 
ies there  may  have  been  a dozen  or  fifteen  stockholders;  but  my 
judgment  is  that  there  were  less  than  one  hundred  persons  inter- 
ested in  the  sugar  refining  business  at  that  time  in  the  compan- 
ies that  were  embraced  in  this  consolidation;  and  those  persons, 
the  stockholders  of  each  corporation,  appointed  some  one  to  rep- 
resent them  in  this  negotiation,  and  to  those  representatives  ev- 
erything was  made  known  that  was  done,  and  they  were  kept  in- 
formed and  they  were  informed  of  this  transaction. 

Q.  And  do  you  mean  to  say  that  those  persons  to  whom  was 


218  - 


[Senate. 


confided  the  interests  of  the  stockholders  in  their  several  corpo- 
rations, representing  them  upon  this  deal,  permitted  you  to  re- 
ceive an  issue  of  almost  double  in  face  or  nominal  value  of  Sugar 
Trust  certificates,  as  compared  with  the  cash  paid  by  you  for  the 
property,  without  demanding  similar  treatment  for  their  bene- 
ficiaries in  the  other  companies?  A.  In  the  first  place,  bear  in 
mind  that  only  TO  per  cent.,  instead  of  double,  was  the  amount  of 
the  certificates  represented  in  excess  of  the  money  paid;  and  in 
the  second  place — 

Q.  85  per  cent,  isn’t  it?  A.  No,  70  per  cent,  on  the  amount 
paid  on  the  $50,000,000  certificates — 85 — so  that  not  double,  but 
70  per  cent,  was  the  amount  paid  over  and  above  any  certificates 
on  the  amount  of  actual  cash. 

Q.  Why,  you  received  double,  less  15  per  cent,  didn’t  you?  A. 
Yes;  that  made  85  per  cent,  for  what  I paid  50. 

Q.  Yes?  A.  Now,  70  per  cent,  of  50  makes  35  per  cent. 

Q.  35  per  cent,  additional?  A.  Yes,  sir. 

Q.  Now,  do  you  mean  to  say,  Mr.  Searles,  that  these  trustees 
permitted  their  beneficiaries,  with  full  knowledge  of  that  par- 
ticular transaction,  to  be  treated  any  less  generously  in  the  issue 
of  Sugar  Trust  certificates,  than  you  had  been  treated  personally 
in  the  issue  of  certificates  to  yourself?  A.  My  recollection  is 
that  I offered  to  any  gentleman  interested  in  the  transaction  the 
proposition  which  I submitted,  which  was  possible  to  myself,  and 
offered  to  any  one  who  was  willing  to  pay  the  money,  the  pur- 
chase of  the  stock,  or  any  part  of  it,  on  precisely  the  same  terms, 
but  found  no  one  was  willing  to  put  up  the  cash  and  take  the 
stock. 

Q.  Was,  then,  the  same  offer  open  to  every  one  of  the  other 
constituent  concerns,  that  they  could  either  have  cash  to  the  ex- 
tent of  50  per  cent,  of  their  property  or  50  per  cent,  of  the  nomi- 
nal value  of  the  certificates  issued,  or  certificates  of  the  amount 
representing  twice  that  amount  of  cash?  A.  No,  sir. 

Q.  Nobody  else  received  that  permission,  or  that  option?  A. 
The  whole  matter  was  based  on  the  issue  of  certificates;  it  was 
the  failure  to  carryout  this  negotiation  in  certificates  which  made 


No.  40.] 


219 


this  case  a peculiar  one;  and  the  transaction  was  simply  the  pur- 
chase of  these  certificates  at  a valuation. 

Q.  Now,  isn't  it  true,  Mr.  Searles,  that  the  actual  value  origi- 
nally estimated  by  those  who  went  into  the  Sugar  Trust  arrange- 
ment was  $15,700,000  for  all  the  properties  that  were  trans- 
ferred? A.  I have  no  knowledge  of  any  such  figures. 

Q.  Will  you  swear  that  those  figures  were  not  made  at  the 
time?  A.  I have  no  recollection  of  any  such  figures. 

Q.  Will  you  swear  that  at  the  time  the  amount  of  actual  values 
estimated  for  the  properties  that  were  taken  into  the  Sugar  Trust 
were  not  less  than  $20,000,000?  A.  I don’t  know  what  you  mean 
by  “actual  values.” 

Q.  The  actual  cash  value  of  the  property,  not  the  certificated 
value,  but  the  cash  value  of  the  property?  A.  By  cash  value  of 
the  property  do  you  mean  brick  and  mortar  and  machinery  and 
real  estate,  merely? 

Q.  I mean  this:  That  taking  $50,000,000  as  the  measure 
of  issue  of  the  Sugar  Trust  certificates,  you  figured  the 
actual  cost  of  the  property  for  which  this  $50,000,000  of  cer- 
tificates were  issued  at  less  than  $20,000,000?  A.  That  would 
depend  entirely  upon  the  limit  you  put  upon  the  words  “actual 
value;”  the  properties  were  taken — all  of  them — at  their  esti- 
mated value;  each  property  was  estimated  on  the  basis  of  its 
property  and  earning  capacity. 

Q.  Was  it  not  estimated,  Mr.  Searles,  with  reference  to  the 
statement  you  made,  in  regard  to  the  North  River  Sugar  Refining 
Company,  as  to  its  ultimate  value,  in  view  of  the  contemplated 
consolidation?  A.  It  was  estimated  as  to  its  value  in  the  con- 
solidation based  upon  its  earning  capacity. 

Q.  It  ultimate  earning  capacity?  A.  No;  its  then  earning  ca- 
pacity. 

Q.  Its  then  earning  capacity?  A.  Yes,  sir. 

Q.  Well  now,  we  will  consider  that  the  standard  of  values;  why 
was  it  then  that  you  issued  for  the  refineries  that  were  closed  up, 
and  the  earning  capacity  of  which  you  absolutely  destroyed,  pro- 
portionately the  same  amount  of  certificates  in  value  as  you  did 


220  [Senate, 

for  the  others?  A.  They  were  not  issued  in  proportionately  the 
same  value,  by  any  means. 

Q.  Taking  fifty  millions  as  the  type  of  issue?  A.  No,  sir. 

Q.  As  the  standard  of  issue?  A.  No,  sir. 

Q.  How  much  did  you  issue  for  the  four  Brooklyn  refineries 
that  you  closed  up?  A.  I don’t  remember  the  amount  which  was 
received  by  them. 

Q.  Have  you  the  figures  obtainable?  A.  I have  not  at  present. 

Q.  Do  you  know  where  they  are?  A.  They  are  in  the  books  of 
the  Sugar  Refineries  Co.,  I should  judge. 

By  Mr.  Mazet: 

Q.  Who  fixed  those  values?  A.  They  were  fixed  by  agreement 
with  the  owners  of  the  various  properties. 

Q.  They  consented  to  the  valuation?  A.  They  consented  to 
the  valuation;  there  is  this  which  ought  to  be  estimated  in  fixing 
the  value  of  a manufacturing  property,  when  property  with  the 
same  amount  of  real  estate  and  bricks  and  mortar  and  machinery 
may  have  an  earning  capacity  of  double  the  amount  of  another 
growing  out  of  the  perfection  of  its  work  and  the  accretions  of 
fifty  years  of  experience,  and  the  earning  capacity  based  upon  all 
the  conditions  which  appertained  to  each  of  these  properties  was 
the  basis  on  which  these  values  were  calculated. 

Q.  Then  Mr.  Havemeyer  was  mistaken,  was  he,  when  he  testi- 
fied here  that  the  estimated  values  upon  which  these  certificates 
were  issued  were  furnished  by  the  stockholders  and  the  direc- 
tors of  the  companies  that  were  consolidated,  each  company  fur- 
nishing its  own  estimate  of  value  and  they  accepting  same  with- 
out inquiry  or  investigation  of  any  kind — was  he  in  error  when  he 
gave  that  testimony?  A.  The  representatives  of  each  company 
did  furnish  some  data  as  to  the  amount  of  their  business  and  the 
earnings  of  the  companies  and  the  property  which  they  had,  all 
of  which  were  used  in  estimating  the  value  of  the  property,  or  in 
checking  the  value  which  they  put  upon  the  property. 

Q.  That  is  not  as  complete  an  answer  to  the  question  as  you 
might  give,  Mr.  Searles;  the  question  implied  whether  Mr.  Have- 


No.  40.] 


221 


merer  was  right  or  wrong  in  his  answer  when  he  said  that  the 
Sugar  Trust  trustees  accepted  the  figures  and  estimates  of  the 
officers  and  stockholders  of  the  component  companies  without 
inquiry  or  investigation  and  issued  Sugar  Trust  certificates  upon 
that  basis?  A.  I think  the  statements  of  the  representatives  of 
the  various  companies  were  generally  accepted  as  the  basis  for 
estimating  the  values  of  the  properties. 

Q.  Do  you  know  any  ease  in  which  they  were  not?  A.  I think 
that  concessions  were  made  by  some  of  these  people  from  their 
original  estimates,  but  in  the  main  that  was  the  basis. 

Q.  Then  there  was  inquiry  and  investigation  as  to  the  actual 
value  of  the  properties?  A.  No  investigation  but  what  was  based 
upon  the  statements  of  the  gentlemen  connected  with  the  com- 
panies. 

Q.  Is  it  not  true  that  the  total  capital  stock  of  all  the  com- 
panies affiliated  afterward  with  the  Sugar  Trust  amounted  to 
$19,760,000?  A.  I have  not  the  figures  which  go  to  make  up  that 

sum. 

Q.  Is  it  your  recollection  that  these  figures  are  at  least  approx- 
imately true?  A.  Do  you  refer  there  to  the  companies  that  were 
taken  in  the  original  Trust? 

Q.  Yes.  A.  My  recollection  is  that  the  capital  was  not  nearly 
so  large  of  those  corporations. 

Q.  Was  not  nearly  so  large?  A.  No,  sir. 

Q.  Perhaps  you  leave  out  the  capital  of  those  companies  whose 
properties  which  were  abandoned  and  dismantled,  amounting  to 
$4,110,000.  A.  The  capitalization  of  the  companies  which  origi- 
nally organized  in  the  Sugar  Refineries  Company  did  not  repre- 
sent that  amount  of  money;  the  capital  was  very  much  less  than 
that. 

Q.  It  was  less  than  that?  A.  It  was  less  than  that;  the  capi- 
tal in  no  wise  represented  the  value  of  the  properties  or  the  mag- 
nitude of  the  business. 

Q.  We  understand  that  it  may  not?  A.  Did  not. 

Q.  What  was  the  original  capital  of  all  the  companies  forming 
the  Sugar  Trust?  A.  My  recollection  is  that  it  was  about  $7,000,- 
000;  less  than  $7,000,000. 


222 


[Senate, 


Q.  When  were  these  corporations  formed  with  that  capital? 
A.  Some  of  them  were  formed  with  the  commencement  of  the 
companies;  others  were  formed  with  the  organization  of  the 
Sugar  Refineries  Company. 

Q.  Of  the  Sugar  Trust?  A.  Yes;  so-called. 

Q.  Now,  how  many  of  them  were  formed  prior  to  the  organi- 
zation of  the  Sugar  Refineries  Company,  or  Trust,  and  how  many 
were  organized  at  the  time  of  the  formation  of  the  Trust?  A.  I 
think  three  or  four  of  them  were  organized  in  connection  with 
the  formation  of  the  Sugar  Trust,  so-called. 

Q.  Can  you  give  their  names,  Mr.  Searles?  A.  Havemeyer  & 
Elder,  Dick  & Meyer,  and  my  impression  is,  the  Oxnard;  I am  not 
sure  as  to  that. 

Q.  I think  you  are  right;  and  what  other?  A.  Well,  I don’t 
recall  any  others  that  were  organized  in  connection  with  it. 

By  Mr.  Mazet : 

Q.  Were  the  Wiechers  incorporated  then?  A.  Yes. 

By  Mr.  Lexow- 

Q.  And  after  investigating  the  business?  A.  They  were  incor- 
porated under  the  laws  of  New  Jersey  several  years  previously. 

Q.  Prior  to  that?  A.  They  were  originally  organized  as  a cor- 
poration, 

Q.  What  was  the  capitalization  of  these  four  companies  that 
were  organized  simultaneously  with  the  organization  of  the  Su- 
gar Trust?  A.  I think  Havemeyer  & Elder’s  was  $500,000,  and 
Dick  & Meyer  $200,000;  the  Oxnard  was  $100,000. 

Q.  Yes,  and  the  other  one?  A.  Matthiessen  & Wiechers? 

Q.  No;  the  other  one  that  was  organized  at  the  time?  A. 
Well,  I don’t  recall  now  for  the  moment. 

Q.  Do  you  remember  the  capital  of  it?  A.  I don’t  remember 
the  other  one — three — I don’t  recollect  the  fourth  company. 

Q.  Well,  we  will  assume  then  that  there  were  only  three;  and 
what  was  the  value  of  the  Sugar  Trust  certificates  that  were 
issued  against  the  capital  stock  of  the  three  corporations  that 


No.  40.]  223 

were  organized  at  the  time  the  Sugar  Trust  was?  A.  I don’t  re- 
member what  those  figures  are. 

Q.  Don't  you  remember  how  much  in  Sugar  Trust  certificates 
were  delivered  to  the  concern  of  which  you  were  Manager — Have- 
meyer  & Elder?  A.  I was  not  connected  with  Havemeyer  & 
Elder;  I was  with  the  Havemeyer  Sugar  Refining  Company,  I 
stated. 

Q.  Don’t  you  remember  what  was  delivered  to  Havemeyer  & 
Elder?  A.  I don’t  recollect  the  amount  they  received. 

Q.  Were  they  not  one  of  the  largest  concerns  in  the  Sugar 
Trust?  A.  The  largest. 

Q.  Have  you  the  figures  showing  the  amount  of  Sugar  Trust 
certificates  issued  to  Havemeyer  & Elder?  A.  I have  not  at 
present. 

Q.  Now  the  capitalization  of  Havemeyer  & Elder  and  Dick  & 
Meyer  and  the  Oxnard  Company,  made  simultaneously  with  the 
organization  of  the  Sugar  Trust,  must  have  represented  in  your 
judgment  and  their  judgment,  then,  the  true  value  of  the  prop- 
erties that  they  controlled.  A.  Not  at  all. 

Q.  Less?  A.  Less,  by  all  means. 

Q.  Then  in  the  case  of  the  organization  of  the  companies  at 
the  time  of  the  organization  of  the  Sugar  Trust  they  capitalized 
for  less  than  they  were  worth,  and  received  Sugar  Trust  certi- 
ficates for  more  than  they  were  worth;  is  that  true?  A.  They 
capitalized  for  very  much  less  than  the  real  value  of  that 
property. 

Q.  Well,  why  was  it  that  simultaneously  in  the  ratio,  or  about 
the  ratio  obtained  by  the  North  River  Sugar  Refining  Company, 
Havemeyer  & Elder  received  their  proportion  of  the  $50,000,000 
of  the  Sugar  Trust  stock  and  yet  capitalized  at  the  same  time  for 
less  than  the  actual  value  of  their  property  in  a separate  and 
independent  corporation,  which  stock  was  transferred  to  the 
Sugar  Trust  trustees?  Will  you  answer  that  conundrum, 
please?  A.  Under  the  organization  of  the  Sugar  Refineries 
Company  it  was  necessary  that  all  properties  should  be  in  the 
form  of  corporations,  and  the  Havemeyer  & Elder,  which  was  a 


224 


[Senate, 


private  firm,  transferred  their  property  for  the  convenience  of 
transfer,  to  the  Sugar  Refineries  Company,  into  a corporation 
with  a capitalization  of  $500,000;  Dick  & Meyer  did  the  same 
thing  on  the  basis  of  $200^000 — simply  to  comply  with  require- 
ments. 

Q.  And  the  Oxnard  also?  A.  I think  the  Oxnard  Company 
was  taken  at  that  time;  I am  not  sure. 

Q.  Only  $100,000?  A.  That  was  only  at  that  time;  a small 
refinery. 

Q.  Have  you  any  idea  of  the  amount  of  Sugar  Trust  certifi- 
cates issued  for  this  $800,000  worth  of  capital  stock  of  those 
three  companies?  A.  I don’t  recollect  the  amount  was  issued 
to  those  companies. 

Q.  What  value  proportionately  to  the  whole  property  taken 
by  the  Sugar  Trust  did  the  assets  of  these  three  corporations 
bear?  A.  Well  I don’t  think  I could  answer  that  question  defi- 
nitely. 

Q.  One-quarter?  A.  Fully  that. 

Q.  One-half?  A.  Hardly;  no,  sir;  not  so  much  as  that. 

Q.  Between  a quarter  and  a half?  A.  I should  think  so. 

Q.  Would  you  make  it  one-third?  A.  I should  not  want  to 
attempt  to  fix  definitely  the  proportion. 

Q.  Would  it  be  about  one-third?  A.  More  or  less;  one-third, 
I should  think. 

Q.  But,  about  approximately  that?  A.  Approximately. 

Q.  Within  reasonable  limitations,  one-third?  A.  Yes,  sir. 

Q.  Was  the  corporation  organized  at  the  time  of  the  organiza- 
tion of  the  Sugar  Trust  itself  for  the  purpose  of  transferring  its 
property  to  the  Sugar  Trust,  for  the  purpose  of  transferring  the 
certificates  of  its  stock  to  be  held  by  the  trustees  of  the  Sugar 
Trust,  organizing  on  a basis  of  $800,000  worth  of  capital  stock, 
nominal  value,  receiving  in  exchange  therefor,  about  $17,000,000 
worth  of  certificates  of  the  Sugar  Trust?  A.  One-third  would  be 
about  $14,000,000. 

Q.  Well,  was  fourteen  millions — would  that  be  right;  that  is 
less  than  the  fifteen  per  cent.?  A.  Yes,  sir. 


No.  40.] 


Q.  About  fourteen  millions  of  face  value  in  the  certificates  of 
the  Sugar  Trust?  A.  Approximately,  I should  think. 

Q.  Then  either  the  stock  issued  of  these  three  original  com- 
panies was  a misrepresentation  as  to  its  taxable  value  to  the  tax 
officers  of  the  State,  or  else  the  issue  of  the  Sugar  Trust  certifi- 
cates by  the  Cugar  Trust  trustees  was  very  largely  in  excess  of 
the  actual  value  of  the  properties  transferred;  is  that  true— as 
an  alternative?  A.  As  to  the  taxable  value,  the  property  which 
was  transferred  was  all  taxed,  as  all  property  in  Brooklyn,  re- 
gardless of  the  capital  stock;  there  was  no  tax  on  the  capital 
stock  of  a manufacturing  corporation  at  that  time. 

Q.  Yes?  Well,  it  was  a representation  that  was  untrue,  was 
it  not?  A.  No,  sir;  I don’t  think  that  it  is  customary  to  repre- 
sent that  the  capital  stock  of  a corporation  represents  the  entire 
value  of  its  property, 

Q.  You,  then  do  not  consider  that  the  nominal  value  of  the 
capital  stock  has  anything  to  do,  in  the  way  of  representation  or 
otherwise  to  the  public  or  to  the  authorities  of  the  State?  A. 
Not  necessarily, 

Q.  You  hold  that  it  is  simply  a certificate  representing  the 
proportionate  interest  of  the  stockholder  in  the  property  of  the 
whole?  A.  I think  that  is  the  custom  in  corporations  generally. 

Q.  Don’t  you  think  that  is  one  of  the  vices  of  the  present  situ- 
ation, Mr.  Searles;  I am  asking  you  now  as  a business  man — and 
one  of  the  reasons  for  the  present  situation — this  false  issue  of 
capital  stock,  representing  to  the  public  and  believed  by  the  pub- 
lic to  represent  actual  values,  whereas  by  those  issuing  them  they 
are  not  considered  as  representing  values  at  all,  but  simply  pro- 
portionate interests?  A.  I scarcely  think  that  is  correct,  for  the 
reason  that  the  Corporation  Law  is  availed  of  among  parties  who 
are  associated  in  business  simply  to  provide  a distribution  inter- 
est, which  will  not  be  interfered  with  as  in  the  case  of  a firm  by 
death,  and  ordinarily,  I think,  in  a very  large  proportion  of  in- 
terests it  is  simply  for  that  purpose,  that  the  matter  may  be  dis- 
tributed and  without  attempting  to  place  a valuation  on  the  prop- 
erty. 


15 


226 


[Senate, 


Q.  As  a matter  of  convenience?  A.  As  a matter  of  conven- 
ience; I think  that  where  the  public  suffers  it  is  where  they  are 
over  capitalized  and  not  where  they  are  under  capitalized. 

Q.  That  is  it;  whether  this  situation  that  appears  to  be?  A. 
I hardly  know  what  that  is,  what  you  refer  to. 

Q.  Over  capitalization;  now  is  it  not  a fact  that  when  you  give 
utterance  to  those  views  you  do  utter  the  general  view  of  those 
dealing  in  corporate  interests;  that  is,  the  general  view  of  those 
engaged  in  corporate  enterprises?  A.  I think  it  is  the  view  of 
very  many. 

Q.  Of  those  that  you  know?  A.  Many  that  I know. 

Q.  And  you  are  a gentleman  of  large  experience  in  these  oper- 
ations, are  you  not?  A.  I have  considerable  experience. 

Q.  I believe  you  are  so  considered;  do  you  overlook  entirely, 
in  reaching  that  conclusion,  the  law  of  the  State,  which  says  that 
capital  stock  shall  not  be  issued,  excepting  for  cash,  or  it  may  be 
exchanged  for  property  of  the  actual  value  of  the  capital  stock 
issued  in  exchange  therefor,  so  that  if  your  view  is  the  view 
shared  by  those  engaged  in  corporate  enterprises,  it  means  that 
they  have  closed  their  eyes  and  evaded  the  statutes  of  this  State 
in  the  organization  of  corporations?  A.  I do  not  understand 
that  the  law  provides  that  you  shall  capitalize  for  all  the  prop- 
erty that  you  have  got,  but  that  it  provides  that  you  shall  not 
issue  stock  which  does  not  represent  either  actual  property  or 
cash. 

Q.  Yes?  A.  Not  that  you  shall  make  your  capital  so  large  as — 

Q.  (Interrupting)  But  you  should  not  issue  capital  stock  for 
property  in  excess  of  the  actual  fair  market  value  of  the  property 
received  in  exchange  for  it?  A.  I think  that  is  correct;  I think 
that  is  proper. 

Q.  But  it  is  just  that  which  is  entirely  overlooked,  is  it  not,  or 
which  is  absolutely  violated  in  the  organization  of  corporations 
and  in  the  making  of  a transaction  such  as  has  been  disclosed 
here?  A.  Not  in  the  making  of  a small  capitalization;  I don’t 
consider  that  that  is  an  evasion  of  that  law,  inasmuch  as  it  is 


No.  40.] 


227 


true  of  every  such  corporation  that  the  capital  stock  does  repre- 
sent every  dollar  of  value  which  it  states  to  represent. 

Q.  Iso;  but  in  the  making  of  an  over-issue;  I mean  by  an  over- 
issue, an  inflated  issue?  A.  I think  you  are  quite  correct  as  to 
any  inflation  of  value. 

v v 

By  Mr.  Bedell: 

Q.  If  you  are  making  another  issue  by  that  means,  you  are 
then  avoiding  the  tax  upon  corporations  in  this  State,  are  you 
not?  A.  I think  not;  I think  that  if  you  tax  a corporation  here 
on  a capital  of  $100,000,  the  value  of  which  is  fl, 000, 000,  the 
value  of  the  stock  and  not  its  capitalization,  is  what  is  taxed  by 
the  law. 

Q.  Well,  it  would  be  very  possible  for  a close  corporation  to 
keep  the  value  of  its  stock  down — they  owning  the  majority  of  it 
and  not  putting  it  on  the  market;  then  would  the  State  be  able  to 
form  any  basis  for  the  value  of  the  stock  beyond  the  par?  A. 
They  place  every  officer  of  such  corporation  under  oath  as  to  the 
value  of  the  property. 

Q.  That  is  true;  it  might  not  reveal  it  always?  A.  That  is  a 
pretty  serious  charge. 

Q.  I said  “always”;  I did  not  say  that  it  would  not  sometimes. 

By  Mr.  Lexow: 

Q.  Well,  the  fact  that  a foreign  corporation  is  taxed  in  this 
State  only  upon  the  capital  actually  in  usd  in  this  State  opens  the 
door  to  an  evasion  of  taxation,  with  reference  especially  to  large 
manufacturing  concerns,  does  it  not?  It  is  a very  easy  matter,  is 
it  not,  to  forget  conveniently,  just  the  amount  of  capital  that  is 
used  by  a foreign  corporation  in  the  transaction  of  business  in 
this  State,  and  if  only  that  capital  which  is  used  in  this  State  can 
be  taxed  by  the  State,  that  offers  a loop-hole  for  escape  in  the  way 
of  taxation?  A.  It  might  operate  in  that  way,  I should  think. 

Q.  Don't  you  think,  Mr.  Searles,  from  your  acquaintance  with 
loivigu  corporations,  that  if  they  were  compelled,  upon  apnli- 


228 


[Senate, 


cation  for  a license  to  the  Secretary  of  State,  to  do  business  in 
this  State,  to  make  an  exposure  of  the  amount  of  capital  upon 
which  they  propose  to  do  business,  that  that  would  to  some  ex- 
tent, relieve  the  situation?  A.  Well,  I could  scarcely  say  im- 
promptu, what  would  be  the  effect  of  such  a law  as  that;  my  feel- 
ing is,  the  better  course  for  the  Legislature  is  to  encourage  the 
formation  of  corporations  in  this  State,  rather  than  to  force  them 
out  of  the  State  by  adverse  legislation. 

Q.  There  is  nothing  in  the  statutes  of  the  State  to-day  that 
does  not  operate  as  favorably  for  the  organization  of  corporations 
here  as  there  is  in  any  other  State  in  the  United  States,  excepting 
possibly  in  West  Virginia?  A.  My  impression  is  that  the  tax 
upon  capitalization  of  corporations  here  is  greater  than  it  is  in 
some  other  States. 

Q.  Is  it  not  simply  that  the  method  of  obtaining  an  honest 
statement  of  the  property  of  the  corporation  upon  which  to  lay 
the  taxes  is,  under  the  recent  amendments  of  the  Tax  Law,  more 
efficient  in  this  State  than  it  is  in  others,  and  that  simply  they 
are  not  avoiding  taxation  here  as  thoroughly  and  completely  as 
as  they  are  evading  taxation  in  New  Jersey  and  other  states 
isn’t  that  true?  A.  I would  hardly  consider  myself  competent 
to  discuss  that  question;  I notice  this  fact — that  in  the  State  of 
New  Jersey  a franchise  tax  is  demanded  upon  the  capital  of  the 
corporation  that  is  fixed  and  determinable  and  my  understand- 
ing is  that  such  a tax  would  be  very  much  greater  in  this  State 
than  it  is  in  the  State  of  New  Jersey. 

Q.  Now,  Mr.  Searles,  you  have  testified  that  the  figures  I gave 
you,  with  reference  to  the  capitalization  of  these  original  cam- 
panies,  were  approximately  true ; would  the  value — not  the  capi- 
talization, but  the  actual  value — of  the  property  that  was  thus 
capitalized  be  about  $12,000,000?  A.  The  value  of  the  corpora- 
tions named  a few  moments  ago? 

Q.  The  actual  cash;  appraised  cash  value  of  the  properties 
for  which  fifty  millions  of  Sugar  Trust  certificates  were  issued? 
A.  There  was  no  cash  appraised  valuation  of  these  corporations. 

Q.  Adding  to  the  question  I put  a moment  ago,  the  Philadel- 


No.  40.] 


229 


pliia  companies  that  were  acquired  in  1892 — I believe  in  March, 
1S92 — and  for  which  $23,960,000  worth  of  additional  stock — I be- 
lieve, if  my  recollection  serves  me — was  issued — as  part  of  the 
general  question;  did  this  issue  of  $73,960,000  worth  of  certifi- 
cates of  the  New  Jersey  Company  represent  more  than  an  actual 
value  of  $12,060,000?  A.  That  is  no  fair  estimate  whatever  of 
the  value  of  the  property. 

Q.  I am  speaking  now  not  of  an  estimated  value  by  others, 
but  the  appraised  value,  fixed  by  those  who  owned  and  controlled 
the  properties  at  the  time  they  were  taken  in?  A.  There  never 
was  any  such  appraised  value. 

Q.  Did  you  ever  see  those  figures  before?  A.  No,  sir. 

Q.  Will  you  swear  that  the  actual  cash  market  valuation  of 
the  properties  represented  more  than  a total  of  $12,060,000?  A. 
I should,  most  assuredly. 

Q.  To  what  extent  would  you  add  to  that  figure  and  be  justi- 
fied to  swear  to  the  actual  cash  value?  A.  Well,  I scarcely  know 
how  to  answer  that  because  I think  the  designation  of  “ actual 
cash  values  ” — if  you  can  tell  me  what  you  mean  by  that? 

Q.  I mean — I am  speaking  of  the  value  that  the  North  River 
Refining  Company  put  upon  its  property  and  agreed  to  take  cash 
for  it,  applying  the  same  rule  or  standard  to  the  other  proper- 
ties taken  in  by  the  Sugar  Trust,  would  you  say  that  the  value 
of  all  the  properties  combined  representing  $73,960,000  worth  of 
sugar  certificates,  was  to  exceed  $12,060,000?  A.  If  I under- 
stand your  question  it  is  whether  the  $73,000,000  of  outstanding 
capital  of  the  company  represents  in  value  more  than  the 
$12,000,000. 

Q.  No — I am  speaking  now  of  the  time  of  the  issuance  of  the 
certificates  and  asking  you,  on  the  basis  of  an  estimated  cash 
value  of  the  North  River  Sugar  Refining  Company,  whether  all 
the  properties  taken  in  by  the  New  Jersey  Sugar  Refining  Com- 
panies, for  which  $73,960,000  worth  of  stock  certificates  were 
issued,  had  that  kind  of  value  to  exceed  $12,060,000?  A.  It  had 
undoubtedly. 


230 


[Senate, 


Q.  How  much  more  will  you  swear  to?  A.  Well,  it  would  be 
impossible  for  me  to  fix  the  actual  cash  value  of  those  properties. 

Q.  Will  you  swear  it  was  $20,000,000?  A.  That  is  very  much 
less  than  the  value  undoubtedly. 

Q.  Will  you  swear  that  this  property  exceeded  in  cash  value  on 
the  basis  of  the  estimated  cash  value  of  the  North  River  Sugar 
Refining  Company,  to  exceed  $20,000,000?  A.  Will  you  let  me 
ask  you,  M.  Chairman,  whether  when  you  talk  about  $73,000,000 
as  representing  the  capital  of  the  company,  that  the  capital  in- 
cludes all  the  real  and  personal  property  of  the  American  Sugar 
Refining  Company? 

Q.  I understand  that.  A.  Now,  that  being  the  case,  do  you  ask 
me  what  the  real  cash  value  is? 

Q.  Is  that  what  its  real  cash  valuewasatthetimeof  theissuance 
of  these  $73,960,000  worth  of  certificates;  whether  you  will  swear 
that  its  real  cash  value,  estimated  on  the  basis  of  the  North  River 
Sugar  Refining  Company,  exceeded  $20,000,000?  A.  Well,  I could 
not  give  any  figure,  estimated  on  the  basis  of  the  North  River 
Company,  as  that  is  no  criterion  for  anything  connected  with  the 
properties  of  the  company. 

Q.  That  was  a cash  transaction?  A.  That  was  a cash  trans- 
action, under  peculiar  conditions. 

Q.  Was  any  other  transaction  a cash  transaction?  A.  No,  sir. 

Q.  All  the  others  were  certificate  transactions?  A.  Altogether. 

Q.  And  no  cash  passed  at  all?  A.  None  whatever. 

Q.  All  that  the  original  Sugar  Trust  received  was  the  real  es- 
tate, and  the  plant  of  the  respective  companies?  A.  That  was 
all. 

Q.  No  cash?  A.  No  cash. 

Q.  Not  a dollar?  A.  No,  sir. 

Q.  The  fifteen  per  cent,  that  was  deducted  was  retained  by  the 
treasury  temporarily  as  cash — as  a working  capital?  A.  As  a 
working  capital. 

Q.  And  absolutely  nothing  in  the  way  of  cash  was  contributed 
by  the  original  companies?  A.  No,  sir. 

Q.  Now,  Mr.  Searles,  will  you  not  aid  the  committee  in  getting 


No.  40.] 


231 


at  the  figures  that  were  established  by  these  component  com- 
panies upon  which  basis  the  Sugar  Trust  certificates  were  ex- 
changed for  their  property?  A.  I will  endeavor  to  get  that  in- 
formation. 

Q.  That  was  one  of  the  questions  put  by  me  to  Mr.  Havemeyer 
and  he  testified  that  you  were  the  proper  person  to  answer  a 
question  of  that  kind.  I asked  Mr.  Parsons  whether  it  would  be 
necessary  for  me  to  serve  a Subpoena  Duces  Tecum  to  produce 
that  evidence  and  it  was  stated  No,  that  the  evidence  would  be 
produced  on  Saturday  before  the  committee  and  it  was  then  ad- 
journed until  to-day;  we  would  like  to  have  it  as  soon  as  it  can 
be  made  accessible;  I do  not  want  to  take  advantage  of  you  and  1 
will  call  your  attention  to  the  Deed  of  Trust  which  Mr.  Assembly- 
man  Bedell  has  just  handed  to  me  and  which  recites  that  upon 
completing  the  execution  of  that  instrument  the  parties,  being 
those  various  subsidiary  companies,  “shall  make  a full  inventory 
of  the  property,  including  raw  and  refined  sugars,  molasses,  sugar 
in  process,  syrups,  bone  black,  fuel,  barrels,  packages,  charcoal, 
and  other  supplies,  and  such  inventory  is  to  be  examined  and  the 
articles  appraised  at  their  present  cash  value  except  as  to  the 
sugar  and  molasses  to  arrive  which  are  to  be  appraised  at  their 
market  value  on  arrival  by  a committee  of  five  persons,  as  fol- 
lows: Theodore  A.  Havemeyer,  F.  O.  Matthiessen,  Julius  A.  Sturz- 
burg,  John  E.  Searles,  Jr.,  and  Joseph  V.  Thomas;”  was  that 
done?  A.  That  was  done. 

Q.  Where  is  the  document  or  where  are  the  papers  showing 
the  appraisal  of  the  values  then  had?  A.  I could  not  say  what 
has  become  of  those  papers  since,  those,  papers — that  appraisal 
which  you  refer  to — was  an  appraisal  of  the  personal  property 
of  the  various  refineries  for  which  each  company  was  paid  in 
cash. 

Q.  Yes.  A.  That  had  nothing  whatever  to  do  with  the  ap- 
praisal of  the  properties  of  the  company  but  simply  its  cash 
assets.  : 

Q.  You  mean  paid  by  the  Sugar  Trust  to  these  various  cor- 
porations? A.  No,  sir;  paid  by  each  of  the  corporations;  for 


232 


[Senate, 


instance,  if  in  the  North  River  Company  there  were  $200,000  of 
these  cash  assets,  the  re-organized  North  River  Company  repaid 
the  old  stockholders  of  the  North  River  Company  that  $200,000 
for  those  call  assets,  in  addition  to  its  sale  of  plant  for  certifi- 
cates; that  had  nothing  to  do  with  the  transfer  of  the  properties. 

Q.  Well,  it  had  to  do  with  the  transfer  of  this  personal  prop- 
erty? A.  This  was  simply  a transfer  of  the  personal  property 
from  the  old  to  the  new  corporation. 

Q.  Yes.  A.  Of  the  individual  corporations. 

Q.  And  a payment  of  cash  by  the  new  corporation  for  this 
transfer?  A.  Yes,  but  that  had  nothing  to  do  with  the  property. 

By  Mr.  Bedell: 

Q.  Then  not  all  the  personal  property  was  taken  into  consid- 
eration in  the  fixing  of  the  value  of  the  property  taken  by  the 
Trust?  A.  No,  sir. 

By  Mr.  Lexow: 

Q.  Inasmuch  as  you  have  stated  that  the  Trust  did  not  re- 
ceive from  any  of  these  component  companies  any  cash  what- 
ever, how  was  the  cash  raised  with  which  to  pay  for  this  ma- 
terial turned  over  under  the  provisions  of  this  Trust  Deed  to  the 
Trust?  A.  It  was  contributed  by  the  managers  of  the  various 
corporations  who  loaned  to  the  company. 

Q.  Loaned  to  what  company?  A.  T6  the  individual  company. 

Q.  What,  to  the  new  company?  A.  Yes,  sir. 

Q.  And  what  did  they  receive  for  it?  A.  They  received  for  it 
those  personal  assets  which  are  provided  for  in  that  inventory. 

Q.  They  remained  owners?  A.  They  remained  owners. 

Q.  Of  that  personal  property?  A.  A new  company  was  started 
for  each  of  those  corporations;  that  is  to  say,  a new  set  of  books 
were  opened;  the  new  company  took  over  these  cash  assets  of 
the  old  company  and  liquidated  them,  and  paid  the  money  to  the 
stockholders  of  the  old  company. 


No.  40.] 


233 


Q.  By  declaring  a dividend?  A.  No;  simply  turning  it  over; 
it  was  liquidated  for  their  benefit. 

Q.  Well,  in  what  other  way  can  a stockholder  get  any  money 
out  of  a corporation  on  dissolution  except  in  the  way  of  dividend? 
A.  Well,  the  old  stockholders  received  in  liquidation  for  their 
old  companies  these  monies  which  were  appraised  for  in  that 
inventory. 

Q.  Do  you  mean  to  say  that  the  actual  money  was  taken  out 
of  the  treasury  of  the  old  companies  and  paid  over  to  individual 
stockholders  without  going  through  the  form  of  declaration  of 
dividend?  A.  No,  Sir;  I mean  to  say  that  the  managers  who 
were  appointed  to  manage  the  new  company  provided  funds  to 
liquidate  these  personal  assets  and  they  were  paid  over  to  the 
old  stockholders — the  stockholders  of  the  old  company. 

Q.  Well,  what  did  the  managers  get?  A.  The  managers  had 
the  property  for  which  they  exchanged  the  cash. 

Q.  Didn't  the  Sugar  Trust  get  the  property?  A.  The  personal 
assets  they  didn't  get  until  they  liquidated  them. 

Q.  Until  they  liquidated  when?  A.  Until  they  liquidated 
these  personal  assets  referred  to  in  that  inventory. 

Q.  Do  we  understand  you  correctly  as  saying  that  the  mana- 
gers of  the  subsidiary  companies  paid  for  this  personal  property 
and  received  money  back  from  the  Sugar  Trust  when  the  prop- 
erty was  sold?  A.  Yes,  sir. 

Q.  They  paid  their  own  companies  for  that  property;  they 
paid  their  own  companies,  did  they  not?  A.  The  managers  of 
the  new  company,  the  oflicers  of  the  new  company,  assumed 
these  personal  assets  to  liquidate  them,  and  turned  the  proceeds 
over  to  the  stockholders  of  the  old  company  or  to  their  represen- 
tatives. 

Q.  How  did  they  do  it?  A.  By  realizing  the  assets. 

Q.  These  assets  were  represented  in  the  trust  by  certificates? 
A.  Not  at  all;  the  certificates  had  nothing  to  do  with  these  assets 
whatever. 

Q.  There  was  no  issue  of  certificates  at  all  for  them?  A.  None 
whatever;  no  sir. 


234 


[Senate, 


Q.  Do  you  mean  to  say  then,  that  the  managers  of  the  Sugar 
Trust  liquidated  these  assets  and  turned  them  over— the  results — 
to  the  various  companies;  paid  originally  for  these  assets?  A. 
They  furnished  the  money  to  pay  for  these  assets  in  cash,  and 
turned  the  proceeds  over  to  the  old  stockholders. 

Q.  And  that  was  divided  among  the  old  stockholders?  A. 
Certainly. 

Q.  In  the  form  of  a dividend?  A.  I presume  it  was  divided  iu 
that  form;  the  corporation  itself  having  been  turned  over  by  the 
transfer  of  is  stock,  all  of  its  assets  in  the  way  of  these 
personal  assets,  were  ordinarily,  I think,  placed  in  the  hands  of 
a trustee  for  the  benefit  of  the  old  stockholders;  these  were 
taken  over  by  the  new  company  who  paid  to  that  trustee  or  rep- 
resentative of  the  old  stockholders  the  amount  of  these  assets, 
and  it  was  by  him  distributed  to  the  old  stockholders. 

Q.  Do  you  make  annual  reports?  A.  No,  sir. 

Q.  Do  you  make  any  reports?  A.  We  make  no  public  reports. 

Q.  Do  you  make  any  private  reports?  A.  No,  sir. 

Q.  Have  you  since  the  organization  of  the  Trust  and  the  subse- 
quent organization  of  the  New  Jersey  corporation  made  any  re- 
port of  a public  character  in  this  State?  A.  We  have  not. 

Q.  Or  in  the  State  of  New  Jersey?  A.  The  law  of  New  Jersey 
does  not  require  any  report. 

Q.  I understand  that;  I asked  for  the  fact?  A.  The  company 
made  a report  to  its  stockholders  at  an  annual  meeting  made,  I 
think,  in  1891  or  1892. 

Q.  Where  is  that  report?  A.  It  was  published  at  the  time. 

Q.  In  the  newspapers?  A.  Yes,  sir. 

Q.  What  newspaper  do  you  know  it  was  published  in?  A.  All 
the  city  papers,  I think. 

Q.  You  have  made  one  report  to  the  State  of  Massachusetts, 
haven't  you?  A.  We  make  an  annual  report  to  the  State  of 
Massachusetts. 

Q.  Have  you  a subsidiary  company  there?  A.  The  American 
Sugar  Refining  Company  has  a refinery  there;  not  a subsidiary 
company  at  all. 


No.  40.] 


235 


Q.  Now,  why  is  it  that  you  make  a report  to  the  State  of  Mas- 
sachusetts aud  don’t  make  one  to  the  State  of  New  York?  A. 
The  laws  of  the  State  of  Massachusetts  require  the  making  of  a 
report  in  the  matter. 

Q.  The  laws  of  the  State  of  New  York  require  the  making  of 
a report?  A.  I do  not  so  understand  it. 

Q.  You  believed  that  it  is  entirely  optional  and  refers  only  to 
the  liability  of  directors?  A.  I don't  understand  that  the  law 
of  this  State  requires  a report  concerning  a foreign  corporation. 

Q.  But  where  you  have  a corporation,  which  is  a New  York 
Corporation,  don’t  you  consider  that  the  law  of  the  State  requires 
you  to  make  a report  here?  A.  We  do  not  have  such  a corpora- 
tion. 

Q.  Well,  you  have  five  or  six  New  York  corporations  merged 
in  the  New  Jersey  corporation?  A.  None  at  all. 

Q.  Haven't  you?  A.  No,  sir. 

Q.  You  make  the  distinction  that  you  purchased  their  assets? 
A.  Those  corporations  have  all  been  dissolved  long  since. 

Q.  In  the  report  that  you  made  to  the  State  of  Massachusetts 
1 find  in  the  year  1895,  “Investments  in  other  companies  .825,692,- 
000";  does  that  represent  stock  purchased  of  other  companies? 
A.  It  does. 

Q.  Competing  companies?  A.  No,  sir;  the  companies  owned 
by  this  company. 

Q.  I thought  that  you  had  purchased  the  assets  and  properties 
of  the  companies  that  went  into  this  company  and  dissolved 
them;  are  there  others  that  you  have  not  dissolved,  the  stocks  of 
which  you  own?  A.  All  of  the  companies  constituting  the  origi- 
nal Sugar  Refineries  Company  were  dissolved  after  the  organiza- 
tion of  the  American  Sugar  Refining  Company,  which  purchased 
their  properties. 

Q.  I see?  A.  The  investments  in  other  corporations  referred 
to  are  investments  that  have  since  been  made. 

- Q.  Subsequent  to  the  1st  of  January,  1891?  A.  Yes,  sir. 

Q.  Does  that  include  investments  in  the  Western  Sugar  Re- 
fineries Company?  A.  I think  it  does. 


236 


[Senate, 


Q.  Of  one-half  its  stock?  A.  Yes,  sir. 

Q.  That  is  the  Spreckels  Company,  isn't  it?  A.  No,  sir;  it  is 
not  the  Spreckels  Company. 

Q.  That  is  the  company — A.  Spreckels  owned  part  of  the 
stock. 

Q.  That  is  the  company  that  practically  controls  the  product 
of  the  Hawaiian  Islands?  A.  Yes,  sir. 

Q.  And  practically  controls  the  sugar  fields  west  of  the  Mis- 
souri river?  A.  In  part. 

Q.  Don’t  it  substantially  control  it?  A.  I don’t  consider  that 
it  controls  that  market. 

Q.  What  other  company  except  the  so-called  California  Com- 
pany is  there  in  competition  with  the  Western  Refining  Com- 
pany? A.  There  are  three  beet  sugar  companies  there  which 
make  sugar  for  consumption ; there  are  also — 

Q.  You  don't  consider  that  beet  sugar  under  the  present  tariff 
comes  in  competition  with  your  cane  sugar?  A.  Unfortunately 
it  does. 

Q.  Haven't  you  stated  that  it  doesn’t?  A.  No,  sir. 

Q.  What  are  the  names  of  the  three  beet  sugar  refineries  that 
are  in  competition  with  the  Western  Refineries  Company?  A. 
There  is  the  company  at  Almeda,  California. 

Q.  With  what  daily  output?  A.  I don't  remember  their  daily 
output. 

Q.  What  other  companies?  A.  The  China  Company. 

Q.  That  is  two,  and  the  third  one?  A.  Well,  the  third  one  is 
a Watsonville  Company,  the  product  of  which  this  company  has; 
therefore,  it  is  not  in  competition  with  them. 

Q.  Then  there  are  only  two  companies?  A.  That  and  the 
Hong  Kong  refineries;  the  refineries  in  Hong  Kong;  imported  su- 
gar from  China  are  the  principal  competitors. 

Q.  Then  you  have  two  competitors  in  the  Western  market; 
what  is  the  total  product  of  these  two  competitors?  A.  I think 
about — well,  I haven’t  the  figures,  but  I think  about  10,000  tons. 

Q.  Ten  thousand  tons  in  what  space  of  time?  A.  In  a year. 


No.  40.] 


237 


Q.  Ten  thousand  tons  as  against  about  1,600,000  tons?  A.  Oh, 

no. 

Q.  What  is  your  product?  A.  As  against  the  consumption  on 
the  Pacific  coast;  you  can  put  it  as  against  that  only? 

Q.  I am  speaking  of  the  consumption  of  the  whole  United 
States;  what  is  the  consumption  of  the  whole  United  States? 
A.  About  2,000,000  tons. 

Q.  Then  you  have  in  actual  competition  west  of  the  Missouri 
to  the  extent  of  10,000  tons  against  the  product  of  two  mills,  is 
that  it?  A.  No,  sir;  it  is  10,000  tons  against  the  product  of  the 
Pacific  coast. 

Q.  Yes;  well,  what  is  the  total  competing  product,  assuming 
that  you  haven’t  got  any  underlying  agreement  with  any  refinery 
that  is  not  included  in  the  Sugar  Trust ; what  is  the  total  compe- 
tition in  tons  against  you  in  the  whole  United  States  of  America? 
A.  About  700,000  tons  out  of  two  millions. 

Q.  Then  you  only  manufacture  about  65  per  cent,  of  the  prod- 
uct? A.  A part  of  the  consumption  of  the  country — of  2,000,000 
tons,  is  domestic  production ; there  is  a cane  crop  in  Louisiana. 

Q.  How  much  is  that?  A.  250,000  to  300,000  tons. 

Q.  Does  it  exceed  100,000  tons?  A.  Oh,  yes. 

Q.  Didn't  Mr.  Havemeyer  testify  that  it  was  100,000  tons  ap- 
proximately; was  he  in  error  if  he  so  stated?  A.  No;  I say  un- 
doubtedly it  is  over  200,000  tons;  between  200,000  and  300,000 
tons., 

Q.  How  much  of  that  do  you  produce;  none  of  it?  A.  The  re- 
fining part  of  it. 

Q.  How  much  of  that  do  you  refine;  I am  speaking  now  of  re- 
fined sugar?  A.  Oh,  I ask  your  pardon;  I didn’t  understand  you. 

Q.  I am  speaking  of  refined  sugar;  go  on.  A.  Well,  the  con- 
sumption of  refined  sugars  is  not  2,000,000  tons  then;  I should 
correct  those  figures. 

Q.  Are  the  figures  correct  when  I estimated  it  at  1,500,000 
tons?  A.  Refined  sugars;  yes., 

Q.  And  of  that  you  produce  how  much?  A.  About  80  per 
cent. ; between  75  per  cent,  and  80  per  cent. 


238 


[Senate, 


Q.  That  would  be  in  tons  how  much?  A.  About  1,200,000  tons. 

Q.  Then  you  produce  1,200,000  out  of  a total  of  1,500,000  tons? 
A.  Of  refined  sugars., 

Q.  And  you  fix  the  price?  A.  We  fix  the  price  on  what  we 

purchase.  ; 

Q.  You  so  testified  before  the  committee  in  Washington,  and 
since  that  time  Mr.  Havemeyer  has  on  two  occasions  stated  that 
you  fixed  the  price  on  all  the  product  in  this  country;  does  he 
make  an  error  when  he  makes  that  statement?  A.  In  my  judg- 
ment; that  statement  is  not  an  accurate  statement. 

Q.  Whether  you  do  it  directly,  by  subsidiary  agreements  or 
contracts  or  understandings,  you  do  it  indirectly  by  the  fact  that 
the  price  that  you  fix  is  the  controlling  price  for  sugar  in  this 
country,  don’t  you?  A.  That  is  not  correct,  except  in  so  far  as 
we  make  so  low  a price  that  no  competitor  can  afford  to  sell  it 
cheaper,  that  is  the  only  way  in  which  we  can  control  the  price. 

Q.  But  they  do  sell  it  cheaper,  don’t  they?  A.  At  times. 

Q.  And  that  is  the  rule  when  they  get  a chance  to  sell  it,  isn’t 
it?  A.  Ordinarily;  I don’t  think  they  undersell  the  price  of  the 
American  Sugar  Refining  Company. 

Q.  Isn’t  it  true,  that  you  control  the  market  so  absolutely  that 
you  can  prevent  competition  even  if  that  competition  is  ready  to 
take  a less  price  than  you  are  willing  to  sell  for?  A.  No,  sir. 

Q.  Don’t  you  control,  by  reason  of  the  output  that  you  make; 
don’t  you  control  the  price  of  the  raw  product  and  control  the 
market  of  the  raw  product,  the  price  of  sugar  for  your  competi- 
tors in  the  market  and  for  the  trade  in  the  raw  sugar?  A.  No, 
sir. 

Q.  You  buy  about  three-quarters  of  the  total  raw  product,  don't 
you?  A.  Yes,  sir. 

Q.  Do  you  mean  to  say  that  with  a purchase  of  that  amount 
that  you  are  not  able  to  control  the  price  of  that  raw  product? 
A.  Not  at  all;  when  we  are  not  in  the  market,  our  competitors 
have  the  market  entirely  to  themselves;  we  cannot  buy  all  the 
sugar. 

Q.  But  you  practically  do?  A.  We  buy  three-quarters  of  it  as 
you  state. 


No.  40.] 


239 


By  Mr.  Mazet: 

Q.  Are  you  working  to  tlie  full  working  capacity  of  your  re- 
fineries? A.  No,  sir. 

Q.  Wliat  percentage  of  tlie  full  capacity  are  you  working?  A. 
I should  judge  at  this  time  of  tlie  year,  60  per  cent,  perhaps. 

Q.  Well,  on  the  average,  during  the  whole  year?  A.  Well,  not 
over  SO  per  cent. 

Q.  What  is  to  prevent  your  working  them  to  100  per  cent,  of 
capacity  if  you  only  buy  75  per  cent,  of  the  raw  material?  A. 
Well,  the  75  per  cent,  of  the  raw  material  simply  represents  the 
75  per  cent,  of  the  sugar  consumed,  that  is  to  say;  but  unfortunately 
the  refining  capacity — taking  our  competitors  and  our  own— is 
largely  in  excess  of  the  requirements  of  the  country;  therefore,  a 
large  part  of  the  plant  has  to  remain  idle. 

By  Mr.  Lexow: 

Q.  Now,  Mr.  Searles,  let  me  call  your  attention  to  your  testi- 
mony before  the  Investigating  Committee  at  Washington;  Sen- 
ator Allen  then  put  to  you  the  following  question: 

“ Q.  Your  purpose  then,  is  to  control  the  output  and  not 
“ manufacture  more  sugar  than  the  country  demands  at  any 
“time?  You  answered — -“Precisely.” 

“ Q.  And  by  that  means  get  rid  of  the  competition  that 
“would  otherwise  exist  between  free  factories?  A.  Undoubt- 
edly.” 

“ Q.  Is  that  true?  A.  Undoubtedly.” 

Q.  Is  it  true?  A.  Yes. 

Q.  Then  the  various  steps  that  you  have  taken  which  have  led 
up  to  this  consolidation  of  interests,  to  this  acquisition  of  stocks 
of  other  companies,  to  this  closing  of  factories  in  various  parts 
of  the  country,  have  been  designed  for  the  purpose  of  controlling 
the  output  of  sugar  and  getting  rid  of  competition  that  would 
otherwise  exist  between  free  factories?  A.  No,  sir. 

Q.  How  can  you  get  away  from  that  conclusion?  A.  The  ob- 
ject of  consolidating  these  factories  was  to  enable  us  to  produce 
sugar  more  economically  than  it  can  be  produced  under  any  other 


240 


[Senate, 

form;  and  to  the  extent  which  that  gives  us  the  control  of  the 
market  we  have  the  advantage  of  it 

Q.  The  question  that  was  put  to  you  by  Senator  Allen  was, 
whether  that  was  your  purpose,  not  whether  that  was  an  inci- 
dental advantage  that  accrued  to  }rou,  but  whether  your  purpose 
was  to  get  rid  of  that  competition  which  would  otherwise  arise 
through  free  competition  between  free  factories;  I ask  you  how 
can  you  bring  into  consistency  that  statement  then  made  by  you 
and  your  present  denial  that  your  organization — that  the  steps 
that  have  led  up  to  the  present  situation  were  all  part  and  parcel 
of  that  purpose  to  destroy  that  competition  which  would  other- 
wise prevail  between  free  factories?  A.  I think  you  will  find  in 
the  context  in  connection  with  that  investigation  something 
which  further  explains  it,  if  you  will  read  it  a little  further  on. 

Q.  You  have  given  back  of  that  the  same  general  explanation — 
A.  Yes;  well,  what  is  following  that  sentence? 

Q.  — 1 may  say  that  you  have  given  to-day — A.  I think  there  is 
something  that  follows  that. 

Q.  But  do  you  think  that  one  is  consistent  with  the  other;  do 
you  think  it  is,  Mr.  Searles?  A.  Yes,  sir. 

Q.  Mr.  Havemeyer  has  stated  before  that  same  committee, 
speaking  of  this  consolidation,  in  answer  to  the  question:  “It  was 
organized,  Mr.  Havemeyer,  as  I understand  it,  with  the  view  of 
controlling  the  price  for  that  product  to  the  people  of  this  coun- 
try A.  That  was  one  of  the  objects  of  the  consolidation.’’  is 
that  true,  or  was  Mr.  Havemeyer  mistaken?  A.  I should  not 
make  myself  responsible  for  Mr.  Havemeyer’s  statements  on  that 
line. 

Q.  He  was  the  controlling  spirit  in  the  consolidation,  was  he 
not?  A.  He  was  one  of  the  trustees  and  one  of  the  officers  of  the 
company. 

Q.  And  the  President  of  the  company?  A.  Yes,  sir. 

Q.  And  always  the  President  since  the  organization  of  the 
Sugar  Trust  down  to  the  present  time?  A.  Well,  since  the  or- 
ganization of  the  American  Refineries  Company. 

Q.  His  brother,  Mr.  Theodore  A.  Havemeyer,  testified  that  all 


No.  40.] 


241 


the  facts  in  connection  with  the  consolidation  were  known  by  his 
brother,  who  had  charge  of  them;  is  that  statement  justified  or 
not  by  the  facts?  A.  I presume  they  were  within  his  knowledge. 

Q.  From  your  knowledge  of  the  situation,  was  that  statement 
of  the  brother  justified?  A.  I think  the  successive  steps  in  the 
consolidation  were  known  to  Mr.  H.  O.  Havemeyer. 

Q.  And  he  was  actively  engaged  in  carrying  them  into  exoeu- 
tion?  A.  Yes,  sir. 

Q.  (Reading)  that  was  one  of  the  objects  of  the  consolidation 
— and  you  have  succeeded  in  doing  it?  A.  Yes  ” Was  that 
true?  A.  Only  in  a qualified  sense. 

Q.  It  is  an  absolute  statement;  do  you  mean  to  say  that  in  its 
absolute  form  here,  it  is  not  true?  A.  I do  in  my  judgment. 

Q.  (Reading)  That  was  the  principal  object  in  organizing  the 
American  Sugar  Refining  Company?  A.  It  may  be  said  it  was  the 
principal  object.”  Now,  can  there  be  any  question  about  that  being 
either  true  or  false;  it  must  be  either  one  or  the  other;  if  it  was 
not  the  principal  object,  we  would  like  to  know  what  the  princi- 
pal object  was?  A.  The  principal  object  in  organizing  the  origi- 
nal Sugar  Refineries  Company  was  to  eliminate  certain  costs  and 
expenses  incidental  to  the  maintenance  of  all  these  different 
properties  and  corporations  independently,  which  would  enable, 
w ithout  increase  of  the  cost  of  the  sugar  to  the  consumer,  a profit 
to  be  made  in  the  business  where  a loss  was  being  made;  that  was 
the  argument  which  led  to  the  consolidation  of  the  sugar  inter- 
ests. 

Q.  Then,  you  do  not  agree  with  Mr.  Havemeyer  in  stating  that 
the  principal  object  was  to  prevent  competition?  A.  No,  sir. 

Q.  Another  question  put  to  Mr.  Havemeyer — he  having  an- 
swered “We  issued  increased  stock  and  used  it  in  buying  in  other 
refineries  ” — Q.  By  which  means,  Mr.  Havemeyer,  you  were 
able  to  control  the  price  and  output  of  those  other  refineries  that 
were  brought  into  the  trust?  A.  Yes. 

Q.  That  is  true?  A.  Yes,  sir. 

Q.  “Before  that  you  had  not  been  able  to  control  the  price  of 
“sugar;  there  was  competition  between  the  American  Sugar  Re- 

16 


242  [Senate, 

“finery  and  those  outside  companies?  A.  Yes,  sir;  that  is  true. 
A.  Yes,  sir. 

Q.  “By  that  competition  you  succeeded  in  destroying  or  bring- 
ing them  into  the  Trust?  A.  Yes,  sir.”  A.  It  is  correct. 

Q.  And  that  was  the  object,  was  it  not?  That  was  incidentally 
the  result. 

i 

Q.  Do  you  mean  to  say  that  that  was  not  the  motive  and  the 
underlying  object  of  the  creation  of  that  consolidation  to  buy  in 
those  additional  companies  and  remove  their  competition?  A. 
That  was  the  case  undoubtedly. 

Q.  “And  that  made  the  price  of  sugar  to  the  American  Sugar 
“Refining  Company  much  more  favorable  than  it  had  been  be- 
“fore  that  time?  A.  Precisely.”  That  is  true,  is  it  not?  A. 
Yes,  sir. 

Q.  Have  any  refineries  been  built  since  the  organization  of  the 
New  Jersey  concern?  A.  Yes,  sir. 

Q.  I mean  not  that  in  process  of  building  by  Mr.  Arbuckle,  but 
any  others?  A.  Yes,  sir^ 

Q.  What  others?  A.  I think  the  National  and  the  Mollen- 
hauer  have  both  been  built  since  that  time. 

Q.  Here  in  this  State?  A.  In  this  State;  yes,  sir. 

Q.  Have  you  any  agreement  or  understanding  with  them  with 
reference  to  price?  A.  No,  sir. 

Q.  Do  you  swear  that  as  a fact  of  personal  knowledge  or  from 
your  own  information  on  the  subject?  A.  I have  no  knowledge 
of  any  such  agreement. 

Q.  You  would  be  the  person  who  would  make  the  agreement  if 
any  were  made?  A.  Not  necessarily. 

Q.  Who  would?  A.  The  President  of  the  company. 

Q.  Have  you  or  has  your  company  to  your  knowledge  any  ver- 
bal understanding  with  those  two  concerns  or  either  of  them  as 
to  the  price  at  which  sugar  should  be  sold  in  this  State?  A.  No, 
sir. 

Q.  Do  you  state  that  as  a matter  of  personal  knowledge  or  as  a 
matter  of  information?  A.  So  far  as  I know  there  is  no  such  ar- 
rangement. 


No.  40.] 


243 


Q.  Who  would  have  the  authority  to  make  such  an  arrange- 
.ment?  A.  The  president  of  the  company  if  any  one. 

Q.  Isn't  it  true  that  you  control  the  price  of  their  product?  A. 
It  is  not. 

Q.  Isn’t  it  true  that  you  control  the  price  of  the  product  in  the 
same  way  that  Mr.  Havemeyer  and  you  have  admitted  you  control 
the  product  of  the  whole  country  and  set  its  price?  A.  We  con- 
trol no  price  except  the  price  of  our  own  goods,  except  that  other 
refineries  usually  follow  our  prices,  because  it  is  in  their  interests 
to  do  so  doubtless — to  get  all  they  can — but  the  only  way  we  can 
control  the  price  is  by  selling  at  a cheaper  price;  as  fair  a price 
as  they  can  afford  to  make  it. 

Q.  Isn’t  it  true  that  they  are  compelled  to  follow  your  price  or 
be  destroyed  in  the  competition?  A.  Not  at  all. 

Q.  Have  you  not,  where  you  have  had  competitors  in  the  field, 
put  down  the  price  of  sugar  in  their  particular  localities  and 
forced  them  to  the  wall  and  then  bought  their  capital  stock  and 
brought  them  into  the  Trust?  A.  No,  sir. 

Q.  Didn't  you  do  that  in  Philadelphia?  A.  No,  sir. 

Q.  Didn't  you  so  operate  with  regard  to  the  four  factories  that 
you  took  into  the  Trust  there?  A.  No,  sir. 

Q.  You  issued  twenty-three  million  dollars  of  certificates  for 
the  property,  didn't  you?  A.  Yes,  sir. 

Q.  What  was  its  fair  cash  actual  value  at  the  time  you  bought 
it?  A.  We  estimated  its  value  to  be  the  twenty-three  millions 
of  dollars  that  we  paid  for  it. 

Q.  What  were  the  certificates  ruling  at  that  time  in  the  mar- 
ket? A.  Something  under  par. 

Q.  How  much  under  par?  A.  I think  between  eighty  and 
ninety. 

Q.  That  was  in  ’92?  A.  Yes,  sir. 

Q.  Immediately  after  the  formation  of  the  New  Jersey  Com- 
pany? A.  A year  or  more  later. 

Q.  About  a year  later?  A.  Yes,  sir. 

Q.  Mr.  Spreckels  received  half  of  that  stock  which  was  trans- 
ferred for  the  Spreckels  refinery  in  Philadelphia,  or  the  whole  of 
it?  A.  He  received  stock  for  his  half — 


244 


[Senate, 


Q.  How  much?  A.  I don’t  remember  the  amount. 

Q.  Was  it  ten  millions?  A.  No,  sir;  I don’t  think  it  was. 

Q.  Are  you  sure  about  the  figures?  A.  I am  not. 

Q.  Have  you  any  figures  in  regard  to  that  transaction?  A.  I 
have  not  here. 

Q.  We  would  like  to  notify  you,  Mr.  Searles,  to  produce  at  the 
next  session  of  this  committee  the  minute  books  of  the  American 
Sugar  Refining  Company,  showing  the  meetings  of  directors  from 
the  time  of  the  organization  of  that  company,  and  also  any  data 
or  memoranda  showing  the  transaction  with  these  four  refineries 
that  were  purchased  in  ’92;  I believe  in  March,  was  it?  A.  March, 
’92. 

Q.  And  I would  ask  you  whether  you  require  a subpoena  duces 
tecum  or  whether  you  will  produce  those  books  without  the  ne- 
cessity of  a subpoena?  A.  The  books  of  the  company  are  not  in 
my  control  to  the  extent  that  I have  any  right  to  produce  them; 
I will  present  to  the  directors  of  the  company  the  request  of  this 
committee. 

Q.  Whose  control  are  they  in?  A.  They  belong  to  the  com- 
pany. 

Q.  So  far  as  an  officer  has  any  control  over  the  books  and  the 
facts  inquired  of,  or  memoranda  inquired  of,  you  have  it — so  far 
as  any  officer  has?  A.  Well,  in  so  far  as  any  one  has. 

Q.  Except  for  the  general  control  of  the  Board  of  Directors, 
you  have  the  special  control  of  the  books  in  your  capacity  as  sec- 
retary and  treasurer?  A.  That  is  correct. 

Q.  Are  you  willing  to  produce  them?  A.  I have  no  right  to 
produce  them  without  the  consent  of  the  Board  of  Directors. 

Q.  I am  asking  personally  as  to  whether  you  are  personally 
willing?  A.  Personally  I have  no  objection. 

Q.  Further  on  Mr.  Havemeyer  stated — after  explaining  about 
these  Louisiana  concerns,  and  the  product  made  there  or  pro- 
duced near  there — Mr.  Havemeyer  stated,  in  answer  to  this  ques- 
tion, “Is  it  not  true  that  you  control,  that  is,  the  American  Sugar 
Refining  Company  controls  the  price  of  sugar  in  all  the  Louisiana 
refineries?  And  the  answer  was,  “Directly  we  do  not;  indirectly 


No.  40.] 


245 


we  do;”  is  that  true?  A.  It  is  only  true  in  the  sense  which  I 
stated  a short  time  since,  that  we  control  only  the  price  of  our 
product,  and  that  may  be  taken  by  the  other  refineries  as  a basis 
for  their  business,  but  it  is  entirely  within  their  control ; we  have 
no  control  over  it  whatever. 

Q.  Then  you  differ  from  Mr.  Havemeyer  on  that  question?  A. 

I do. 

Q.  He  further  answered,  “We  undertake  to  control  the  price  of 
refined  sugar  in  the  United  States;  that  must  be  distinctly  under- 
stood.” Do  you  disagree  with  him  in  that  statement?  A.  I dis- 
agree with  any  statement  which  implies  that  we  control  more 
than  the  price  of  our  product. 

Q.  Now,  the  consumer  has  not  been  particularly  benefited,  has 
he,  in  the  organization  of  these  companies?  A.  Of  the  American 
Sugar  Refineries? 

Q.  Yes?  A.  I think  he  has;  very  materially. 

Q.  Well,  now,  let  us  see  how  that  is;  what  was  the  price  of  the 
raw  product  in  1886?  A.  Well,  I have  not  the  figures  here  with 
which  to  answer  that  question.( 

Q.  What  was  the  price  of  refined  sugar  in  1886?  A.  I have  not 

that  price  here. 

Q.  Is  it  true  that  in  1886  and  in  1887,  before  the  organization 
of  the  Sugar  Trust,  so-called,  your  margin  of  difference  in  the 
value  of  the  raw  product  and  the  cost  of  the  refined  sugar  was  a 
fraction  of  69-100  of  a cent  per  pound?  A.  In  the  years  1886  and 
1887  it  was  abnormally  low;  the  business  was  done  at  a loss. 

Q.  Did  that  result  from  this  situation  disclosed  by  you  on  your 
previous  investigation,  “The  business  has  been  very  disastrous 
“for  a few  years;  it  has  been  disastrous  from  the  standpoint  of 
“profit  on  the  capital  invested  in  the  industry.”  Do  you  remem- 
ber making  that  statement?  A.  I doubtless  made  that  state- 
ment. 

Q.  And  that  is  the  fact?  A.  That  was  the  fact. 

Q.  Now,  that  was  conducive  to  the  benefit  of  the  consumer,  was 
it  not?  A.  No,  sir. 

Q.  It  resulted  from  competition,  didn't  it?  A.  It  did;  a ruin- 


246 


[Senate, 


ous  competition  which  inevitably  would  have  resulted  in  the 
crushing  out  of  all  the  weaker  refineries  and  the  placing  of  the 
business  in  the  hands  of  a few  people — 

Q.  (Interrupted)  I am  not  speaking  as  to  what  the  future  would 
bring,  but  the  present  at  that  time;  it  was  a fact,  was  it  not? 
A.  Temporarily,  doubtless  it  would;  yes. 

Q.  Then,  at  that  time,  your  profit  on  sugar  was  about  one-half 
of  what  it  became  immediately  after  the  organization  of  the  Su- 
gar Trust?  A.  “One-half;”  I think  it  is  not  a correct  statement; 
it  was  less  than  it  was  immediately  after. 

Q.  It  was  quoted  at  69-100;  then  immediately  after  the  organi- 
zation of  the  Sugar  Trust  it  was  from  1.22  to  1.30,  wasn't  it?  A. 
I don’t  remember  the  figures. 

Q.  That  is  within  a fraction  of  one-half;  the  consumer  got  a 
benefit  of  that,  didn’t  he?  A.  He  did. 

Q.  And  your  operations  from  that  time  on  have  been  for  the 
purpose  of  enhancing  the  cost  of  this  article  to  the  consumer 
over  the  price  that  prevailed  at  the  time  immediately  preceding 
the  organization  of  the  Trust?  A.  No,  sir;  I do  not  think  that  is 
a fair  statement^ 

Q.  It  has  been  to  change  the  situation  that  then  obtained,  to 
prevent  that  competition  that  was  then  considered  as  being  dis- 
astrous for  capital  invested,  and  incidentally,  therefore,  enhanc- 
ing the  price  to  the  consumer  of  the  product  that  you  made?  A. 
Well,  there  are  two  ways  of  looking,  Mr.  Chairman,  at  the  inter- 
est of  the  consumer;  the  interest  of  the  consumer  lies  in  the  pro- 
duction of  the  sugar  at  the  lowest  possible  cost,  coupled  with  the 
purchase  and  delivery  of  the  raw  supplies  in  the  interest  of  the 
consumer ; the  difference  between  the  raw  and  refined  can  scarcely 
be  judged  by  any  one  year  or  two  years  as  a result  of  the  sugar 
refining  business;  an  average  must  be  taken  in  order  to  show 
what  is  a fair  comparison;  you  take  the  comparison  of  the  nine 
years  preceding  the  organization  of  the  Trust  and  the  nine  years 
subsequent,  and  the  average  is  below  during  the  last  nine  years 
during  the  existence  of  this  organization. 

Q.  You  mean  that  the  price  of  the  refined  product  to  the  con- 


No.  40.] 


247 


sumer  is  lower  within  the  nine  years  after  consolidation  than  it 
was  the  nine  years  before?  A.  I mean  that  the  margin  between 
the  raw  and  refined  sugar  is  smaller— the  price  has  been  very 
much  less — about  one-half;  but  the  margin  to  the  refiner  has  been 
diminished  during  the  nine  years,  as  compared  to  the  previous 
nine  years. 

Q.  To  what  extent?  A.  My  recollection  is  by  2-100  cent,  or 
13-100  pre  cent.  ' 

Q.  Have  you  figured  it  out?  A.  Yes;  I have  not  the  figures 
here. 

Q.  Was  there  any  margin  or  difference  favorable  to  the  con- 
sumer, taking  the  five  years  previous  to  the  organization  of  the 
Trust  and  nine  years  after  its  organization?  A.  I have  not  made 
a comparison;  I have  taken  the  same  number  of  years  in  making 
the  comparison. 

Q.  Haven't  you  taken  the  nine  years  which  included  the  first 
two  years — including  the  first  two  years  where  the  margin  of  dif- 
ference was  abnormally  high?  A.  I have  taken  the  first  two 
years  of  the  Trust,  you  mean? 

Q.  No,  the  first  two  years  of  the  nine  years  precedingtheTrust? 
A.  Well,  the  first  two  years  preceding  the  Trust  were  abnormally 
high,  also. 

Q.  The  first  two  years  preceding  the  Trust?  A.  No — the  first 
two  years  of  the  Trust  were  the  only  two  years  where  any  large 
margin  was  shown  in  this  business. 

Q.  But  you  are  creeping  up  now,  again,  aren’t  you?  A.  Oh, 
not  at  all. 

Q.  Well,  isn't  it  a fact  that  you  have  increased  the  margin  of 
profit,  nowithstanding  your  facilities,  as  stated  by  Mr.  Have- 
meyer,  have  enabled  you  to  manufacture  more  economically,  not- 
withstanding the  hard  times,  you  have  increased  the  margin  of 
profit  in  the  last  three  years  so  that  it  has  run  from  .70  up  to  .88, 
which  was  the  prevailing  price  or  margin  last  year?  A.  It  has 
varied  from  year  to  year,  I should  think,  from  .70  to  .S6. 

Q.  It  sprang  from  .70  to  .82,  from  .82  to  .88,  notwithstanding 
the  depression  of  the  times  and  the  economies  made,  according  to 


248 


[Senate, 


Mr.  Havemeyer,  in  the  conduct  of  your  business,  so  that  the  con- 
sumer is  not  gaining  by  theeconomiesthatyouarepracticingorthe 
consolidations  you  are  making;  but  you  are  increasing  the  price 
now  to  the  consumer— and  what  is  the  cause  of  it?  A.  The  price 
to  the  consumer  varies  with  varying  conditions  surrounding  the 
raw  sugar  refineries;  on  a declining  market  there  will  be  a varia- 
tion from  what  there  would  be  on  a rising  market;  and  the  con- 
dition of  the  European  markets,  to  which  we  have  been  beholden 
for  our  raw  sugar  supplies,  especially  during  the  past  two. years, 
have  created  a condition  of  things  which  was  abnormal — the  de- 
struction of  the  crop  of  Cuba,  and  our  being  obliged  to  go  to 
Europe  for  sugars. 

Q.  What  particular  effect  has  that  upon  the  difference  between 
the  cost  of  the  raw  material  and  the  refined  product,  which  con- 
stitutes the  element  of  your  profit?  A.  Because  of  the  character 
of  the  raw  product  which  we  have  been  obliged  to  purchase;  we 
have  been  obliged  to  go  to  the  European  market  for  beet  sugars 
which  are  worth  less  proportionately,  than  cane  sugars,  but  we 
have  been  forced  there  for  a certain  percentage  of  our  needs,  and 
obliged  to  pay  more  for  those  sugars  really  than  they  were  worth. 

Q.  Is  it  not  the  real  fact,  Mr.  Searles,  that  having  destroyed  the 
competition  in  Philadelphia,  and  having  destroyed  competition  in 
every  other  direction  where  you  could,  you  have  now  reached  a 
point  where  you  can  again  put  up  your  sugar,  and  propose  to  put 
it  up  to  just  that  point  where  the  people  will  stop  buying,  and 
only  be  limited  by  that  figure?  A.  On  the  contrary,  Mr.  Chair- 
man; the  policy  of  the  American  Sugar  Refining  Company  is,  and 
has  been,-  since  its  organization,  to  furnish  the  sugar  to  the  con- 
sumer at  the  lowest  possible  price,  not  for  philanthropic  reasons, 
but  because  it  is  good  business  to  do  it;  what  the  American  Sugar 
Refining  Company  aims  at  is  to  purchase  the  largest  number  of 
pounds  of  sugar,  and  increase  the  consumption  to  the  largest  pos- 
sible extent;  the  fraction  of  per  cent,  which  it  makes  on  each 
pound  is  its  object,  rather  than  to  make  a large  profit  on  a cer- 
tain amount  of  production;  the  policy  has  always  been  to  keep 


No.  40.] 


249 


its  production  in  advance  of  the  consumption,  and  in  that  way 
to  protect  the  consumers  of  this  country;  if  you  will — 

Q.  Why  was  it,  then,  Mr.  Searles,  that  in  1892  and  in  1893,  al- 
though there  was  no  tariff  on  sugar  and  that  did  not  enter  into 
an  ingredient  of  cost,  you  increased  the  limit  between  the  value 
of  the  raw  material  and  the  price  of  the  refined  product,  from 
less  than  .70  of  the  year  before  to  one  cent  and  thirty  one  hun- 
dredths that  year  and  the  year  after?  A.  Well,  the  price  during 
the  preceding  years  was  abnormally  low;  it  was  below  the  proper 
cost  of  production;  it  did  not  admit  of  a profit. 

Q.  Well,  one  moment,  please;  on  .69  of  one  cent  in  that  year 
you  were  able  to  pay  7 per  cent,  on  your  preferred  stock,  12  per 
cent,  upon  your  common  stock,  and  an  extra  cash  dividend  of  10 
per  cent.,  making  22  per  cent,  on  your  common  stock  and  7 per 
cent,  on  your  preferred;  if,  with  the  margin  of  .69  of  a cent 
you  can  accomplish  that,  please  state  to' me  what  the  profits  of 
your  concern  will  be  at  the  margin  prevailing  last  year  of  .88 
cents  A.  It  does  not  follow  that  the  10  per  cent,  extra  dividend 
declared  was  the  proceeds  of  those  years;  but  it  was  an  accumu- 
lated surplus  of  preceding  years. 

Q.  Is  it  your  present  recollection  that  it  was  an  accumulated 
surplus?  A.  Yes,  sir. 

Q.  That  is  your  recollection?  A.  Yes,  sir. 

Q.  And  that  surplus  you  accumulated  in  the  years  1891  and 
1892,  when  you  charged  the  consumer  one  and  thirty-one  hun- 
dredths cents  between  the  cost  of  the  raw  materials  and  the  re- 
fined product;  you  were  accumulating  that  surplus  during  that 
period  of  time;  is  that  it?  A.  Probably  a part  of  it  was  accumu- 
lated that  time. 

Q.  You  have  accumulated  two  and  one-half  millions  of  dollars 
a year  surplus,  haven't  you?  A.  Well,  I don’t  remember  the  fig- 
ures, now. 

Q.  Well,  you  have  made,  in  addition  to  a surplus  of  eight  mill- 
ions of  dollars,  which  prevailed  in  1894 — you  have  got  now  a sur- 
plus of  thirteen  millions,  in  1895?  A.  You  take  this  from  the 
Boston  Report? 


250 


[Senate, 


Q.  Yes?  A.  That  is  correct;  whatever  that  says. 

Q.  So  that  you  have  accumulated  twelve  millions  of  dollars, 
besides  paying  ten  per  cent,  upon  your  stock?  A.  If  you  will 
notice  one  item  in  that  same  report  that  you  have  there,  showing 
that  surplus — there  is  offset  against  that,  for  the  account  of  im- 
provements yade,  to  a very  large  amount — several  millions — 

Q.  That  was  about  five  millions  of  dollars?  A.  Yes;  money 
paid  back  into  the  properties. 

Q.  In  other  words,  you  are  using  up  your  surplus  or  using  it 
for  the  purpose  of  making  improvements  upon  the  property?  A. 
Yes,  sir. 

Q.  But  the  fact  remains  that  that  surplus  is  accumulating?  A. 
We  use  the  surplus  accumulating  during  that  time. 

Q.  Now,  if  you  can  afford  to  pay  dividends  on  a limit  be- 
tween raw  material  and  manufactured  product  in  the 
neighborhood  of  80  per  cent,  upon  your  product  of 
1892  and  1893,  when  that  limit  was  1.31  cents,  how  much  addi- 
tional tax  were  you  levying  upon  the  consumer— -how  much  addi- 
tional profit  were  you  able  to  accumulate  under  a charge  of  sev- 
enty to  eighty  one-hundredths  as  the  margin  of  difference  be- 
tween the  cost  of  raw  material  and  manufactured  product?  A. 
Well,  that  would  depend  entirely  upon  the  conditions  of  the  re- 
fining; the  cost  of  refining  in  this  year  as  compared  with  previ- 
ous years. 

Q.  Wasn’t  the  difference  that  obtained  in  the  three  years  from 
1891  to  1894,  as  testified  by  Mr.  Havemeyer  before  the  Senate 
Committee,  between  twenty  and  twenty-five  millions  of  dollars? 
A.  I think  twenty  millions  of  dollars  was  stated  as  the  net 
amount  of  earnings. 

Q.  That  was  a tax  on  the  earnings  that  you  charged  against 
the  consuming  public?  A.  During  that  time. 

Q.  Have  you  paid  any  higher  wages  since  the  consolidation 
than  you  had  before?  A.  Yes,  sir. 

Q.  You  do?  A.  Yes,  sir. 

Q.  What  is  the  increased  scale  of  wages?  A.  My  recollection 
is  it  was  about  ten  per  cent,  increase. 


No.  40.] 


251 


Q.  In  what  departments?  A.  In  the  manufacturing  depart- 
ment. 

Q.  Do  you  mean,  spread  over  the  entire  department?  A.  I think 
that  was  particularly  in  this  State,  in  the  refineries  here. 

Q.  Have  you  any  statistics  upon  that  subject?  A.  I have  not — 
that  belongs  in  the  manufacturing  department. 

Q.  Is  that  increase  represented  by  salaries  to  officers  or  by  in- 
creased wages  to  workingmen?  A.  Wages  to  workingmen  I re- 
fer to. 

Q.  You  refer  entirely  to  wages  to  workingmen?  A.  Yes,  sir. 

Q.  Was  there  any  increase  in  any  other  State  beyond  New 
York?  A.  I think  the  same  is  true  of  New  Jersey. 

Q.  When  did  you  make  that  increase?  A.  Well,  I don’t  recol- 
lect the  date;  it  was  some  time  since;  I think  it  was  soon  after 
the — 

Q.  Well,  recently?  A.  (Continuing) — organization  of  the 
Trust. 

Q.  Of  the  original  Trust?  A.  Yes. 

Q.  Have  you  increased  since  that  time?  A.  I think  not;  I am 
not  aware,  however,  definitely  of  that,  as  those  increases  are  not 
in  my  department. 

Q.  Have  you  decreased  since  that  time?  A.  No,  sir;  we  never 
reduced  the  wages. 

Q.  Were  they  increased  as  a result  of  voluntary  action  on  your 
part  or  the  result  of  a strike  or  demand  by  the  workingmen?  A. 
I think  it  was  voluntary  action. 

Q.  Had  you  decreased  the  price  of  labor?  A.  No,  sir. 

Q.  Prior  to  the  organization  of  the  Trust?  A.  No,  sir. 

Q.  During  those  years  of  depression  which  you  speak  of,  you 
did  not  decrease  the — A.  Well,  I don’t  know  what  it  was  in  the 
several  companies  during  those  years,  or  individually. 

Q.  The  company  of  which  you  were  the  manager,  did  you  make 
a decrease?  A.  They  were  not  decreased. 

Q.  Are  yofi  certain  that  there  is  an  advance  of  10  per  cent.? 
A.  That  is  my  impression. 

Q.  I now  refer  again  to  the  question  of  competition,  and  ask 


252 


[Senate. 


yon  whether  you  remember  the  testimony  you  gave  before  the 
Senate  committee,  in  which  you  state  at  page  3S3  of  the  record, 
“Our  purpose  is  to  control  the  output  and  not  to  manufacture 
“more  sugar  than  the  country  demands  at  any  time,  and  by  that 
“mean  to  get  rid  of  the  competition  that  would  otherwise  exist 
“between  free  factories.”  Was  that  statement  true  when  you 
made  it?  A.  That  statement  referred  only  to  our  own  produc- 
tion, to  the  control  of  our  own  production;  that  we  should  not 
over-produce. 

Q.  Was  it  a true  statement  when  you  made  it?  A.  Undoubt- 
edly. 

Q.  And  is  it  a true  statement  to-day?  A.  I think  so. 

Q.  In  those  words?  A.  I think  so;  but  I am  not  trying  to  tes- 
tify those  are  the  precise  words;  will  you  kindly  read  it  again? 

Q.  “Our  purpose  is  to  control  the  output  and  not  to  manufac- 
ture more  sugar  than  the  country  demands  at  any  time,  and  by 
“that  means  to  get  rid  of  the  competition  that  would  otherwise 
“exist  between  free  factories.”  A.  I think  that  “free  factories” 
was  a mistake,  which  was  corrected  a little  later  in  the  same 
hearing;  is  there  some  reference  there  to  a correction? 

Q.  WTell  you  may  have  corrected  it  in  the  following  sentence, 
which  I will  read,  and  ask  you  also  whether  that  is  true,  “We 
“have  naturally  the  purpose  of  eliminating  the  competition  under 
“which  there  was  waste  in  management  of  the  business”;  that  is 
true?  A.  Competition  under  which  there  was  waste? 

Q.  Yes?  A.  Yes;  I think  that  is  qualified  still  further  on,  Mr. 
Chairman., 

Q.  This  qualification,  do  you  mean,  “One  of  the  purposes  of  our 
“company  was  to  have  a steady  market  for  sugar  and  eliminate 
“all  that  kind  of  competition”?  A.  There  is  some  reference  there 
to  the  kind  of  competition,  I think,  in  another  question  and  an- 
swer., 

Q.  “Competition  which  undersold  your  price”?  A.  That  was 
not  so  stated,  I think,  in  the  interview. 

Q.  “It  is  frequently  sold  lower  than  ours” — this  proceeds — and 
again,  “The  Mollenhauer  and  New  York  Companies  have  all  with- 


No.  40.] 


253 


“in  the  last  sixty  days  been  underselling  our  price”;  now,  is  that 
true?  A.  That  was  correct. 

Q.  And  your  criticism  upon  that  is  true,  that  you  proposed  to 
get  rid  of  that  kind  of  competition?  A.  My  criticism  did  not  re- 
fer to  that  at  all — that  is  the  very  point. 

Q.  What  does  it  refer  to,  then;  what  kind  of  competition?  A. 
Well,  there  is  in  the  context  there  some  conversation  in  reference 
to;  which  made  it  clear,  my  impression  is. 

Q.  Well,  what  is  the  explanation  you  have  to  make?  A.  The 
only  thing  referred  to  in  that  testimony  was  the  question  as  to 
whether  we  controlled  the  output  of  sugar,  to  which  I replied 
that  we  controlled  the  output,  referring  to  our  own  refineries  of 
sugar  to  the  extent  of  manufacturing  only  such  sugar  as  was 
needed  for  consumption;  that  we  calculated  to  keep  abreast  of 
the  consumption  of  the  country;  we  never  allow  the  consumption 
to  exceed  the  product  of  our  refineries,  so  that  we  may  always 
supply  the  demand;  and  I illustrated  before  those  gentlemen  that 
very  point;  you  will  find  it  in  that  interview  or  that  hearing. 

By  Mr.  Mazet: 

Q.  What  proportion  of  the  sugar  consumed  in  the  United 
States  is  manufactured  here?  A.  You  mean  is  raised  in  this 
country? 

Q.  No;  of  refined  sugar?  A.  The  refined? 

Q.  Yes.  A.  Well,  during  the  last  year  the  importations  of  re- 
fined sugar  from  Germany  and  from  China  have  been  something 
over  100,000  tons. 

Q.  What  proportion  is  that  of  the  entire  amount?  A.  Of  the 
entire  amount  of  refined  about  6 per  cent. 

Q.  And  then  94  per  cent,  of  the  sugar  consumed  in  this  country 
is  manufactured  here,  is  it?  A.  By  American  refineries;  yes,  sir. 

Q.  And  how  is  the  amount  manufactured  here  limited;  is  it 
owing  to  the  lack  of  raw  sugar  on  hand?  A.  No;  it  is  limited  by 
the  fact  that  the  present  tariff  admits  of  the  importation  of  re- 
fined sugars  in  competition  with  the  sugars  here. 

Q.  But  there  is  only  6 per  cent,  of  the  refined  sugars  consumed 


254 


[Senate, 


imported.  A.  That  is  up  to  this  time;  if  the  present  tariff  should 
continue  we  shall  have  a steadily  increasing  amount  of  that  su- 
gar, which  is  only  limited  now  by  the  facilities  of  the  German 
refineries  and  the  Hong  Kong  refineries  to  turn  out. 

By  Mr.  Lexow: 

Q.  To  what  extent  can  they  undersell  you,  Mr.  Searles?  A. 
Oh,  they  can  undersell  us  from  a quarter  to  three-eighths  of  a cent 
a pound  for  their  product. 

Q.  Then,  if  your  present  profit  is  88-100  of  one  cent,  per  pound, 
and  they  can  undersell  you  only  to  the  extent  of  one-quarter  to 
three-eighths  there  would  still  be  a large  resulting  profit  to  you, 
would  there  not?  A.  No,  sir;  none  at  all. 

Q.  There  would  be  the  resulting  profit  if  you  proposed  only  to 
pay  dividends  on  the  original  investment,  assuming  as  a 
standard  the  actual  value  of  the  properties  taken  in,  wouldn’t 
there?  A.  That  depends  upon  the  value  that  you  put  upon  the 
property. 

Q.  I mean  the  actual  cash  value  of  the  property,  as  distin- 
guished from  the  certificated  value?  A.  1 do  not  think  thatthere 
would  be  a profit  to  the  American  Refineries  under  those  con- 
ditions if  they  were  to  continue. 

Q.  Now,  these  plants  and  factories  that  have  been  abandoned, 
and  for  which  the  certificates,  the  Trust  certificates  were  issued, 
they  are  still  abandoned,  are  they  not,  in  their—  A.  They  are 
not  abandoned. 

Q.  They  have  no  earning  power?  A.  Some  of  them  are  not  in 
commission  at  the  present  time. 

Q.  Well,  some  of  them  are  absolutely  dismantled,  aren’t  they? 
A.  Yes. 

Q.  How  many  of  them?  A.  Three  of  them. 

Q.  Those  three  are  represented  by — A.  Four  of  them. 

Q.  (Continuing)  Certificates  issued  by  your  company?  A.  Yes, 

sir. 

Q.  Based,  as  you  say,  upon  the  value  of  the  plant  and  its  earn- 
ing capacity,  there  being  absolutely  no  earning  capacity;  now, 


No.  40.] 


255 


those  certificates  issued  are  still  carrying  their  proportion  of 
dividends,  extra  and  general?  A.  This  ought  to  be  said  on 
that — 

Q.  Is  that  true,  Mr.  Searies?  A.  That  is  true,  and  yet  it  is 
hardly  true,  to  leave  it  in  that  way. 

Q.  Well,  if  you  want  to  correct  your  testimony  afterwards,  we 
will  give  you  an  opportunity;  you  can  receive  a transcript  from 
the  stenographer  and  make  any  explanation  afterwards  that  you 
please;  but  we  will  get  more  quickly  to  an  end  if  you  won't  ex- 
plain quite  so  much,  but  give  positive  answers;  now,  you  were 
the  manager  of  the  Havemeyer  Sugar  Refining  Company,  weren’t 
you?  A.  I was  an  officer  of  that  company. 

Q.  The  President?  A.  Yes. 

Q.  At  the  time  of  its  being  taken  into  the  pool?  A.  Yes,  sir. 

Q.  What  was  the  capital  stock  of  that  company?  A.  One 
million  dollars.  1 

Q.  What  did  you  receive  in  certificates?  A.  I don't  remember 
now,  the  figures;  I will  furnish  those  with  the  other  figures  that 
you  call  for. 

Q.  Can’t  you  state  now  what  the  amount  was?  A.  I cannot. 

Q.  A million  dollars  is  a good  deal  of  money  to  plain  people 
like  us,  Mr.  Searies;  we  would  remember  it?  A.  Well,  I have 
handled  a good  many  millions  since. 

Q.  Don’t  you  remember  what  you  got  in  the  way  of  certificates? 
A.  I do  not. 

Q.  Never  referred  to  it  since?  A.  No,  sir. 

Q.  You  have  the  figures,  however,  somewhere?  A.  Yes,  sir. 

Q.  Was  that  Havemeyer  Refining  Company  organized  at  the 
same  time  that  those  other  three  companies  were  organized,  to  be 
taken  into  the  Trust?  A.  No,  sir;  it  was  organized  in  1880. 

Q.  Was  its  stock  capital  increased?  A.  No,  sir. 

Q.  Did  it  have  a surplus  in  its  treasury?  A.  It  did. 

Q.  In  what  form?  A.  Simply,  a surplus  which  had  been  accu- 
mulated in  the  business  and  which  had  been  invested  in  addi- 
tional plant. 

Q.  Any  cash  surplus?  A.  It  had  a cash  surplus. 

. 


256 


[Senate, 


Q.  How  much?  A.  Why,  I don’t  recollect  now;  but  it  was 
something  approaching  a million  dollars;  not  in  cash,  but  in  ad- 
ditional property  which  had  been  accumulated  since  the  com- 
pany was  organized. 

Q.  I ask  you  now  whether  there  was  any  cash  surplus  in  the 
treasury— there  was  not?  A.  There  was  some — there  was  cash 
assets— and  some  cash;  certainly 

Q.  No  cash  was  turned  over?  A.  No,  sir. 

Q.  The  certificates  you  received  represented  the  capital  stock 
of  that  company,  which  was  first  turned  into  the  treasury  of  the 
Trust?  A.  Yes,  sir. 

Q.  How  much  in  total  did  the  properties  represent  in  Sugar 
Trust  certificates,  the  earning  capacity  of  which  have  been  de- 
stroyed after  consolidation?  A.  I could  not  answer  that  ques- 
tion. 

Q.  Can  you  state  approximately?  A.  I could  not. 

Q.  As  much  as  ten  millions?  A.  No,  sir. 

Q.  Less  than  ten  millions?  A.  I should  think  not. 

Q.  Less  than  ten  millions?  A.  Oh,  yes,  I think  very  much  less. 

Q.  If  you  did  not  consider  the  earning  capacity  and  value  of 
the  property  enough  to  keep  it  going  after  the  Trust  was  organ- 
ized, why  did  you  give  anything  for  it  at  all?  A.  It  was  found 
after  the  organization  of  the  Trust  that  the  manufacturing  of  the 
same  amount  of  sugar  could  be  transferred  from  some  of  these 
plants  to  other  plants  where  an  economy  could  be  made,  and  the 
sugar  could  be  produced  more  cheaply  than  by  the  continuing  of 
those  plants;  and  after  a very  careful  investigation  it  was  decided 
to  transfer  that  refining  capacity  to  other  plants  and  so  econo- 
mizing the  cost  of  production. 

Q.  Hid  the  dismantling  and  abandonment,  I mean,  in  the  way 
of  manufacture,  of  those  plants  take  place  simultaneously  with 
the  organization  of  the  Trust?  A.  No,  sir. 

Q.  How  long  after?  A.  Oh,  some  of  them  were  operated  for 
one  or  t\u>  years;  some  of  them  longer;  a good  deal  of  business 
was  transferred  to  others,  as  it  could  be  done  more  advantage- 
ously^ 


No.  40.] 


257 


Q.  How  long  did  it  take  to  accomplish  that  in  Brooklyn?  A. 
I could  not  answer  definitely  as  to  that;  it  was  some  time. 

Q.  Well,  can  you  state  was  it  weeks  or  was  it  months?  A. 
Months  and  years,  I think. 

Q.  Years?  A.  Yes,  sir;  in  some  instances. 

Q.  The  report  of  1887  made  by  Willet  & Gray  shows  the  aban- 
donment of  these  companies  in  the  report  of  that  year,  1887,  of 
the  organization  of  the  Trust?  A.  Of  which  companies? 

Q.  Of  those  four  companies  on  the  other  side  of  the  East  River? 
A.  Some  of  these  companies  were  operated  after  that  date;  the 
balance  were  remodelled  and  were  operated  the  year  after  1887 ; 
improvements  were  made  on  them. 

Q.  You  reduced  nineteen  active  companies  to  eight  active  com- 
panies? A.  There  are  fifteen  companies  reduced  to  eight;  eight 
or  nine.( 

Q.  But  there  were  nineteen  or  twenty  altogether  in  the  busi- 
ness; is  that  it?  A.  I think  that  was  it. 

Q.  You  reduced  from  fifteen  to  eight?  A.  Ultimately  not  at 
once^ 

Q.  In  other  words  you  reduced  about  half  of  the  factories  with- 
in a fraction  of  half  of  the  factories?  A.  No;  well,  it  was  a trans- 
ference, as  I stated  before,  of  the  refining  capacity  from  one  to 
another,  and  a merging  in  the  larger  companies  for  the  sake  of 
economy;  I think  some  of  these  plants  are  maintained;  take,  for 
instance,  the  plant  that  I spoke  of — the  Havemeyer  Sugar  Refin- 
ing Company;  that  plant  has  been  thoroughly  remodelled,  and  is 
to-day  one  of  the  finest  refining  plants  in  the  country,  but  it  is 
not  in  operation;  it  is  held  by  the  company  as  a reserve  plant  to 
provide  against  accidents,  if  we  have  to  have — 

Q.  That  is  in  Brooklyn?  A.  That  is  in  Brooklyn;  that  plant  is 
held  there  ready  to  start  at  twenty-four  hours’  notice  in  case  of  a 
fire  which  would  destroy — as  we  have  had  such  instances — some 
of  our  large  refining  capacity;  we  maintain  it  for  that  purpose, 
and  it  is  a plant  involving  a very  large  amount  of  investment  and 
it  is — 


17 


258  [Senate, 

Q.  (Interrupting)  Is  that  shown?  A.  (Continuing)  First-class 
in  every  particular.  v 

Q.  Is  that  shown  by  the  issue  of  certificates?  A.  No,  sir;  it  is 
not;  it  is  shown — 

Q.  (Interrupting)  Has  that  been  paid  out  of  surplus  operating 
expenses?  A.  That  is  shown  in  that  item  of  $5,000,000  there  for 
improvements;  it  was  a plant  originally  taken  in  and  paid  for  in 
certificates;  it  was  doubled  in  capacity  and  remodelled  in  all  its 
appointments. 

Q.  Do  you  own  any  stock  in  the  Mollenhauer  Companies?  A. 
No,  sir. 

Q.  In  the  Howell  Company?  A.  No,  sir. 

Q.  Do  you  own  any  stock  in  any  competing  company,  not  re- 
ferring to  the  Western  Refining  Company?  A.  No,  sir. 

Q.  You  own  $10,000,000  stock  in  the  Western  Refining  Com- 
pany, don’t  you?  A.  No,  sir. 

Q.  How  much?  A.  We  own  half  a million. 

Q.  500,000?  A.  That  is  all. 

Q.  Well,  the  stock  of  what  companies  then  are  included  in  that 
investment  item  of  $25,000,000?  A.  That  includes  the  Philadel- 
phia companies. 

Q.  The  four  Philadelphia  companies?  A.  Yes,  sir. 

Q.  For  which  you  have  issued  capital  stock  in  that  company? 
A.  Yes,  sir;  that  is  the  offset  in  the  statement  of  the  capital  stock 
of  $73,000,000. 

Q.  You  said  that  you  taxed  the  capacity  of  your  factories  only 
60  per  cent.?  A.  No;  I was  asked — I misunderstood  the  question 
— I was  asked  as  to  the  percentage  of  our  properties  running, 
and  I stated  at  the  present  time  GO  per  cent. ; by  that  I meant  to 
state  that  the  consumption  is  only  60  per  cent,  at  this  time  of 
year;  we  are  producing,  all  of  the  refineries  taken  together  are 
producing  to-day  about  60  per  cent,  of  what  they  produce  in  the 
summer  time,  growing  out  of  the  season  of  the  year. 

Q.  So  that  in  summer  time  you  produce  to  the  full  extent  of 
your  capacity?  A.  No,  sir;  unfortunately  we  never  use  all  our 
capacity,  as  there  is  more  capacity  than  consumption  of  the  coun- 
try demands. 


No.  40.] 


259 


Q.  You  then  hare  a capacity  that  would  enable  you  to  furnish 
the  entire  demand  of  the  United  States  in  your  factories?  A. 
We  could  do  it  very  easily. 

Q.  A factory  is  profitable  in  proportion  as  it  is  permitted  to 
operate  its  entire  capacity?  A.  Much  more  economically  run  if 
it  can  be  run  to  its  full  capacity. 

Q.  Is  there  any  considerable  variation  in  the  price  of  the  raw 
material?  A.  There  is. 

Q.  To  what  extent  have  these  certificates  which  have  been  Is- 
sued been  sold  to  the  public  ? A.  They  are  very  largely  in  the 
hands  of  the  public. 

Q.  How  many  stockholders  did  you  have  at  the  time  of  the 
formation  of  the  original  Trust— how  many  have  you  now?  A.  I 
think  at  the  time  that — I don’t  recollect  definitely,  but  my  Im- 
pression is  there  were  not  over — there  were  only  a few  hundred 
at  the  most  at  the  organization;  the  dividend  checks  that  were 
sent  out  on  the  2d  of  January  were  9,000. 

Q.  Have  you  any  recollection  of  the  exact  number  of  stockhold- 
ers the  original  Trust  held?  A.  I have  not. 

Q.  Am  I out  of  the  way  in  saying  32?  A.  I don’t  think  that 
would  represent  the  real  number  of  stockholders;  I thiuk  that 
possibly  the  original  certificates  issued  may  have  been  32,  but 
those  were  subsequently  split  up  in  dividing  them  among  the 
stockholders  in  some  of  these  corporations  there  were  compara- 
tively very  few. 

Q.  Is  your  recollection  that  the  original  issue  of  certificates 
was  32  in  number?  A.  No,  sir;  I have  no  recollection  on  that 
point;  it  may  have  been  so. 

Q.  I mean  52  not  32?  A.  I have  no  distinct  recollection  of  the 
number,  but  it  is  very  small. 

Q.  Well,  there  were  not  52  companies;  there  were  only  fifteen 
companies;  do  you  mean  to  say  that  if  there  were  a stock  issue  of 
52  that  that  don’t  represent  the  individual  stock  holding  at  the 
time?  A.  I have  no  knowledge  on  that  point. 

Q.  Can  you  furnish  the  committee  the  number  of  certificates 
originally  issued?  A.  I could  not;  I don't  know  whether  I could 
do  that  or  not. 


260  [Senate,. 

Q.  Where  are  the  transfer  books  of  the  original  Sugar  Trust? 
A.  I do  not  know. 

Q.  Who  had  control  of  them?  A.  The  company  went  into  the 
hands  of  a Receiver  sometime  in  1890,  and  what  became  of  those 
original  books  after  that  time  I do  not  know  at  the  present  time. 

Q.  Were  not  all  of  the  assets  in  the  hands  of  the  Receiver  by 
consent  of  all  the  parties  interested  transferred  to  the  New  Jersey 
Company?  A.  I think  they  were,  but  I say  now  I have  no  pres- 
ent knowledge  as  to  what  became  of  those  books  you  spoke  of. 

Q.  Those  books  were  a part  of  the  assets  in  the  hands  of  the 
receiver?  A.  I should  judge  so. 

Q.  Have  you  any  knowledge  outside  of  the  dividend  checks 
sent  as  to  the  number  of  stockholders  you  now  have?  A.  No, 
sir;  these  dividend  checks  represent  the  transcript  from  the  stock 
ledgers  of  the  company  when  the  books  are  closed. 

Q.  These  stock  certificates  have  been  purchased  by  the  public 
of  all  classes?  A.  Yes,  sir. 

Q.  What  is  your  smallest  stock  holding?  A.  One  share. 

Q.  One  share  is  held  by  an  individual?  A.  Yes,  sir. 

Q.  And  your  highest?  A.  Well,  I couldn’t  tell  you  that. 

Q.  Do  you  know  as  to  whether  or  not  your  associates  in  the 
board  hold  a majority  of  the  stock?  A.  I do  not  think  that  they 
hold  a majority., 

Q.  The  same  spirits  who  organized  the  original  Sugar  Trust 
and  acted  as  its  trustees  are  still  the  directors  of  the  present 
sugar  refining  company?  A.  Some  of  them;  only  five  of  those 
who  were  originally  in  the  Trust  are  now  directors  of  the  sugar 
refining  company. 

Q.  The  others  have  died,  have  they  not?  A.  No,  sir. 

Q.  Or  gone  to  Europe;  is  that  a fact?  A.  Well,  I think  some 
of  them  have  died;  I don’t  know  of  any  of  them  that  are  in  Eu- 
rope. 

Q.  Mr.  Stursburg — A.  He  is  not  dead  or  in  Europe. 

Q.  Is  he  here?  A.  I don’t  know  where  he  is. 

Q.  He  is  not  in  the  board,  is  he?  A.  No,  sir. 

Q.  Don’t  you  know  whether  a majority  of  that  stock  is  held 


No.  40.] 


261 


by  or  represented  by  a majority  of  those  who  are  now  trustees? 
A.  I don’t  think  it  is. 

Q.  Or  by  the  trustees?  A.  Or  by  the  trustees;  no,  sir. 

Q.  You  have  been  a self-perpetuating  body  from  the  time  of 
the  organization  of  the  original  Sugar  Trust,  have  you  not?  A. 
No,  sir;  the  directors  are  elected  from  year  to  year  by  the  stock- 
holders. 

Q.  Haven’t  you  controlled  sufficient  of  the  stock  to  cause  the 
re-election  from  year  to  year  of  that  same  board?  A.  No,  sir. 

Q.  You  make  the  transfers?  A.  Yes,  sir. 

Q.  Send  out  to  the  stockholders  proxies?  A.  Everyone. 

Q.  In  your  name?  A.  In  the  name  of  a committee  of  three, 
two  of  whom  are  not  connected  officially  with  the  company  in  any- 
way. 

Q.  Have  the  minority  stockholders  any  representation  at  all? 
A.  I don’t  know  who  you  mean  by  the  minority  stockholders. 

Q.  Has  there  ever  been  an  attempt  by  a minority  to  secure  ac- 
cess to  the  books,  knowledge  of  the  business  or  representation 
on  the  board?  A.  Yes;  we  have  been  unanimous  from  the  or- 
ganization of  the  company. 

Q.  They  have  been  satisfied  with  their  profits?  A.  Yes,  sir; 
apparently.  , 

Q.  Has  no  request  been  made  for  a statement  of  the  company’s 
annual  affairs  by  the  stockholders?  A.  No,  sir;  the  stockholders 
have  expressed  themselves  as  perfectly  satisfied  to  leave  the 
management  in  the  hands  of  their  directors. 

Chairman  Lexow:  It  is  necessary  for  us  to  take  an  adjourn- 
ment now,  as  we  will  have  to  be  in  Albany  this  evening;  so,  it 
will  be  impossible  to  complete  your  examination,  Mr.  Searles; 
and  it  would  be  any  way  impossible  before  we  have  these  docu- 
ments that  we  have  requested. 

Now,  we  asked  for  certain  information  from  Mr.  Havemeyer; 
have  you  a copy  of  his  testimony?  A.  I have  seen  a copy  this 
morning;  yes,  sir. 

Q.  Well,  if  you  will  read  through  the  testimony  of  Mr.  Have- 
meyer, you  will  find  that  we  asked  for  certain  information  with 


262  [Senate, 

regard  to  tlie  value  of  that  property  in  this  State;  the  amount 
of  taxes  paid;  the  question  of  capitalization ; the  original  capitali- 
zation value;  the  basis  upon  which  the  Trust  certificates  were 
issued;  whatever  I have  meutioued  to  the  witness  or  included  in 
the  request  made  to  Mr.  Havemeyer  and  stated  in  his  testimony, 
we  will  consider  repeated  to  you;  will  you  produce  the  papers  re- 
quired? A.  I will  in  so  far  as  I am  able  to  do  so. 

Q.  I understand  now  that  we  are  addressing  the  witness  who 
has  special  charge  of  all  these  matters,  according  to  the  state- 
ment of  Mr.  Havemeyer?  A.  In  so  far  as  I have  control  of  them, 
sir,  they  are  at  your  service. 

Q.  It  is  simply  a question  whether  we  serve  you  officially  with 
a subpoena  duces  tecum , or  whether  you  will  voluntarily  bring 
those  papers  with  you?  A.  No  subpoena  is  necessary;  anything 
that  I have  it  in  my  power  to  produce,  I shall  produce  in  answer 
to  your  request. 

Q.  Well,  I assume  that  you  are  not  going  to  say  that  you  have 
not  control  over  a particular  document,  if  it  is  in  existence;  if  it  is 
in  existence  it  will  be  produced?  A.  Well,  I want  to  say  this,  in 
reference  to  the  books  of  the  company,  that  I have  no  control 
over  the  books  of  the  company,  to  take  them  out  of  the  custody  of 
the  company,  except  by  vote  of  the  board  of  directors;  I have 
custody  of  them  in  the  ordinary  transaction  of  the  business; 
they  are  in  my  custody  for  that  purpose;  but  when  it  comes  to 
producing  the  books  in  court,  it  will  be  my  pleasure  to  produce 
them  if  it  is  within  my  power  to  do  it. 

Q.  You  do  not  want  us,  do  you,  to  subpoena  the  whole  board 
of  directors — as  we  certainly  will  do,  if  there  is  any  disposition  to 
keep  those  papers  back?  A.  I do  not  think  it  will  be  necessary 
at  all;  but  I am  simply  explaining  my  position  personally,  as  re- 
lates to  your  committee  and  your  request. 

Q.  Could  Mr.  Shepard  notify  me  here  in  the  city  whether  those 
books  will  be  produced? 

Mr.  Shepard:  I think,  Mr.  Chairman,  we  will  be  able  to  produce 
I think,  all  that  you  wish  on  Friday,  and  will  let  you  know  ex- 


No.  40.] 


263 


actly  what  will  be  produced.  If  you  want  to  serve  a subpoena, 
this  gentleman  will  be  here  ready  to  be  served. 

Chairman  Lexow:  Then,  we  will  stand  adjourned  until  next 
Saturday  morning,  Friday  being  Lincoln’s  birthday,  at  nine 
o’clock. 


FOURTH  PUBLIC  HEARING.  MORNING  SESSION.  NEW 
YORK,  N.  Y.,  SATURDAY,  FEBRUARY  13,  1897. 

Mr.  Lexow:  A quorum  being  present,  the  committee  will  now 
come  to  order. 

Calls  out  George  R.  McDougall. 

Mr.  Mynderse:  I appear  for  Mr.  McDougall;  he  was  served  just 
as  he  was  leaving  the  city,  and  went  to  Boston  on  urgent  busi- 
ness; he  could  not  abandon  his  business  without  great  loss,  and 
is  willing  to  appear  at  any  time  that  the  committee  will  name. 

Mr.  Lexow:  He  was  regularly  subpoenaed? 

Mr.  Mynderse:  He  was  regularly  subpoenaed. 

Mr.  Lexow : And  there  was  no  complaint  that  he  was  not  prop- 
erly served? 

Mr.  Mynderse:  No  complaint  that  he  was  not  properly  served. 

Mr.  Lexow:  He  will  be  expected  to  be  here  at  the  opening  of 
the  session  on  Monday  morning.  We  have  not  fixed  the  time  yet, 
but  it  will  probably  be  9:30. 

The  following  names  were  called  out  and  answers  given  as 
stated  below: 

Michael  Callaghan,  “Present.” 

J.  E.  Connell,  no  response. 

E.  E.  Beardsley,  “Here.” 

Joseph  Turnen,  “Here.” 

James  H.  Post,  “Here.” 

George  Moller,  “Yes,  sir.” 

Lawson  N.  Fuller,  no  response.  , 

Mr.  Lexow:  George  R.  McDougall,  then,  will  be  excused  until 
Monday  morning,  9:30. 


264 


[Senate, 


The  other  witnesses  just  called  will  remain. 

Henry  Byrne  and  Samuel  A.  Maxwell  did  not  respond. 

(Continues  calling):  Enos  B.  Smith,  “Here.” 

James  W.  Duke,  no  response;  Josiah  Brown,  no  response. 

Mr.  Lexow:  Are  neither  Mr.  Duke  nor  Mr.  Brown  in  the  room, 
nor  anybody  representing  either  of  those  gentlemen? 

No  answer. 

(Continues  calling):  James  B.  Ford,  “Here.” 

Charles  R.  Flint,  “Here.” 

M.  C.  Martin,  “Here.” 

William  H.  Trenholme — 

A voice:  I will  answer  for  Mr.  Trenholme;  he  will  be  here 
when  it  is  necessary. 

Irving  R.  Fisher,  “Here.” 

Mr.  Lexow:  The  gentlemen  last  called,  Mr.  Ford,  and  Mr. 
Flint,  Mr.  Martin,  Mr.  Trenholme,  Mr.  Fisher,  will  not  be  required 
to  remain  to-day,  and  will  be  expected  to  be  back  here  on  Tues- 
day morning  next  at  9:30.  We  understand  that  the  gentlemen 
waive  any  informality  in  the  subpeona  and  will  be  present  at  that 
time. 

A.  Voices:  Yes,  sir;  I will. 

The  Sergeant-at-Arms : Henry  Byrne,  Samuel  A.  Maxwell.  If 
either  of  the  gentlemen  are  present  they  will  please  answer  to 
their  names. 

No  answer. 

The  Sergeant-at-Arms  similarly  called  out  the  names  of  James 
E.  Duke  and  Josiah  Brown  and  no  response  was  received. 

Mr.  Lexow:  The  stenographer  will  make  a note  accordingly. 

Is  Mr.  Searles  in  court? 

Mr.  Parsons:  Mr.  Searles  is  absent  from  the  city,  and  not  within 
reach.  He  understood  that  the  committee  would  not  want  to  ex- 
amine him  to-day,  and  he  had  important  business  engagements 
which  he  had  to  attend  to  unless  he  was  to  very  much  inconven- 
ience other  people.  Last  week  he  returned  simply  to  accommo- 
date the  committee  and  to  be  examined,  and  he  will  do  so  next 
week  on  any  day  which  the  committee  will  name.  If  the  com- 


No.  40.] 


265 


mittee  wish  to  serve  a subpoena  on  him,  if  they  will  serve  it  at 
Mr.  Parsons’  office — 

Mr.  Lexow:  I think  that  Mr.  Parsons  is  in  error — Mr.  Searles 
is  in  error  in  supposing  that  the  life  of  the  subpoena  had  expired 
with  the  last  hearing,  after  Mr.  Searles  left  the  witness  stand. 
Mr.  Searles  was  distinctly  informed  upon  his  request  to  be  ex- 
cused then,  that  he  would  be  called  for  examination  again,  and 
especially  with  reference  to  the  documents  and  books  that  had 
been  required  to  be  produced  before  the  committee.  Is  there  any 
reason — 

Mr.  Parsons:  Well,  the  reason  that  I have  given.  But  if  the 
committee  will  name  a day  next  week  when  he  is  to  be  called,  he 
will  be  here,  and  will  waive  any  irregularity  in  the  service  of  the 
subpoena. 

Mr.  Lexow:  Is  there  any  of  the  documentary  evidence  here? 

Mr.  Parsons:  That  I cannot  say — I cannot — 

Mr.  Lexow:  There  is  no  claim  that  there  is  any  irregularity  in 
the  service  of  the  subpoena,  is  there? 

\ 

Mr.  Parsons:  No;  I think  not.  I did  not  know  about  the  docu- 
mentary evidence  that  there  has  been  any  subpoena  about  it. 

Mr.  Lexow:  I understand  you  and  also  Mr.  Parsons  to  stipu- 
late to  have  Mr.  Searles  here  next  Monday  morning. 

Mr.  Parsons:  Yes,  sir. 

Mr.  Lexow:  And  how  about  the  documents  and  books  that 
were! — • 

Mr.  Parsons:  Well,  that  I do  not  know.  If  the  committee  will 
wish  to  serve  a subpoena  for  them,  why  we  will  admit  service  of 
the  subpoena.  I do  not  know  anthing  more  than  that. 

Mr.  Lexow:  Mr.  Shepard,  representing  your  office,  and  Mr. 
Searles,  promised  to  have  those  documents  and  books  here  to-day. 

Mr.  Parsons:  I do  not  know  what  Mr.  Shepard  did. 

Mr.  Mazet:  That  is  precisely  what  he  promised,  and  it  was  with 
that  understanding  that  he  was  informed  distinctly  that  he  waa 
to  be  here  this  morning. 

Mr.  Parsons : I cannot  say. 

Mr.  Warner:  Who  informed  Mr.  Searles  that  he  was  not  re- 
quired to  be  here  to-day? 


266 


[Senate, 


Mr.  Parsons:  The — I cannot  say. 

Mr.  Bedell:  We  would  like  to  have  you  say. 

Mr.  Parsons:  Well,  the — No,  I will  not  say.  The  chairman,  per- 
haps, knows  something  about  it. 

Mr.  Lexow:  About  what,  sir. 

Mr.  Parsons:  About  Mr.  Searles  being  assured  that  he  should 
not — that  he  would  not  be  needed  to-day. 

Mr.  Lexow:  Mr.  Searles  did  not  receive  any  notice  that  he 
would  not  be  needed  to-day. 

Mr.  Parsons:  Well,  Mr.  Parsons  for  him. 

Mr.  Lexow:  No;  nor  Mr.  Parsons  for  him;  you  do  not  say  that 
he  did,  do  you?  You  do  not  say  that  he  received  any  assurance 
that  he  would  not  be  needed  to-day? 

Mr.  Parsons:  No.  Well,  I won’t  say  it  went  as  far  as  an  as- 
surance. But  I will  say  that  to  a man  who  had  important  busi- 
ness engagements  it  was  sufficient  to  have  him  understand  that 
he  would  be  excused  from  to-day’s  session. 

Mr.  Lexow:  Well,  we  do  not  want  to  be  unfair.  If  Mr.  Searles 
has  got  an  important  engagement  and  is  so  far  away  that  he  can- 
not reach  the  committee  it  seems  only  fair  that  he  should  have 
one  day  in  which  to  get  back. 

Mr.  Parsons:  That  is  exactly  the  situation. 

Mr.  Lexow:  And  as  far  as  non-attendance  is  concerned  there 
cannot  be  any  question  about  that;  of  course  no  permission  was 
given  and  none  could  be  given.  Mr.  Searles  is  under  subpoena 
and  is  expected  to  be  here.  It  was  expected  at  the  last  meeting 
that  he  would  be  here.  Mr.  Shepard  promised  to  produce  those 
books  and  those  documents.  Now  Mr.  Searles  may  be  excused 
until  Monday  morning  at  9 :30  o’clock,  and  he  must  be  here  then, 
and  we  shall  expect  the  books  and  documents  that  Mr.  Searles 
has  under  the  promise  made  by  Mr.  Shepard.  If  Mr.  Shepard 
will  read  the  stenographer’s  report  he  will  find  that  he  made  an 
absolute  promise  to  produce  them. 

Mr.  Parsons:  You  will  meet  at  what  hour? 

Mr.  Lexow : 9 :30  Monday  morning. 

Mr.  Samuel  H.  Randall  of  the  West  Side  Republican  Club  se- 


No.  40.] 


267 


cured  the  privilege  of  addressing  the  committee  and  read  a reso- 
lution denouncing  the  gas  combines  and  calling  upon  the  com- 
mittee to  investigate  it  and  give  the  people  of  the  city  some  relief. 

While  Mr.  Randall  was  proceeding  with  his  address  Mr.  Lexow 
said  such  an  investigation  was  now  being  held  by  the  Standing 
Committee  of  the  Senate  and  the  Standing  Committee  of  the  As- 
sembly, and  while  it  was  true  they  had  not  the  right  to  issue  sub- 
poenas, still  until  those  two  committees  deemed  it  advisable  for 
the  special  committee  to  undertake  an  investigation  it  would 
come  with  bad  grace  from  the  special  committee  to  undertake 
the  work. 

(Mr.  Randall’s  speech  was  not  to  be  incorporated  with  the  min- 
utes.) 

George  H.  Moller,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow : 

Q.  What  is  your  name?  A.  George  H.  Moller. 

Q.  Where  do  you  live?  A.  City  of  New  York. 

Q.  How  old  are  you?  A.  Seventy-seven  years. 

Q.  Are  you  now  in  business?  A.  No,  sir. 

Q.  When  you  were  in  busilness,  what  was  it?  A.  Sugar  rein- 
ing. 

Q.  You  were  one  of  the  pioneers  of  the  sugar  refining  business? 
A.  Well,  you  might  call  it  so;  I have  been  in  it  for  thirty  odd 

years. 

Q.  Was  yours  one  of  the  concerns  that  went  into  the  so-called 
Trust?  A.  Sir?( 

Q.  Was  yours  one  of  the  concerns  that  went  into  the  so-called 
Trust?  A.  Well,  we  did  not  exactly  go  in;  it  was  contemplated, 
but  it  was  not  accomplished. 

Q.  What  was  the  name  of  your  concern?  A.  The  North  River 
Sugar  Refining  Company., 

Q.  It  was  controlled  by  Mr.  Searles,  was  it  not?  A.  Yes;  I 
don’t  know  whether  it  was  sold  to  Mr.  Searles;  I believe  he  paid 
for  it  through  somebody;  sold. 


268 


[Senate, 


Q.  He  paid  for  it,  didn’t  he?  A.  Well,  I forget  now  who 
signed  the  check,  but  Mr.  Searles  was  the  principal  man,  and  we, 
as  the  trustees,  met,  and  they  appointed  other  trustees  in  our 
place;  but  it  was  fixed  so  that  our  corporation  went  over  into  an- 
other corporation. 

Q.  What  office  did  you  occupy  in  the  North  River  Sugar  Re- 
fining Company?  A.  I was  the  secretary. 

Q.  At  the  time  of  this  transfer?  A.  Yes,  sir. 

Q.  And  how  long  had  you  been  connected  with  the  company? 
A.  Ever  since — could  not  recollect — ever  since  1873. 

Q.  As  secretary?  A.  Yes,  sir;  let  me  see,  hold  on;  yes,  I think 
I was  secretary  all  the  time 

Q.  From  1873  to  1887?  A.  1887;  yes,  sir. 

Q.  Aud  during  all  that  period  of  time  engaged  in  the  sugar 
refining  business?  A.  Yes,  sir. 

Q.  And  that  was  the  only  business  you  had?  A.  Yes,  sir. 

Q.  Do  you  know  the  concern  the  Havemeyer  Sugar  Refining 
Company  doing  business  at  the  same  time?  A.  Yes,  sir. 

Q.  Do  you  know  the  value  of  its  plant  and  property?  A. 
Which? 

Q.  At  that  time  the  Havemeyer  Sugar  Refining  Company?  A. 
Ydfe;  they  had  two  plants;  one  in  Jersey  City,  and  the  other  in 
Brooklyn,  Eastern  District. 

Q.  Do  you  know  the  value  of  those  two?  A.  No. 

Q.  Can  you  state  what  they  were  worth?  A.  No;  I don’t  know;, 
hard  for  me  to  say. 

Q.  As  compared  with  the  property  of  the  North  River  Sugar 
Refining  Company,  which  was  the  more  valuable?  A.  I don’t 
know,  sir;  I never  was  in  their  concern;  I never  was  in  their 
houses, 

Q.  Do  you  know  any  of  these  other  companies  that  formed  part 
of  the  Sugar  Trust,  so-called?  A.  Yes,  sir. 

Q.  Do  you  know  the  value  of  any  of  their  property?  A.  No. 

Q.  It  is  stated  that  you  are  an  expert  on  questions  of  value  of 
this  character;  is  that  so,  or  not?  A.  I don’t  know;  I don’t  think 
I was  ever  in  those  houses. 


No.  40.] 


269 


Q.  Do  you  know  tlie  value  of  any  of  them?  A.  No. 

Q.  Was  that  the  fair  market  value  of  your  property,  the  North 
River  Sugar  Refining  Company’s,  that  you  received  from  Searles? 
A.  Our  company  thought  so,  thought  it  was  a good  sale. 

Q.  Thought  it  was  a good  sale?  A.  Yes,  sir;  otherwise  we 
had  taken  the  other  chances. 

Q.  That  is  to  say,  you  thought  you  were  getting  all  that  the 
property  was  worth?  A.  As  we  considered  it;  yes,  sir. 

Q.  How  much  had  you  invested  in  that  property  at  that  time? 
A.  Myself? 

Q.  No;  the  whole  property?  A.  Our  capital  was  $350,000. 

Q.  How  much  had  you  im-ested?  A.  Well,  that — 

Q.  Had  you  put  all  that  money  in?  A.  Yes,  sir. 

Q.  In  money?  A.  Well,  I will  tell  you  how  it  was;  there  were 
two  concerns;  one  was  the  North  River  Sugar  Refining  Company, 
and  then  there  was  a company,  the  Holler  & Martens;  Holler 
& Martens  owned  three-quarters  of  the  stock  of  this — of  the  North 
River  Sugar  Refining  Company;  then  we  amalgamated  the  two 
together;  the  North  River  bought  Moller  & Martens  out,  although 
Holier  & Martens  was  the  larger  concern,  and  so  make  it  a com- 
pany, and  the  difference  that  the  North  River  Company  had  to 
pay  the  Moller  & Martens  concern,  that  was  paid  in  stock;  we 
took  stock  for  that  in  the  concern. 

By  Mr.  Warner: 

Q.  Were  the  Moller  & Martens  Company  the  so-called  Hollers 
& Sierck  Company?  A.  Moller  & Martens,  that  was  a private 
company;  they  sold  out  to  Moller  & Martens  Sugar  Refining 
concern — 

Q.  Is  that  the  Moller  & Martens  Company?  A.  No;  that  was 
Moller  & Martens. 

By  Mr.  Lexow: 

Q.  The  Moller  & Sierck  Company  was  a New  Jersey  concern? 
A.  Yes;  that  is  a different  company  altogether;  yes. 

Q.  Yours  was  a New  York  concern?  A.  Yes,  sir. 


270 


[Senate, 


Q.  And  yon  say  that  you  took  stock  for  it?  A.  Yes,  sir. 

Q.  Now,  were  you  getting  only  just  the  actual  value  of  your 
property  in  the  nominal  face  of  the  stocks  that  you  received,  or 
were  you  then  getting  what  you  considered  a pretty  good  bargain 
when  you  made  this  transfer  of  the  property  to  the  new  coropra- 
tion?  A.  No;  I think  we  did  not  make — get  any  advantage  at  all; 
it  was — we  were  all  friends  and  relations,  and  it  was  as  nicely 
adjusted  as  it  could  be;  there  was  no  dickering. 

Q.  You  know  the  Havemeyer  & Elder  Sugar  Company?  A. 
Yes,  sir. 

Q.  Do  you  know  the  value  of  their  property?  A.  No,  sir;  I 
never  was  in  their  house.' 

Q.  Didn’t  you  keep  yourself  informed  at  the  time  of  the  value 
of  these  various  sugar  properties,  at  the  time  when  you  were  in 
business?  A.  No,  sir. 

Q.  Did  not;  you  were  competing  together — Havemeyer  & Elder 
and  Havemeyer  Sugar  Refining  Company,  just  prior  to  your  sale 
to  Searles,  were  you  not?  A.  Yes,  sir;  well,  we  were  in  business 
at  the  same  time. 

Q.  And  you  had  an  active  competition  in  this  State?  A.  Yes, 
sir. 

Q.  And  there  were  competing  in  this  State  a large  number  of 
sugar  refining  companies?  A.  Yes,  sir. 

Q.  And  the  price  of  sugar  had  gone  down  to  .67  of  a cent,  re- 
fining profit,  had  it  not?  A.  Well,  I don’t  recollect  the  figures, 
but  it  was  pretty  hard  pulling,  I know  that. 

Q.  Do  you  remember,  particularly,  after  you  sold  your  property 
to  this  so-called  Trust,  or  through  Mr.  Searles  to  the  Trust,  that 
the  price  of  refining  went  up?  A.  Well,  I don’t  remember  that; 
it  is  nine  years  ago. 

Lawson  N.  Fuller,  having  been  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  What  is  your  residence?  A.  155th  street  and  Amsterdam 
avenue. 


No.  40.] 


271 


Q.  And  age?  A.  73. 

Q.  Wliat  was  your  business  in  18S7?  A.  I was  in  the  real  es- 
tate business  in  1887. 

Q.  Did  you  ever  have  anything  to  do  with  the  sugar  business? 
A.  Yes,  sir. 

Q.  When  was  that?  A.  From  1854  to  1873. 

Q.  Do  you  know  the  various  companies,  or  have  you  kept  your- 
self informed  with  reference  to  sugar  matters  since  that  time? 
A.  Fairly  so. 

Q.  Values  of  properties?  A.  Yes,  sir. 

Q.  Do  you  know  the  value  of  the  sugar  property  or  the  sugar 
factory  property  included  in  the  so-called  sugar  trust?  A.  No, 
sir. 

Q.  Do  you  know  the  value  of  any  one  of  those  properties? 
A.  The  approximate  value? 

Q.  That  is  what  I mean?  A.  Pretty  hard  to  tell  the  value  of 
the  Sugar  Trust  property. 

Q.  What  particular  property  have  you  in  mind?  A.  The 
North  River  for  one;  Moller,  Schotter  & (?);  Win.  Mollenhauer, 
I’addish,  Johnson's,  Booth  & Edgar. 

Q.  I am  speaking  now  more  particularly  of  the  property  that 
was  consolidated  in  1887,  into  the  so-called  Sugar  Trust?  A. 
Well,  I could  not  approximate  the  value  of  the  property  at  that 
time. 

Q.  Do  you  know  what  the  value  of  the  property  of  the  Have- 
meyer  Sugar  Refining  Company  was?  A.  I would  not  like  to 
state. 

Q.  Do  you  know?  A.  I do  not  know  positively,  so  I could  not 
state. 

Q.  Do  you  know  the  value  of  the  sugar  property  that  was  con- 
solidated into  this  Sugar  Trust  of  Havemeyer  & Elder  A.  Some 
of  it. 

Q.  What  part  of  it?  A.  Well,  the  North  River. 

Q.  Any  other  part  of  it?  A.  Well,  there  is  the  Brooklyn  Sugar 
Refining  Company. 

Q.  Of  Brooklyn?  A.  Yes,  sir. 


272 


[Senate, 


Q.  Who  owned  that?  A.  Well,  there  was  Cato  Horn;  he  was 
one  of  the  principal  men. 

Q.  Was  that  the  property  of  the  Sugar  Trust  after  1887?  A. 
I understand  so. 

Q.  Under  any  other  name?  A.  Called  the  Brooklyn  Sugar  Re- 
fining Company. 

Q.  Do  you  know  the  value  of  the  Brooklyn  Sugar  Refining 
Company  or  the  value  in  1887?  A.  No,  sir. 

Q.  Do  you  know  the  value  of  the  property  of  De  Castro  & 
Donner?  A.  No,  sir;  not  in  1S87. 

Q.  Of  Matthiessen  & Wiechers?  A.  Not  in  1887. 

Q.  In  what  year  do  you  know  its  value?  A.  About  1872-’73, 
an  estimated  value  of  the  Brooklyn  property. 

Q.  Was  it  added  to  in  the  years  1872  to  1887?  A.  That  I do 
not  know. 

Q.  Then  you  are  not  able  to  form  any  judgment  about  the 
value  of  the  sugar  properties  there  as  a whole  that  went  into 
the  Sugar  Trust  or  separately  in  1887?  A.  As  a whole,  I have 
heard  it  estimated,  and  I have  estimated  it  myself. 

Q.  You  estimated  it  yourself?  A.  Yes,  sir. 

Q.  How?  A.  Well,  with  the  value  of  sugar  houses  at  the  time 
that  I went  out  of  business,  in  1873. 

Q.  Did  you  estimate  the  value  in  1887?  A.  No,  sir. 

Q.  Of  the  properties  that  went  into  the  Sugar  Trust,  or  any  of 
it?  A.  No,  sir;  only  in  a general  way. 

Q.  Well,  what  do  you  mean?  Did  you  make  any  formal  esti- 
mate? A.  I calculated  as  closely  as  I could  from  the  time  that 
I went  out  of  the  business;  it  is  pretty  difficult  for  anybody  out- 
side of  a sugar  house  to  tell  very  closely  the  value  of  the  property, 
but  in  a general  way  any  sugar  refiner  should  know. 

Q.  Is  the  estimate  of  the  value  of  a sugar  refining  property 
made  according  to  its  output  or  capacity?  A.  Generally. 

Q.  You  estimated  the  value  of  the  property  according  to  the 
output,  daily  output  or  capacity  of  the  factory?  A.  Yes,  sir;  and 
its  location., 

Q.  What  has  its  location  to  do  with  the  value  of  the  plant?  A. 


No.  40.] 


273 


Well,  property  over  in  Jersey  on  the  river  is  not  as  valuable  as 
property  on  the  North  River.  / 

Q.  The  real  estate?  A.  Yes,  sir;  the  real  estate. 

Q.  Did  you,  iu  1887  or  thereabout,  make  any  estimate,  formal  or 
otherwise,  of  the  value  of  the  property  that  composed  the  Sugar 
Trust?  A.  I made  up  my  own  mind  about  what  it  was  worth. 

Q.  How  did  you  come  to  make  this  estimate?  A.  By  calculat- 
ing the  output  of  each  house  as  I understood  it  and  what  the 
house  cost  that  I was  a partner  in ; in  fact,  I was  an  accountant 
of  this  very  house  of  Havemeyer  & Elder  when  it  was  formed  into 
the  copartnership  of  Havemeyer  & Bertrand. 

Q.  When  was  that?  A.  That  was  somewhere  between  1856-’58 
and  ’59 ; I don’t  remember  exactly. 

Q.  You  familiarized  yourself  then  with  sugar  statistics,  did 
you?  A.  Yes,  sir. 

Q.  As  an  accountant?  A.  Yes,  sir;  but  there  have  been  great 
additions  made  to  that  house  since  then. 

Q.  Now,  I will  put  a few  questions  that  I had  not  expected  to, 
but  if  you  will  do  a little  calculating  for  me;  this  is  the  recog- 
nized authority,  is  it  not,  in  sugar  statistics;  Willets  & Gray,  rec- 
ognized by  the  sugar  men  (showing  witness  publication  in  the 
form  of  a paper).  That  is  right,  isn’t  it,  Mr.  Fuller?  (Yvitness 
examines  paper).  I should  judge  so. 

Q.  Now,  will  you  look  at  the  column  which  recites  the  value  of 
the  raw  material  of  the  manufactured  product,  and  the  differ- 
ences for  nine  years  before  and  nine  years  after  the  organization 
of  the  so-called  Sugar  Trust?  Have  you  got  that  column?  I 
handed  it  to  you  with  that  column  toward  you  (indicating).  A. 
Yes,  sir. 

Q.  You  have  it?  A.  Yes,  sir. 

Q.  You  see  the  deductions  that  these  experts  drew  from  those 
figures?  A.  Yes,  sir.  , 

Q.  That  the  cost  of  the  refining  or  the  charge  of  the  refinery  is 
smaller  in  the  nine  years  succeeding  the  organization  of  the  Trust 
so-called  than  for  the  mine  years  before;  is  that  so?  A.  It  seems 
so  here. 


18 


274 


[Senate, 


Q.  Now,  Mr.  Fuller,  will  you  oblige  us  by  taking  the  five  years 
prior  to  the  organization  of  the  Trust  and  five  years  after  the  or- 
ganization of  the  Trust  and  state  whether  or  not  the  price  of  re- 
fining, the  profit  of  the  refinery,  was  not  larger  in  the  aggregate 
after  the  organization  of  the  Trust  than  it  was  before  the  organi- 
zation of  the  Trust;  take  the  five  years  before  18S7  and  compare 
them  with  five  years  after  1887  and  state  whether  or  not  the  dif- 
ference between  the  raw  material  and  the  manufactured  article, 
showing  the  limits  of  profit  of  the  Trust  were  not  larger  after  the 
organization  of  the  Trust  than  they  were  before?  A.  That  would 
require  some  calculation. 

Q.  If  you  will  add  up  the  figures;  if  you  will  say  whether  these 
figures  are  correct  five  years  prior  to  1887,  the  average  of  the  raw 
material  was — A.  (interrupting)  One  moment,  if  you  please. 

Q.  (Continuing)  Five  cents  and  918-1,000  of  one  cent  per  pound? 
A.  1887.. 

Q.  Just  look  at  these  figures,  instead  of  referring  to  this;  see 
if  they  compare  with  the  figures  upon  that  statistical  record  and 
whether  the  additions  are  correct. 

(Assemblyman  Mazet  compares  the  figures  with  the  witness.) 

A.  The  average  is  larger  five  years  after. 

Q.  Now,  I want  to  ask  you  whether  you  have  compared  these 
figures  (indicating  on  paper)  with  the  statistical  figures  given 
upon  that?  A.  No,  sir — yes., 

Q.  You  have?  A.  Yes,  sir. 

Q.  Is  it  true  that  the  average  of  the  price  of  the  raw  material 
for  the  five  years  preceding  the  organization  of  the  Sugar  Trust 
was  five  cents  and  918-1000  of  one  cent  per  pound?  A.  Yes,  sir. 

Q.  That  the  price  of  the  refined  article  was  six  and  772-1000  of 
one  cent  per  pound?  A.  Yes,  sir. 

Q.  That  the  difference  for  those  five  years  between  the  raw  ma- 
terial and  the  manufactured  product  was  853-1,000  of  one  cent 
per  pound?  A.  Before  1887? 

Q.  Before?  A.  Yes,  sir, 

Q.  That  for  the  five  years  after  the  organization  of  the  Trust 
the  average  cost  of  the  raw  material  was  four  cents  and  961-1000 


No.  40.] 


275 


of  one  cent  per  pound;  the  cost  of  the  manufactured  product  was 
five  cents  and  971-1000  of  a cent  per  pound,  and  the  profit  to  the 
refinery  was  one  and  10-1000  of  one  cent  per  pound?  A.  Yes,  sir. 

Q.  Then  the  increased  charge  made  by  the  refinery  for  the  five 
years  after  the  organization  of  the  so-called  Sugar  Trust  was 
157-1000  of  a cent  per  pound  more  than  for  the  five  years  preced- 
ing the  organization  of  the  Sugar  Trust?  A.  Yes,  sir;  that 
would  go  without  saying,  I think. 

Q.  And  that  in  the  meanwhile  the  raw  material  had  dropped  in 
price  957-1000  of  one  cent?  A.  Yes,  sir;  according  to  these  sta- 
tistics. 

Q.  Is  it  true  that  this  increase  placed  upon  the  product  of  the 
refinery  has  cost  the  consumer  annually  upward  of  $4,200,000? 
A.  I should  judge  it  has. 

Q.  In  view  of  these  figures,  given  by  gentlemen  recognized  as 
authorities  by  the  sugar  refiners  themselves,  is  their  statement 
made  upon  the  stand  here  that  the  consolidation  of  these  various 
interests  into  one  has  caused  a cheaper  product  to  be  put  before 
the  consumer  by  them,  true  or  not?  A.  I don’t  think  it  was  true. 

Q.  It  is  absolutely  false,  isn’t  it,  as  shown  by  these  figures? 
A.  Certainly. 

Q.  Now,  won’t  you  take  the  whole  nine  years  subsequent  to  the 
organization  of  the  so-called  Trust  and  compare  the  figures  of 
those  nine  years  with  the  figures  shown  for  five  years  before  the 
organization  of  the  Sugar  Trust  so-called,  and  isn’t  it  true  that  the 
cost  of  the  raw  material  has  dropped  within  a fraction  of  one 
cent  per  pound  to  the  refiner,  the  cost  of  refining  computed  over 
the  whole  of  the  nine  years  subsequent  to  the  organization  of  the 
Sugar  Trust,  has  actually  increased  128-1000  of  one  cent  per 
pound;  will  you  please  look  at  that  list  again  and  see  whether 
those  figures  are  correct  (indicating);  have  you  got  the  figures 
now,  sir?  A.  I have,  sir. 

Q.  Now,  I will  repeat  the  question,  and  computing  the  figures 
covered  by  nine  years’  operations  after  the  formation  of  the  Sugar 
Trust,  comparing  them  with  the  five  years  before  the  formation 
of  the  Sugar  Trust,  and  is  it  not  true  that  both  the  cost  of  the 


276 


[Senate, 


raw  material  has  dropped  within  a fraction  of  less  than  one  cent 
per  pound,  and  the  charge  of  the  refined  product  has  increased 
from  853-1000  of  one  cent  to  981-1000  of  one  cent,  or  128-1000  of  a 
cent,  and  at  the  rate  of  $3,400,000  annually  additional  to  the  con- 
sumer? A.  That  appears  so,  sir., 

Q.  And  this,  notwithstanding  the  fact,  testified  by  the  wit- 
nesses on  behalf  of  the  sugar  refining  company,  that  in  the  mean- 
while the  consolidation  had  produced  large  economies  in  the 
manufacture  and  in  distribution,  due  to  better  machinery  and 
greater  concentration;  that  is  true,  isn’t  it?  A.  Yes,  sir. 

Q.  It  appears,  therefore,  that  the  labor  which  has  produced 
the  raw  material  as  shown  by  the  price  of  the  raw  material  has 
been  steadily  dropping  while  the  cost  charged  by  the  refiner 
has  been  as  steadily  increasing;  is  that  true?  A.  Yes,  sir. 

Q.  And  whatever  benefit  the  consumers  have  derived  in  the 
reduction  of  the  price  of  sugar  to  them  has  been  that  they  have 
shared  fractionally  at  least  in  the  reduction  of  the  cost  of  the 
raw  material  but  that  they  have  not  even  got  the  benefit  of  the 
reduction  of  the  cost  of  the  raw  material,  because  the  cost  of  the 
refined  product  has  been  increased?  A.  Yes,  sir;  that  is  so;  I 
think  that — 

Q.  You  claim  to  be  an  expert  on — A.  Not  particularly  so. 

Q.  I understood  you  to  say  that  you  had  been  for  years  in  the 
sugar  business?  A.  Twenty-five  years;  but  it  seems  as  though 
men  in  business  then  were  not  experts  compared  with  the  men 
to-day. 

Q.  Now,  in  making  these  statements  you  have  not  relied  upon 
any  expert  knowledge  of  yours  but  you  have  taken  your  figures 
and  drawn  your  deductions  from  the  statistical  record  of  Willett 
& Gray,  which  the  sugar  refining  company  says  is  authority;  is 
that  not  true?  A.  Not  entirely;  I have  kept  the  run  of  the 
thing  myself,  upon  the  form. 

Q.  But  in  answering  the  questions  that  I have  put  to  you?  A. 
Yes,  sir. 

Q.  You  have  simply  directed  your  knowledge  as  an  account- 
ant? A.  Yes,  sir  (interrupting.) 


No.  40.]  277 

Q.  (Continuing)  As  an  expert  accountant  to  the  figures  fur- 
nished by  Willett  & Gray?  A.  Yes,  sir. 

Q.  That  have  been  produced  here  as  authority  by  the  sugar  re- 
fining company?  A.  Yes,  sir. 

Q.  And  the  deductions  that  you  have  made  are  based  entirely 
upon  these  figures?  A.  Yes,  sir. 

Q.  How  many  buyers  of  raw  material  were  there  in  the  market 
when  you  were  in  the  sugar  business,  Mr.  Fuller?  A.  There 
were  forty-eight  sugar  refineries. 

Q.  How  many  buyers  of  raw  material  are  there  in  the  market 
to-day?  A.  In  the  State  of  New  York? 

Q.  In  the  United  States  of  America?  A.  Well,  I couldn’t  tell 
you  that. 

Q.  Are  there  to  exceed  four?  A.  I think  not. 

Q.  And  in  that  four  do  you  include  the  Western  Sugar  Refin- 
ing Company  of  which  the  American  holds  one-half  of  the  stock? 
A.  Yes,  sir. 

Q.  Is  it,  therefore,  within  the  power  of  the  American  Sugar  Re- 
fining Company  absolutely  to  control  the  price  of  the  raw  ma- 
terial? A.  It  is. 

Q.  According  to  whether  they  buy  or  not,  they  can  fix  the 
price?  A.  Yes,  sir 

Q.  In  this  country,  up  to  the  importing  point?  A.  Yes,  sir. 

Q.  Now,  is  it  true  that  they  can  even  control  to  the  extent  of 
the  imported  sugar?  A.  I could  not  say  as  to  that. 

Q.  Then  your  answer  is  limited  entirely  to  domestic  refined 
sugars?  A.  Yes,  sir. 

Q.  Raw  material?  A.  I am  speaking  now  more  particularly 
of  sugars  imported  from  Cuba. 

Q.  Not  beet  sugar?  A.  Not  beet  sugar. 

Q.  Do  you  mean  that  inasmuch  as  they  control  eighty  per 
cent,  of  the  output  of  refined  sugars,  they  being  buyers  to  that 
extent  in  the  market,  they  control  absolutely  the  market  for  raw 
sugar?  A.  I should  judge  so. 

Q.  Well,  do  you  know  as  a sugar  man  whether  they  do  or  not? 
A.  Well,  if  I was  in  the  sugar  business,  and  if  I controlled  eighty 


278 


[Senate, 


per  cent,  of  the  output  of  sugar,  I should  think  I virtually  con- 
trolled the  market  in  the  sale  for  that;  it  depends  upon  the  elas- 
ticity of  the  conscience  in  regard  to  that. 

Q.  Who  buys  the  raw  material,  do  you  know,  for  the  American 
Sugar  Refineries  Company?  A.  I do  not  know;  a man  by  the 
name  of  Stursburg  did  buy  it. 

Q.  Julius  A.  Stursburg?  A.  So  I understood. 

Q.  When  you  were  in  the  sugar  business,  was  there  anything 
then  known  as  a factor’s  agreement?  A.  No,  sir. 

Q.  Did  you  have  factors?  A.  No,  sir. 

Q.  Transact  your  business,  instead  of  selling  directly  to  con- 
sumers, through  the  agency  of  factors?  A.  Very  rarely;  there 
were  brokers,  when  I was  in  the  business,  used  to  sell  sugars. 

Q.  Under  a factor’s  agreement?  A.  Well,  what  do  you  in- 
clude in  that?  By  a general  agreement  among  all  the  refineries? 

Q.  By  an  agreement  such  as  this,  that  the  person  receiving  the 
sugar  from  the  consigning  company,  should  hold  it  merely  on 
consignment,  and  should  receive  a rebate  of  say  3-16  of  a cent  per 
pound?  A.  Nothing  of  that  kind. 

Q.  Was  there  anything  then  in  the  financial  or  commercial 
situation  that  took  the  place  of  the  present  wholesale  grocers’ 
association?  A.  No,  sir. 

Q.  There  was  free  and  fair  competition?  A.  Yes,  sir;  fierce 
competition. 

Q.  Between  forty-eight  refineries?  A.  Yes,  sir. 

Q.  Were  those  forty-eight  all  over  the  United  State?  A.  Yes, 
sir;  principally  Boston,  Baltimore,  Philadelphia  and  New  York. 


By  Mr.  Warner: 

Q.  Do  you  know  how  many  refineries  there  were  in  the  United 
States  in  1878?  A.  Well,  from  about  1868  to  1878  twenty-eight 
refineries  had  to  go  out  of  business. 

Q.  To  1878?  A.  Yes,  sir;  had  to  go  out  of  business  on  account 
of  the  low  price  of  refined  sugars. 

Q.  Then,  how  many  refineries  would  you  say  that  there  were 


No.  40.] 


279 


in  the  United  States  in  ISIS?  A.  Well,  that  would  leave  about 
twenty,  as  there  were  no  others  built. 

Q.  Did  I understand  you  to  say  that  you  knew  what  the  value 
was  of  the  North  River  Sugar  Refining  Company  in  1878?  A. 
Well,  I should  judge  that  it  was  worth  just  what  it  brought. 

Q.  What  was  that?  A.  $325,000. 

Q.  Do  you  hold  any  Trust  certificates  in  the  American  Sugar 
Refining  Company?  A.  No,  sir. 

Edward  J.  Duggan,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  What  is  your  residence?  A.  Albany,  N.  Y. 

Q.  How  old  are  you?  A.  41  years  of  age. 

Q.  What  is  your  business?  A.  Grocery  business. 

Q.  Grocery  business  in  Albany?  A.  Well,  I am  just  winding 
up  the  grocery  business. 

Q.  In  Albany?  A.  Albany. 

Q.  As  part  of  your  business,  have  you  been  in  the  habit  of 
selling  sugar?  A.  I have. 

Q.  How  long?  A.  About  18  or  20  years — about  18  years. 

Q.  Have  you  sold  sugar  for  the  American  Sugar  Refining  Com- 
pany? A.  I have. 

Q.  Were  you  a factor,  so-called,  of  the  American  Sugar  Re- 
fining Company,  under  an  agreement,  a copy  of  which  is  in  evi- 
dence and  which  I hand  you?  A.  I was  a factor  for  one  of  its 
branches,  known  as  the  Franklin  Sugar  Refining  Company. 

Q.  The  Franklin  Sugar  Refining  Company,  which  was  one  of 
the  companies  taken  into  the  so-called  Trust?  A.  Of  the  Sugar 
Trust. 

Q.  How  long  were  you  a factor  for  the  American  Sugar  Refin- 
ing Company?  A.  I should  say  close  to  a couple  of  months. 

Q.  What  was  that  last  answer?  A.  I think  nearly  two  months. 

Q.  What?  A.  That  I was  a factor. 

Q.  Then  you  did  not  get  any  rebate?  A.  No;  not  yet;  I 
haven’t. 

Q.  Just  explain  your  experiences  with  the  American  Sugar  Re- 


280 


[Senate, 


fining  Company  or  with  the  Franklin  Sugar  Refining  Company, 
which  is  a branch  of  the  American  Sugar  Refining  Company?  A. 
With  the  Few  York  refiners,  before  the  Trust  was  formed,  I could 
buy  from  any  of  them  that  were  in  the  refining  business;  after 
the  Trust  was  formed,  I refused  to  join  the  Wholesale  Grocers’ 
Association,  and  was  shut  off  from  getting  any  sugars  from  the 
Few  York  end  of  the  Trust;  I went  to  Philadelphia  then. 

Q.  What  do  you  mean  by  you  were  “shut  off”  from  getting  the 
sugars,  or  do  you  say  you  couldn’t  buy  any  sugars?  A.  I couldn’t 
buy  any  from  them. 

Q.  They  would  not  sell  you  sugar?  A.  They  would  not  sell  me 
under  any  consideration. 

Q.  What  did  they  say  to  you?  A.  Well,  on  two  occasions,  they 
told  me  that  there  were  complaints  from  Albany  that  I had  been 
cutting  prices. 

Q.  And  that  was  a crime,  eh?  A.  It  seemed  to  be. 

Q.  Was  that  all?  A.  There  was — there  isn’t  anything  else  that 
I know  they  objected  to  it  for;  but  they  questioned  my  credit  at 
one  time,  and  after  giving  them  a statement  they  sold  me  goods, 
for  they  filled  a couple  of  orders;  and  complaints  came  from  Al- 
bany, they  said,  again,  and  they  were  compelled  to  shut  me  off. 

Q.  Well,  the  fact  is,  that  you  had  been  selling  imported  sugar, 
had  you  not?  A.  I bought  some  imported  sugars. 

Q.  And  as  soon  as  you  bought  imported  sugar  they  closed 
their  connection  with  you  as  a factor;  is  that  right?  A.  I was 
told  that  by  a broker. 

Q.  Well,  I mean,  is  that  the  fact?  A.  I suppose  it  is — I 
couldn’t  give  you  any — 

Q.  Within  how  long  a time  after  you  had  purchased  imported 
sugar  was  it  that  you  received  notice  that  your  relation  to  them 
as  a factor  had  been  concluded?  A.  I did  not  receive  a written 
notice,  but  when  I sent  an  order  to  a broker,  they  refused  to  take 
the  order. 

Q.  Was  anything  said  to  you  about  the  purchase  of  imported 
sugar?  A.  Except  by  the  broker. 

Q.  What  did  the  broker  say?  A.  He  said  that  I had  ought  to 


No.  40.] 


281 


buy  all  the  sugars  that  I needed  from  the  American  Sugar  Refin- 
ing Company,  and  not  be  running  around  to  other  places. 

Q.  What  is  the  name  of  the  broker?  A.  Robert  S.  Russell. 

Q.  Where  is  his  place  of  business?  A.  No.  107  Water  street. 

Q.  Where?  A.  New  York  City. 

Q.  Now,  explain  how  it  is  that  no  grocer  or  dealer  in  sugar  can 
live  unless  he  becomes  a factor  of  the  American  Sugar  Refining 
Company;  if  that  is  a fact?  A.  Well,  the  object  of  the  factor  is 
to  protect  the  broker  and  the  wholesale  grocer;  that  means  that 
before  sugar  comes  to  a consumer,  there  is  two  or  three  profits 
to  be  gotten  out  of  it  after  it  leaves  the  refinery;  the  broker  first 
gets  his  brokerage;  he  buys  for  the  wholesale  grocer;  the  whole- 
sale grocer  then  gets  his  profit;  he  sells  to  the  retail  grocer;  the 
retail  grocer  is  supposed  to  get  a profit  before  it  goes  to  the  con- 
sumers, and  it  is  in  order  to  protect  all  those  interests  that  the 
Sugar  Trust  make  factors,  as  well  as  to  control  the  trade. 

Q.  Now,  do  you  mean  to  be  understood,  then,  that  the  Sugar 
Refining  Company  takes  all  these  interests  under  its  wing,  and 
for  the  purpose  of  protecting  the  profits  of  these  various  subsidi- 
ary agencies,  creates  this  factor  arrangement  that  you  have 
spoken  of?  A.  I do;  I think  it  is  a protection  to  themselves  also. 

Q.  Well,  how  does  it  work  so  far  as  protecting  the  American 
Sugar  Refining  Company  is  concerned?  A.  Why,  the  profits 
that  they  are  receiving  won't  be  questioned  by  the  wholesaler 
since  his  interests  are  protected. 

By  Mr.  McCarren: 

Q.  I understand  you  to  say  that  the  object  of  the  factor  was 
to  protect  the  interest  of  the  broker  and  the  wholesale  grocer? 
A.  The  wholesale  grocer  and  broker. 

Q.  That  is  the  object  of  the  factor?  A.  It  seemed  that  is  the 
only — that  can  be  the  only  object. 

By  Mr.  Lexow: 

Q.  You  said  that  in  addition  to  protecting  the  wholesale  gro- 
cer and  the  broker,  the  factor's  agreement  was  for  the  benefit  of 
the  refiner?  A.  Well,  it  certainly  is;  I should  think. 


282 


[Senate, 


By  Mr.  McCarren: 

Q.  Is  that  your  conclusion,  or  have  you  any  personal  knowledge 
in  that  direction?  A.  Why,  I have  had  a chance  to  form  a 
knowledge  since. 

Q.  Well,  you  had  a chance,  but  have  you  any  knowledge?  A. 
I have  the  same  knowledge  that  any  merchant  would  have  that 
came  in  contact,  that  was  driven  out  of  the  business  for  it. 


By  Mr.  Lexow : 

Q.  Isn't  it  true  that  this  rebate  of  3-16  of  a cent  per  pound  and 
a discount  of  1 per  cent.,  if  not  allowed  by  the  sugar  refining  com- 
pany, would  make  the  business  of  selling  sugar  absolutely  un- 
profitable? A.  I don’t  think  so. 

Q.  You  don’t  think  what?  A.  I don’t  think  it  would  make  it 
unprofitable. 

Q.  If  this  rebate  was  not  allowed,  would  there  be  any  profit 
in  it  for  the  seller  of  sugar,  the  retailer?  A.  Would  there  be  a 
profit? 

Q.  Yes?  A.  I think  there  would;  there  would  be  the  same 
profit  that  there  was  before  the  factor  system  came  into  vogue. 

Q.  I mean — you  don’t  get  my  meaning;  as  between  two  men, 
one  receiving  the  rebate  of  3-16  a pound  and  the  other  not  re- 
ceiving it;  one,  therefore,  being  a factor  under  this  arrangement, 
and  the  other  being  an  independent  buyer  without  the  factor’s 
agreement,  would  the  man  who  was  not  a factor  be  able  to  make 
any  profit  on  sugar  at  all?  A.  Why,  he  couldn’t  stay  in  the  busi- 
ness; he  couldn’t  make  any  profit  on  to  it. 

Q.  Then  the  only  profit  that  comes  to  the  factor  comes  to  him 
under  this  arrangement  of  rebate?  A.  The  only  profit. 

Q.  And  unless  he  gets  that  rebate  he  cannot  live?  A.  He  can- 
not exist  in  the  grocery  business  or  sugar  business. 


By  Mr.  Warner : 

Q.  Is  there  anything  that  prevents  the  retailer  from  selling  at  a 
higher  price  than  the  market  price  or  fixed  price?  A.  There  is 


No.  40.] 


283 


nothing  that  prevents  him,  but  sugar  is  something  that  is  known 
all  over  the  world,  about  the  price  of  what  it  is,  more  than  any 
other  article  in  the  grocery  trade,  and  it  will  be  pretty  hard  for 
you  to  get  any  more  than — 

Q.  (Interrupting)  The  rebate?  A.  Than  what  the  market 
price  is  for  it. 

Q.  Or  to  derive  any  more  profit  than  the  rebate?  A.  Not  any 
more. 

Mr.  Lexow:  The  fact  is  that  under  the  terms  of  this  agreement 
you  must  sell  at  the  daily  quotations  fixed  by  the  refiner,  and  you 
must  sell  on  the  terms  fixed  by  them  as  to  credits  and  discounts? 
A.  Yes. 

Q.  And  you  must  make  an  affidavit  as  factor  showing  that  you 
have  done  that  in  order  to  secure  this  rebate  of  3-16  of  a cent  a 
a pound?  A.  You  must. 

Q.  Must  you  not,  and  do  you  not,  get  that  rebate  if  you  do  not 
make  that  affidavit?  A.  You  do  not. 

Q.  Have  you  made  that  affidavit  in  your  case?  A.  I have  not. 

Q.  What?  A.  Not  yet;  I have  not. 

Q.  Well,  why  have  you  not  made  that  affidavit?  A.  Well, 
when  they  stopped  me  from  getting  sugars  under  the  factor  sys- 
tem it  practically  collapsed  my  business ; it  stagnated  it,  and  in  a 
very  short  time  I was  not  able  to  handle  it ; my  bank  turned  me 
dowrn,  and  I am  just  now  closing  it  up;  if  I do  not  have  any  sugars 
in  the  grocery  trade  I cannot  do  any  business  in  the  grocery  trade. 

Q.  And  you  cannot  buy  sugar  now  from  the  American  Sugar 
Refining  Company  and  receive  the  rebate  which  would  enable 
you  to  make  a profit  on  it?  A.  I cannot. 

Q.  Do  you  know  the  system  called  the  “equality  system?”  A. 
In  regard  to  what? 

Q.  In  regard  to  the  sugar  business?  A.  I know  something  of 
it,  I think. 

Q.  Do  you  know  what  they  call  the  “equality”  book?  A.  In 
regard  to  freight  rates — 

Q.  And  the  prices  of  sugar?  A.  I do. 

Q.  Have  you  one?  A.  I have  received  one  from  the  wholesale 


284  [Senate, 

grocers,  but  I haven’t  got  it  with  me;  never  paid  any  attention 
to  it. 

By  Mr.  Warner: 

Q.  When  was  it  that  you  entered  into  this  contract  with  the 
sugar  company,  the  American  Company?  A.  Shortly  after  the 
factor  system  was  put  in  use;  I think  it  was  about  three  months 
afterward. 

Q.  In  1892?  A.  The  factor  system  is  later  than  that. 

Q.  Well,  when?  A.  Why,  the  date  of  the  factor  agreement 
there  will  tell. 

Q.  The  dates  are  in  blank,  I take  it?  A.  There  is  a date  on 
that,  I think,  Senator. 

Mr.  Lexow:  No,  there  is  no  date  on  to  it.  It  is  blurred;  this  on 
the  factor  agreement,  it  is  blurred;  but  there  is  a date  on  to  it; 
there  is  no  date  on  this  (looking  at  factor  agreement). 

(Witness  indicates  date  on  paper). 

By  Mr.  Warner; 

Q.  The  date  of  the  agreement,  then,  between  you  and  the  Amer- 
ican Sugar  Refining  Company  is  that  of  October  25,  1895?  A. 
The  factor  agreement  it  was. 

Q.  Factor’s  agreement  October  25,  1895;  you  say  that  one  of 
the  objects  of  the  making  of  this  factor’s  agreement  is  also  to 
control  the  trade?  A.  Yes. 

Q.  And  to  stifle  competition  between  these  wholesale  grocers 
and  retailers,  etc.?  A.  Yes,  sir. 

Q.  Did  any  member  of  the  American  Sugar  Refining  Company 
call  to  see  you  with  reference  to  your  violation  of  the  contract? 
A.  From  the  New  York  end  there  was  not  any. 

Q.  Were  you,  under  this  contract,  able  to  buy  sugar  directly  of 
the  American  Sugar  Refining  Company?  A.  There  are  some  in- 
voices there  to  that  effect., 

Q.  And  you  did?  A.  I did, 

Q.  Buy  directly  of  the  company?  A.  Yes. 


No.  40.] 


285 


Q.  Who  did  you  see  of  the  company  when  you  came  to  New 
York,  as  I understand  it?  A.  When  I came  to  New  York? 

Q.  When  you  came  to  New  York  to  see  them  about  buying 
sugar  of  them?  A.  Always  went  to  my  broker. 

Q.  Well,  after  they  refused  to  sell  you  sugar?  A.  Who  did  I 
see?  Well,  I saw  Mr.  Barstow,  who  was  alive  then,  but  is  dead 
now;  he  is  the  only  one  of  the  sugar  refining  company  that  I — 

Q.  What  position  did  he  hold  in  the  company?  A.  He  was 
salesman  and  had  charge  of  the  credit  system. 

Q.  What  did  he  tell  you  in  regard  to  selling  you  sugar?  A. 
He  told  me  that  the  grocers  in  Albany  were  complaining  that.  I 
was  cutting  into  their  trade  and  cutting  prices,  and  that  if  there 
was  any  more  complaint  that  they  would  not  sell  me  sugar. 

By  Mr.  Lexow : 

Q.  Did  he  say  anything  about  the  purchase  of  foreign  sugar? 
A.  Not  at  that  time;  foreign  sugars  were  not  used  at  that  time  as 
much  as  they  are  now. 

Q.  How  many  affidavits  did  you  make  under  this  agreement 
and  receive  rebate?  A.  I did  not  receive  any. 

Q.  Have  you  never  received  any  rebates  of  any  kind  under  this 
factor's  agreement?  A.  Not  under  the  factor's  agreement;  have 
received  it  under  those  invoices. 

Q.  I see  the  factor’s  agreement  is  dated  October  25,  1895,  and 
that  there  are  bills  attached  to  it  dated  February  11,  1896;  also 
that  this  factor’s  agreement  calls  for  the  settlement  within  three 
months;  now  didn’t  you  make  an  affidavit  that  you  had  been 
working  for  three  months  under  this  factor’s  agreement?  A. 
Well,  when — as  I have  said  a few  moments  ago,  when  I was 
about  six  -weeks  or  two  months  working  they  shut  me  off  as  a 
factor. 

Q.  And  then  you  went  on  purchasing  as  an  ordinary  purchaser 
without  agreement?  A.  Well,  for  a certain  kind  of — I had  to 
have  a few  sugars. 


286 


[Senate, 


Q.  Had  to  have  wliat?  A.  I had  to  have  a few  preparatory 
to  going  out  of  business;  I did  not  want  to  be  altogether;  I 
bought  a few  sugars  of  them. 

Q.  And  received  no  rebate  from  them?  A.  Not  yet. 

Q.  You  do  not  expect  to,  do  you?  A.  Well,  I don’t  suppose  I 
will;  but  I might  possibly. 


By  Mr.  Warner: 

Q.  It  is  a matter  entirely  within  their  discretion  whether  you 
receive  it  or  not?  A.  Yes. 

Q.  Under  your  factor’s  agreement  with  them? 

Mr.  Lexow:  No. 

Mr.  Warner:  No? 

Mr.  Lexow:  If  he  lives  up  to  this  factor’s  agreement  they  have 
to  pay  him  the  rebate  of  3-16  of  one  cent. 


By  Mr.  Lexow: 

Q.  Now  do  we  understand  you  to  say  that  unless  a man  makes 
an  agreement  of  that  kind  with  the  American  Sugar  Refining 
Company,  or  one  of  its  branches,  as  a grocer,  that  he  cannot 
live  and  do  business?  A.  He  cannot  do  business. 

Q.  That  sugar  is  essential  in  the  grocery  business,  and  unless 
you  can  get  this  rebate  of  3-16  of  a cent  a pound  you  cannot  do 
business,  is  that  true?  A.  That  is  true. 

Q.  Look  at  this  factor’s  agreement  (handing  witness  paper), 
and  state  whether  or  not  the  only  difference  between  that  which 
is  in  the  case  and  this  is  that  the  one  comes  from  the  American 
Sugar  Refining  Company — the  one  involved  here — and  this  comes 
from  the  Franklin  Sugar  Refining  Company. 

(Assemblyman  Mazet  compares  agreements  with  the  witness.) 

Mr.  Mazet:  He  says  it  is  the  same  except  the  signatures. 

Mr.  Lexow : They  are  precisely  the  same  except  the  signatures. 


No.  40.] 


287 


By  Mr.  McCarren: 

Q.  I understand  that  the  factor’s  agreement  there  says  that 
you  entered  into  an  agreement  sometime  in  October,  1S95?  A. 
I did.  _*• 

Q.  1S95?  A.  Whatever  the  date  is  there. 

Q.  1895?  A.  Yes. 

Q.  And  about  six  weeks  thereafter  your  contract  with  the 
Sugar  Refining  Company  was  broken;  that  you  have  been  in  the 
grocery  business  since  that  time,  since  six  weeks  subsequent  to 
October  1895?  A.  I am  partially  in  it  yet. 

Q.  Well,  have  you  been  in  the  grocery  business  since  that 
time?  A.  Ever  since  that  time,  and  am  yet. 

Q.  Well,  and  have  you  been  selling  sugar  since  that  time?  A. 
Very  little  of  it;  not  selling  any  now. 

Q.  Well,  when  did  you  cease  selling  sugar?  A.  Partically 
when  the  last — as  the  last  invoice  will  show  there,  except  some — 

Q.  What  date  was  that?  A.  Some  time  in  February. 

Mr.  Mazet:  February  11,  1896. 

By  Mr.  McCarren : 

Q.  Have  you  been  selling  any  sugar  since  February  11,  1896? 
A.  I am  selling  a few  foreign  sugars;  not  to  amount  to  anything. 

Q.  Where  did  you  buy  your  sugar?  A.  My  foreign  sugar? 

Q.  The  sugar  that  you  sold;  where  did  you  buy  it?  A. I bought 
some  in  Albany,  and  some  in  Xew  York. 

Q.  Who  did  you  buy  it  from  in  New  York?  A.  Robert  Crooks. 

Q.  Is  he  a broker?  A.  No;  he  is  an  importer. 

Q.  That  was  foreign  sugar,  was  it?  A.  Yes. 

Q.  When  did  you  buy  your  last  domestic  sugar?  A.  The  last 
domestic  sugar — probably  a couple  of  months  ago;  that  I used 
in  the  store. 

Q.  A couple  of  months  ago;  who  did  you  buy  that  from?  ? A. 
Some  of  the  grocers  in  Albany — which  would  come  in  this  way, 
when  a customer  would  come  in  and  say  that  positively  he  had 
to  have  a barrel  of  sugar,  I would  go  out  and  get  it  for  them;  but 
not  at  all  into  it;  I have  not  kept  it  in  stock. 


28S  [Senate, 

Q.  At  what  price  would  you  buy  it?  A.  At  what  the  market 
or  refiners’  prices  was  at  that  time. 

Q.  At  the  refiners’  price  on  that  day?  A.  Yes,  sir. 

Q.  Was  any  of  the  sugar  that  you  bought  put  to  yop  at  a high- 
er price  than  that  you  bought  from  the  American  Sugar  Refin- 
ing Company?  A.  Was  it  put  at  a higher  price? 

Q.  Yes?  A.  Well,  it  was  when  you  come  to  consider  the  re- 
bates and  the  double  discount. 

Q.  Well,  did  you  pay  any  higher  price  to  the  grocer  or  the 
other  person  from  whom  you  bought  sugar  than  you  would  to 
the  American?  A.  Well,  that  would  depend  on  whether  I was  a 
factor  or  not. 

Q.  Did  you  do  that;  did  you  pay  any  higher  price  to  the  person 
you  bought  the  sugar  from?  A.  I did. 

Q.  Who  are  they?  A.  There  was  Woodward,  and  Quinn  Bros, 
and  Hart. 

Q.  You  paid  them  a higher  price?  A.  I paid  them  a higher 
price  than  if  I was  a factor,  because  they  had  made  the  difference 
between— they  got  the  factor’s  3-16. 

Q.  Well,  that  is  where  the  difference  exists;  you  did  not  get 
the  rebate  of  3-16?  A.  Or  the  two  one  per  cents. 

Q.  Well,  it  was  because  you  did  not  get  the  rebate  from  the 
American  Sugar  Refining  Company,  wasn’t  it?  A.  The  Ameri- 
can Sugar  Refining  Company  would  not  sell  me  sugars  unless  I 
was  a factor. 

Q.  Well,  that’s  not  answering  the  question — the  reason  why 
you  did  not  get  the  3-16  rebate  was  because  you  did  not  buy  from 
the  Sugar  Refining  Company;  was  that  it?  A.  No. 

Q.  Well,  why  was  it?  A.  Because  that  is  the  short  price  that 
the  Sugar  Refining  Company  asks  for  a wholesale  grocer. 

Q.  Well,  was  that  wherein  the  only  difference  was,  3-16  in  your 
purchasing  from  the  wholesale  grocer,  or  the  Sugar  Refining  Com- 
pany? A.  Or  the  two  one  per  cents,  that  is  allowed. 

Q.  The  only  difference  was  the  rebate  and  the  percentage?  A. 
That  is  all. 

Q.  The  price,  the  intrinsic  value  was  the  same  price,  wasn't 
it?  A.  The  same  thing. 


No.  40.] 


289 


By  Mr.  Lexow: 

Q.  With  the  difference  that  if  you  get  the  rebate  you  can  make 
a profit,  and  if  you  don’t  get  the  rebate  you  make  a loss,  is  that 
a fact?  A.  That  is  so. 

Michael  Callahan,  being  duly  sworn,  testified  as  follows: 

By  Mr.  Lexow: 

Q.  Where  do  you  reside?  A.  In  the  city  of  New  York. 

Q.  What  is  your  business?  A.  Raw  sugar  broker. 

Q.  How  long  have  you  been  in  that  business?  A.  Thirty-one 
years;  ever  since  I was  a boy. 

Q.  Do  you  act  as  broker  or  in  any  capacity  for  the  American 
Sugar  Refining  Company?  A.  No,  sir. 

Q.  You  act  as  broker  for  what  sugar  concerns?  A.  Merchants 
and  importers. 

Q.  How  many  customers  were  there  for  raw  sugar  prior  to  the 
organization  of  the  so-called  Sugar  Trust?  A.  That  I could  not 
answer. 

Q.  Were  there  many?  A.  I guess  there  were  quite  a number. 

Q.  Can  you  approximately  state  the  number?  A.  Well,  the 
refineries  in  the  East,  I think — 

Mr.  Lexow:  Will  you  please  speak  a little  louder?  A.  I can- 
not speak  louder  because  I am  troubled  with  laryngitis;  in  Boston 
four,  Philadelphia  two,  five  or  six  in  New  York. 

Q.  Competing  in  the  open  market  on  the  price  of  raw  material? 
A.  Yes,  sir. 

Q.  Since  the  organization  of  the  Sugar  Trust  how  many  are 
there  in  the  market  for  the  purchase  of  raw  material?  A.  Out- 
side of  the  Trust  there  are  four  in  the  North;  I think  there  are 
two  or  three  in  New  Orleans  and  Texas. 

Q.  Who  fixes  the  price  on  raw  material?  A.  It  depends  on  the 
markets;  the  price  of  the  raw  material  is  the  price  ruling  in  Eu- 
ropean markets  for  beet  sugars. 

Q.  Up  to  the  importing  point?  A.  Yes,  sir. 

Q.  Below  the  importing  point?  A.  It  is  governed  by  the  price 
19 


290 


[Senate, 


ruling  in  the  European  markets;  some  of  them  have  a preference 
for  cane  sugar  over  beet  sugar,  but  the  price  in  the  European 
markets  governs  the  price  here. 

Q.  But  the  price  of  the  European  market  does  not  govern  the 
price  of  raw  material  below  the  importing  point?  A.  I do  not 
understand  what  you  mean* 

Q.  If  the  price  of  the  raw  material  here  is  below  the  importing 
point  for  beet  sugar,  then  the  price  in  the  European  market  does 
not  govern  the  price  here?  A.  Not  always;  generally  it  does. 

Q.  Is  it  not  a fact  that  practically  the  only  purchaser  of  raw 
material  is  the  American  Sugar  Refining  Company?  A.  Of 
course  they  purchase  the  largest  majority. 

Q.  They  take  about  SO  per  cent,  of  the  total  product?  A.  I 
don’t  know  as  I understand  you. 

Q.  Does  not  the  fact  that  they  are  consumers  of  80  per  cent,  of 
the  total  raw  product  enable  them  to  fix  the  price  of  the  raw  ma- 
terial here?  A.  Not  always. 

Q.  Does  it  not  substantially  work  that  way?  A.  I don’t  think 
so, 

Q.  What  is  your  best  judgment  on  the  subject?  A.  It  depends 
on  the  quantity  of  sugar  in  stock, 

Q.  Haven’t  the  American  Sugar  Refining  Company  fixed,  dur- 
ing the  last  three  years  at  least,  the  price  of  raw  material  in  this 
country?  A.  They  haven’t  fixed  it. 

Q.  Haven’t  they  controlled  the  market  for  raw  material  by 
buying  the  largest  quantity  of  sugars?  A.  They  cannot  control 
the  market  when  other  buyers  are  willing  to  buy  sugars. 

Q.  Have  they  not  got  such  control  over  the  market  by  reason 
of  the  size  of  their  purchases,  which  are  so  large  that  they  sub- 
stantially control  the  market?  A.  Well,  I don’t  think  that  they 
can  control  it  positively;  they  cannot  positively  control  the  mar- 
ket at  all  times. 

Q.  Not  positively,  I understand  that,  but  don’t  it  operate  that 
way;  that  they  substantially  control  the  product  here  in  this 
country?  A.  No,  sic;  they  do  not. 

Q.  Didn’t  they  control  it  last  winter?  A.  No,  sir;  they  didn’t. 


No.  40.] 


291 


Q.  Didn’t  the  operations  of  the  American  Sugar  Refining 
Company  last  winter  control  the  market  for  sugar  in  this 
country?  A.  No,  sir. 

Q.  And  the  operations  of  importers  and  brokers?  A.  No,  sir. 

Q.  Is  it  true  that  owing  to  the  Cuban  war,  the  supplies  from 
Cuba  having  diminished,  importers  and  brokers  of  importers 
bought  largely  from  other  directions  until  they  had  accumulated 
a very  large  supply  of  raw  material  in  the  market  last  winter? 
A.  Last  year,  not  in  the  winter. 

Q.  Last  spring?  A.  Yes,  sir. 

Q.  In  March,  April  and  May?  A.  Yes,  sir;  speculators  bought 
as  early  as  January  last  year. 

Q.  Now,  having  refreshed  your  recollection  to  that  extent, 
didn’t  the  American  Sugar  Refining  Company  at  that  time  con- 
trol the  sugar  market  in  this  country?  A.  No,  sir;  they  did  not 

control — 

Q.  Didn't  they,  by  refusing  to  purchase  in  the  quantities  that 
they  usually  bought  cause  an  enormous  depression  in  sugar?  A. 
They  are  continuous  buyers  of  sugar. 

Q.  Are  you  sure  about  that?  A.  Yes,  sir. 

Q.  Did  you  buy  for  them?  A.  I sold  to  them. 

Q.  Didn’t  they  cease  buying  in  April  and  May,  after  they  had  a 
large  supply  for  themselves?  A.  Yes,  sir. 

Q.  They  accumulated  150,000  tons  or  more  and  stopped  buy- 
ing immediately  upon  that  accumulation,  whereby  there  was 
absolutely  no  demand  for  sugar?  A.  There  was  a demand  right 
along;  the  price  in  Europe  kept  declining  and  that  is  what 
caused  the  price  to  decline  here;  the  immense  crop  of  beet  sugar 
caused  a decline  in  sugars. 

Q.  Was  it  not  the  result  of  the  stoppage  of  purchase  by  the 
American  Sugar  Refining  Company  during  those  two  months 
that  a large  number  of  dealers  and  brokers  were  seriously 
crippled?  A.  Some  people  were  seriously  crippled,  but  the 
American  Sugar  Refining  Company  was  not  responsible  for  that. 

Q.  Was  it  not  due  to  the  fact  of  the  sudden  stoppage  of  all 


292  [Senate, 

purchasing  by  that  company?  A.  They  evidently  had  a pretty 
large  stock. 

Q.  That  does  not  answer  my  question;  the  stenographer  will 
please  repeat  the  question;  (question  repeated.)  A.  No,  sir,  I 
should  say. 

Q.  Do  you  state  that  as  a positive  fact  of  your  own  knowl- 
edge? A.  Yes,  sir. 

Q.  Was  there  any  demand  for  sugar,  the  raw  material  I am 
speaking  of  now,  in  the  months  of  April  and  May?  A.  Yes,  sir. 

Q.  Of  last  year?  A.  Yes,  sir. 

Q.  To  what  extent?  A.  I couldn’t  tell  you  exactly;  of  course 
there  was  a pretty  good  demand. 

Q.  What  was  the  cause  of  this  demand  and  the  crippling  of  so 
many  importing  houses  and  brokerage  houses  in  sugar?  A.  At 
that  time  they  were  not  crippled. 

Q.  Immediately  following?  A.  No,  sir,  not  until  last  fall,  be- 
cause a great  many  sugars  were  purchased  to  arrive  last  fall, 
and  when  they  arrived  the  price  had  declined,  so  they  naturally 
had  to  sell  out  at  the  market  price  or  store  the  sugars. 

Q.  They  were  compelled,  after  the  cessation  of  the  buying  by 
the  American  Sugar  Refining  Company,  to  sell  to  them  at  the 
price  fixed?  A.  No,  sir;  at  the  market  price  as  governed  by 
the  price  ruling  in  Europe. 

Q.  Did  they  buy  from  you?  A.  Yes,  sir. 

Q.  During  all  this  time?  A.  Yes,  sir. 

Q.  Do  you  sell  them  now?  A.  Yes,  sir. 

Q.  Have  you  been  in  the  habit  of  selling  the  American  Sugar 
Refining  Company?  A.  Yes,  sir;  all  the  time. 


By  Mr.  McCarren : 

Q.  Do  you  represent  any  foreign  sugar  interest?  A.  I repre- 
sent the  importers  here  in  New  York  city;  we  have  about  fifty 
constituents. 

Q.  You  represent  the  importers?  A.  Yes,  sir. 


No.  40.] 


293 


By  Mr.  Warner: 

Q.  Have  you  any  stock  in  the  American  Sugar  Refining  Com- 
pany? A.  No,  sir. 

Q.  You  say  that  you  are  still  selling  them  raw  sugar?  A. 
Over  300,000  tons  of  sugar  last  year. 

By  Mr.  Lexow: 

Q.  You  practically  sell  them  one-quarter  of  the  entire  amount 
they  buy?  A.  They  have  been  increasing  the  last  few  years  very 
materially. 

Connele,  James  S.,  being  duly  sworn,  testified  as  follows: 

By  Mr.  Lexow: 

Q.  What  is  your  full  name?  A.  James  S.  Connele. 

Q.  What  is  your  business?  A.  Sugar  broker. 

Q.  Are  you  a broker  in  sugars?  A.  Yes,  sir. 

Q.  Do  you  supply  the  American  Sugar  Refining  Company,  as 
did  the  last  witness,  with  a large  amount  of  the  raw  material? 
A.  Yes,  sir. 

Q.  To  what  extent?  A.  I don’t  know  in  regard  to  the  quan- 
tity. 

Q.  About?  A.  I should  think  in  the  neighborhood  of  quarter. 

Q.  Quarter  of  the  whole  amount  of  purchases?  A.  Yes,  sir; 
that  is,  in  this  market. 

Q.  Do  you  act  as  broker  for  the  importers  or  as  broker  for  the 
American  Sugar  Refining  Company?  A.  For  the  importers. 

Q.  The  sugars  that  you  sell  are  imported  from  where?  A. 
From  Java,  Phillipine  Islands,  Cuba,  Demerara,  Barbados,  Ja- 
maica, and  Brazil. 

Q.  The  American  Sugar  Refining  Company  is  the  largest  pur- 
chaser of  raw  material,  is  it  not?  A.  Yes,  $ir. 

Q.  Do  you  sell,  practically,  all  the  sugars  that  you  do  sell,  or 
raw  material,  to  the  American  Refining  Company?  A.  Well,  we 
sell  them  the  greater  portion,  but  we  also  sell  to  several  others 


294 


[Senate, 


who  are  independent  of  the  American  Sugar  Refining  Company; 
we  sell  to  B.  H.  Howell,  Son  & Co.,  who  represent  two  refineries, 
one  in  Brooklyn,  called  the  Mollenhauer;  Nash  and  Spalding  & 
Co.,  of  Boston;  and  the  McCahan,  of  Philadelphia. 

Q.  Any  others?  A.  No,  sir. 

Q.  How  does  the  amount  that  yon  sell  to  the  American  Sugar 
Refining  Company  compare  with  the  amount  that  you  sell  to  all 
the  others  collectively?  A.  I cannot  give  you  any  exact  figures. 

Q.  I mean  approximately?  A.  I should  say  five-eighths,  possi- 
bly; from  five-eighths  to  three-quarters. 

Q.  Who  fixes  the  price?  A.  The  merchant  who  buys  his  goods 
to  sell  through  his  broker. 

Q.  Is  not  the  American  Sugar  Refining  Company  able,  by  rea- 
son of  its  large  purchases,  to  practically  fix  the  price?  A.  Well, 
they  have  not  control  of  the  goods. 

Q.  Don’t  they  substantially  fix  the  price?  A.  Not  with  compe- 
tition; we  have  competitors;  they  have  competitors. 

Q.  Do  their  competitors  fix  the  price?  A.  No,  sir;  the  mer- 
chant fixes  the  price  in  all  cases. 

Q.  Purchasing  the  large  amount  that  they  do,  by  refusing  to 
purchase,  and  by  accumulating  stocks,  are  they  not  in  a position, 
and  do  they  not  substantially  fix  the  price  of  the  raw  material? 
A.  I should  not  call  it  fixing  the  price;  I should  say  it  inter- 
fered with  our  getting,  sometimes,  as  big  a price  as  we  could. 

Q.  That  is  the  same  thing,  only  put  in  a different  way?  A. 
I don’t  know. 

Q.  They  can  substantially  compel  you  to  submit  to  the  price 
they  make?  A.  No,  sir;  they  may  give  cheaper  sugars  at  times 
to  the  competitors;  they  may  let  them  get  cheaper  sugars  if  they 
hold  out  of  the  market  entirely;  being  large  consumers,  the  com- 
petitors are  apt  to  get  occasionally  a little  lower  figure,  if  the 
merchant  is  forced  to  sell  or  wants  to  sell. 

Q.  Do  you  know  whether  there  is  any  active  or  actual  compe- 
tition between  those  outside  competitors  that  you  have  named 
and  the  American  Sugar  Refining  Company?  A.  I think  they 
are  independent,  so  far  as  I know. 


No.  40.] 


*295 


Q.  Have  you  ever  known  that  there  was  any  active  competi- 
tion in  the  price  of  raw  material?  A.  I have  been  able  to  get 
one-sixteenth  more  for  sugars,  and  even  on  the  same  day. 

Q.  Has  that  occurred  frequently?  A.  Quite  frequently. 

Q.  You  know  what  I mean,  Mr.  Connele,  and  you  must  be  able 
to  say  whether  or  not  in  your  business  as  sugar  broker  there  are 
conditions  which  disclose  to  you  that  there  is  actual  competition 
between  those  various  companies  and  the  American  Sugar  Re- 
fining Company  on  the  one  hand,  and  those  independent  compan- 
ies on  the  other,  in  the  price  of  raw  material?  A.  I don’t  know 
it;  I don't  know  any  such  thing. 

Q.  Have  you  observed  any  competition?  A.  Well,  I may  say 
several  times  I have  observed  competition;  for  instance,  I have 
found  that  if  I did  not  offer  goods  to  one  refinery,  the  American 
Sugar  Refining  Company  if  you  please,  and  the  other  bought 
them,  that  they  seemed  to  be  very  much  annoyed  if  they  were  not 
shown  to  them;  so  there  was  apparent  opposition. 

By  Mr.  Warner: 

Q.  But  no  real  opposition?  A.  I should  judge  that  there  was; 
it  showed  considerable  feeling  in  the  matter;  they  wanted  to 
know  why  goods  were  not  offered  to  them;  whereas,  we  choose 
to  offer  them  to  somebody  else  outside  of  the  Refining  Company, 
and  we  did  it  because  we  thought  we  could  get  a little  more 
money. 

Q.  Than  other  outside  concerns  were  paid  by  the  American 
Sugar  Refining  Company?  A.  Not  always. 

Q.  Generally  so?  A.  They  started  out  to  buy  at  what  is  called 
the  market  price,  but  their  necessities  required  that  they  should 
buy  cane  sugars,  and  the  market  is  dependent  partly  on  the 
necessities  of  the  refiner. 

Q.  Does  not  the  American  Sugar  Refining  Company  control 
the  market?  A.  They  do  to  a certain  extent,  but  not  altogether. 

Q.  Almost  entirely?  A.  No,  sir;  the  merchant  controls  his 
own  sugars. 


296 


[Senate, 


By  Mr.  Lexow: 

Q.  What  did  you  mean  when  you  said  that  the  American'  Sugar 
Refining  Company  allowed  those  others  to  purchase  sugars  at 
lower  prices;  they  were  merely  supplied  and  were  not  in  the  mar- 
ket to  buy?  A.  If  they  were  not  buying  and  had  purchased  large- 
ly from  buyers  of  raw  material  at  the  time,  they  thought  that 
the  market  might  go  up;  we  are  not  infallible,  although  I have 
had  an  experience  of  forty-six  years  in  the  business. 

Q.  How  does  the  tariff  work  in  reference  to  this?  A.  I don’t 
know;  for  a time  we  had  no  tariff  on  sugars  and  for  several  years 
the  markets  declined  in  consequence  and  affected  refined  sugar; 
we  had  no  tariff  for  a while  and  the  market  was  lower  for  raw 
sugar. 

By  Mr.  Mazet: 

Q.  What  percentage  of  the  raw  sugar  used  in  this  counrry  is 
imported?  A.  Do  you  mean  outside  of  what  is  raised  in  this 
country?  We  had  a bounty  on  sugars  raised  in  this  country  of 
two  cents  per  pound. 

Q.  What  proportion  of  the  raw  sugar  consumed  in  this  coun- 
try is  imported?  A.  I should  say  about  seven-eights. 

Q.  From  other  countries?  A.  Yes,  sir. 

By  Mr.  Warner: 

Q.  The  raw  material?  A.  Yes,  sir. 

Q.  What  is  the  percentage  imported  now?  A.  I should  say 
that  there  was  fully  that  now;  there  is  a little  increase  in  the 
crop  of  New  Orleans;  that  is  about  all;  that  does  not  amount  to 
much. 

Q.  The  manufacturers  have  to  get  imported  raw  sugar  to  make 
sugar?  A.  Yes;  they  depend  on  that. 

By  Mr.  Lexow: 

Q.  If  a consumer  using  80  per  cent,  declines  to  buy,  that  neces- 
sarily affects  the  price  one  way  or  the  other?  A.  It  has  an  affect 
on  the  lack  of  competition. 


No.  40.] 


297 


Q.  And  the  man  who  is  using  80  per  cent,  of  the  sugar  fixes 
the  price?  A.  To  that  extent,  yes. 

Q.  And  the  extent  to  which  they  buy  or  refrain  from  buying 
affects  the  cost  of  sugar?  A.  That  would  be  natural. 

Q.  In  that  way  this  company  can  fix  the  price  of  sugar?  A. 
I would  hardly  put  it  that  way,  because  the  merchant  can  hold 
his  goods;  we  are  now  holding  goods  that  we  got  last  spring  and 
we  expect  to  sell  them  next  fall;  we  think  we  will  get  more  for 
them.. 

By  Mr.  Mazet: 

Q.  Don’t  they  deteriorate?  A.  Some  grades  do. 

Q.  And  there  is  the  cost  of  storage  and  insurance?  A.  They 
increase  their  cost;  yes,  sir. 

Q.  It  is  to  your  interest  to  sell  as  quickly  as  possible?  A.  Mer- 
chants are  now  holding  their  sugar;  one  cargo  has  been  held  two 
years  now,  expecting  to  get  a better  price  later  on. 

By  Mr.  Lexow: 

Q.  You  have  not  answered  the  question  yet  as  to  what  the  ef- 
fect of  the  tariff  upon  the  sugar  industry  is — I am  speaking  now 
especially  with  reference  to  refineries;  how  does  it  affect  the  con- 
sumer? A.  In  taking  off  the  price. 

Q.  With  the  duty  on,  or  with  no  duty,  or  with  a small  duty? 
A.  Just  as  it  happens;  sometimes  the  consumer  gets  maybe 
three-quarters  if  the  duty  is  taken  off;  if  the  duty  is  put  on  he 
probably  doesn’t  have  to  pay  much  over  half  the  advance  in  the 
duty;  it  is  distributed  between  the  grower  of  the  sugar  and  the 
refiner  probably  wouldn’t  make  quite  as  much;  the  merchant 
must  also  put  up  with  a little  less,  and  in  that  way  the  consumer 
gets  the  benefit,  but  not  to  the  whole  amount,  nor  does  he  have  to 
pay  a further  amount — the  full  amount — of  the  duty  put  on;  that 
is  my  experience^ 

Q.  Is  it  not  a fact  that  the  American  Sugar  Befining  Company 
buys  now  largely abroaditself  without  operating  through  brokers? 
A.  Yes,  sir;  they  purchase  very  largely  of  beet  sugars;  they  pre- 


298 


[Senate, 


fer  to  buy  cane  sugars;  they  miss  the  Cuban  market  very  much, 
as  it  compels  them  to  get  sugar  elsewhere;  the  crop  there  has 
been  cut  down  nearly  a million  tons  and  they  feel  the  effects  of 
that  very  much,  and  they  are  thus  forced  to  buy  beet  sugars 
abroad,  and  they  buy  very  largely  in  consequence. 

Q.  Did  you  hear  the  questions  that  I put  to  the  gentleman  that 
preceded  you  on  the  stand?  A.  I think  I heard  some  of  them. 

Q.  In  reference  to  the  proceedings  of  April  and  May  of  last 
year?  A.  I think  I did., 

Q.  Is  it  not  a fact  that  the  American  Sugar  Refining  Company 
absolutely  controls  the  price  of  sugar  in  this  country?  A.  No, 
sir;  I do  not  think  that  they  control  it;  there  were  other  buyers 
that  bought.; 

Q.  Didn’t  they  buy  very  freely  just  prior  to  that  time  and  then 
cease  being  buyers  in  the  market?  A.  No,  sir;  they  never  ceased 
buying, 

Q.  They  bought  from  you,  I understand?  A.  Yes,  sir. 

Q.  And  from  the  witness  who  preceded  you?  A.  Yes,  sir. 

Q.  I am  speaking  of  general  buyers;  didn’t  they  stop  buying  of 
general  buyers  in  the  market  with  the  result  that  a large  number 
of  brokers  and  importers  were  crippled?  A.  I don’t  think  that 
was  the  cause;  I can  give  you  the  reason;  we  were  deceived  in 
regard  to  the  statistical  condition  of  the  beet  market  to  the  ex- 
tent of  six  or  eight  hundred  thousand  tons,  which  was  a pretty 
considerable  quantity,  and  we  were  humbugged;  and  when  the 
people  began  to  realize  what  there  was  of  beet  sugars  held  over 
they  were  pushing  those  on  the  market,  and  that  put  the  market 
down;  the  refiners  had  imported  sugars  as  well  as  other  importers 
and  they  lost  money  as  well  as  the  regular  importers;  and  as  the 
sugars  came  along  they  bought  only  as  they  required  instead  of 
anticipating  their  wants;  they  were  buyers  to  a certain  extent  all 
the  time,  but  not  heavy  buyers  during  these  months  that  you 
speak  of. 

Q.  You  do  not  dispute  the  general  proposition  that  buying  or 
non-buying  by  the  American  Sugar  Refining  Company  practically 
controls  the  price  of  the  product  here?  A.  I think  that  is  a 


No.  40.] 


299 


pretty  strong  position ; it  has  its  effect  on  the  sugar  market  for  the 
time  being  if  they  do  not  buy. 

Q.  Isn't  that  effect  so  far  reaching  that  it  means  the  practical 
controlling  of  the  price  within  reasonable  limits?  A.  It  is  with- 
in 80  per  cent,  of  their  purchases;  if  they  didn’t  buy  it  would;  but 
they  are  buying  to  a certain  extent  all  the  time. 

Q.  The  use  of  the  power  that  proceeds  from  the  ability  to  buy 
§0  per  cent,  of  the  total  output,  one  way  or  the  other,  is  the 
factor  in  the  market  that  controls  the  price  within  certain 
limits?  A.  It  does  within  limits  as  long  as  they  do  not  pur- 
chase; but  the  importer  has  the  same  privilege  of  holding  sugar 
that  he  does. 

Q.  I understand  that  as  a business  proposition. 

By  Mr.  Warner: 

Q.  What  effect  would  it  have  upon  you  if  the  American  Sugar 
Befining  Company  should  refuse  to  take  any  more  sugar  from 
you?  A.  It  would  interfere  very  largely  with  my  business;  in 
fact  there  would  be  no  business;  we  sell  our  sugar  to  refineries 
only  in  Philadelphia,  Boston  and  New  York. 

Q.  It  would  drive  you  out  of  the  business;  I mean  from  that 
one?  A.  If  they  refused  to  buy  sugars  through  me  individually 
they  probably  would  not  refuse  to  buy  from  other  merchants;  if 
they  refused  to  buy  from  me  individually  it  would  affect  me. 

Q.  Very  largely?  A.  So  much  so  that  I wouldn’t  be  in  busi- 
ness. 

By  Mr.  McCarren: 

Q.  In  your  experience  as  a sugar  broker  during  the  past  year 
do  you  know  of  any  instance  where  buyers  other  than  the  Ameri- 
can Sugar  Befining  Company  paid  a larger  price  for  raw  sugar 
obtained  than  that  company?  A.  They  did  largely;  there  was  a 
great  deal  of  sugar  sold  on  speculation  during  1896;  there  was 
profit  made  at  times;  very  considerable  profits;  and  there  has 
been  very  large  losses  made  since  by  some  people. 

Q.  I asked  you  that  question  to  bring  out  the  fact  as  to 


300 


[Senate, 


whether  there  was  any  competition  or  not?  A.  Lots  of  competi- 
tion in  speculators  purchasing  sugar  abroad;  very  largely  so; 
they  bought  more  last  year,  I think,  than  they  ever  bought  in  one 
year  before. 

By  Mr.  Lexow: 

Q.  That  is  for  the  speculators  to  hold?  A.  Regular  importers 
bought  for  the  future  expecting  that  crops  would  be  smaller  than 
they  were  on  the  other  side,  and  because  of  the  Cuban  crop  being 
out  of  the  market  on  account  of  the  disturbance  down  there,  they 
went  in  and  bought  sugars. 

By  Mr.  Mazet: 

Q.  The  refiners?  A.  The  refiners  bought  also;  and  the  re- 
finers lost  money  as  the  price  declined;  but  probably  not  to  the 
same  extent,  because  they  were  constantly  using  up  their  sugars; 
but  a man  putting  his  goods  into  store  would  lose  a much  larger 
amount  of  money. 

By  Mr.  Lexow: 

Q.  Was  the  decline  that  you  speak  of  mainly  due  to  the  fact 
that  this  great  consumer  of  raw  material  stopped  buying  in  the 
market  after  accumulating  a large  stock,  so  large  that  the  others 
had  to  sell  at  the  price  fixed  by  that  large  consumer?  A.  There 
was  a great  deal  of  sugar  held — 

Q.  You  can  give  a categorical  answer  to  that  question,  can  you 
not?  A.  That  was  not  the  fact. 

Q.  That  the  fall  in  price  was  largely  due,  not  entirely,  but 
largely  due  to  the  cessation  of  purchases  after  that  product  was 
secured  by  this  one  large  consumer,  which  company  was  able  to 
buy  in  that  product  at  its  own  price;  was  not  that  substantially 
the  situation?  A.  It  had  its  effect;  I think  it  virtually  had  its 
effect;  when  a man  does  buy  80  per  cent,  that  has  its  effect. 

Q.  Isn’t  the  situation  such  that  owing  to  the  fact  that  this 


No.  40.] 


301 


STATE  LIBRAE  x . 

one  consumer  takes  80  per  cent,  of  the  product  it  is  in  a 
position  at  any  minute,  within  limits,  to  produce  that  same 
situation?  A.  Well,  of  course. 

Q.  That  is  a fact,  is  it  not?  A.  But  as  soon  as  they  withdraw 
from  the  market  the  merchant  has  the  same  privilege  and  he 
acts  upon  it  and  says,  “ we  will  wait  ” and  they  buy  when  their 
interests  require. 

Q.  That  indicates  stronger  than  I put  it,  that  they  control  the 
situation;  that  the  brokers  and  the  importers  all  follow  them? 
A.  To  a certain  extent. 

Q.  That  if  they  are  not  buyers  in  the  market  and  accumulate 
a stock  there  are  no  buyers?  A.  No,  sir;  we  sell  all  the  time. 

Q.  I am  speaking  in  quantities?  A.  That  they  withdraw  en- 
tirely; they  do  not  do  that  at  any  time — 

Q.  You  mean  that  you  have  outside  of  this  one  customer 
20  per  cent,  in  the  whole  United  States  of  America?  A.  That  is 
about  it.  , 

Q.  So  that  by  reason  of  their  control  of  80  per  cent.,  do 
you  mean  that  they  are  not  in  a position  at  any  time  to  give  rise 
to  or  to  create  a situation  such  as  was  devoloped  in  April  or  May 
of  last  year?  A.  Well,  to  a certain  extent. 

Q.  That  is  a fact?  A.  It  is  to  a certain  extent;  if  they  with- 
draw entirely;  we  have  had  them  hold  off  when  they  had  large 
stocks  of  their  own. 

Q.  You  can  speculate  against  the  future  demand  of  the  Ameri- 
can Sugar  Refining  Company,  but  they  have  got  you  in  thetr 
power  nevertheless  whether  they  will  buy  or  not;  and  being  in 
control  of  80  per  cent,  of  the  product  they  have  the  broker  and 
the  jobber  and  the  importer  absolutely  in  their  power  by  with- 
drawing their  demand,  if  they  please?  A.  For  the  time  being, 
yes. 

Q.  Practically  for  all  times?  A.  No,  sir;  no;  soon  as  they  are 
required  to  buy;  it  is  a question  as  to  how  long  they  can  hold  out; 
they  are  doing  this  year  considerable  importing;  they  are  carry- 
ing a large  stock;  if  they  ceased  to  buy  from  me  individually  It 
would  drive  me  out  of  business. 


302 


[Senate. 


By  Mr.  Barry: 

Q.  You  said  that  you  would  have  to  go  out  of  business  if  they 
ceased  to  buy  from  you?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  That  is  true  with  reference  to  you  as  it  is  substantially  with 
reference  to  every  large  broker  in  the  sugar  business,  is  it  not? 
A.  There  would  probably  be  others  that  would  please  them  bet- 
ter than  we  would. 

Q.  You  are  getting  away  from  the  question;  theposition  you  hold 
is  such  that  if  they  cease  to  buy  from  you  it  substantially  closes 
your  market;  that  same  thing  is  true  with  reference  to  every 
large  broker,  is  it  not?  A.  You  mean  it  closes  my  business? 

Q.  Yes,  sir?  A.  If  they  cease  to  buy  it  will  close;  I do  not  sell 
to  anybody  except  refiners. 

Beardsley,  E.  S.,  being  duly  sworn,  testified  as  follows: 

By  Mr.  Lexow: 

Q.  Are  you  a broker  for  the  American  Sugar  Refining  Com- 
pany? A.  I am  selling  them  sugar;  I am  an  importers’  broker. 

Q.  Have  you  know  any  competition  to  exist  in  the  demand  for 
raw  material;  I mean  raw  sugars?  A.  Yes,  sir. 

Q.  Between  what  concerns?  A.  Between  the  Yonkers,  The 
Mollenliauer  Sugar  Refining  Company,  the  American  of  Phila- 
delphia, and  the  Spaulding  & Nash,  of  Boston. 

Q.  Those  are  all?  A.  Yes,  sir. 

Q.  Since  1891,  you  mean?  A.  Yes,  sir. 

Q.  Those  are  all  the  companies  outside  of  the  so-called  Sugar 
Trust,  the  American  Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  The  statement  was  made  a month  ago,  and  I think  erro- 
neously, that  80  per  cent,  of  the  demand  came  from  the  Ameri- 
can Sugar  Refining  Company;  it  is  more  than  80  per  cent,  when 
you  exclude  the  Western  Refineries  Company  of  California,  is  it 
not?  A.  I do  not  think  it  is;  no,  sir;  I think  it  is  considered  to  be 
80  per  cent- 


No.  40.] 


■303 


OTi'k  ^dvdllM 
StaM o 


Q.  The  testimony  here  is  to  the  effect  that  the  American  Sugar 
Refining  Company  does  the  business  to  the  extent  of  80  per  cent, 
of  the  whole  country;  that  includes  Louisiana  and  the  Western 
Refineries  Company,  excluding  Louisiana  and  the  Western  Re- 
fineries Company,  the  demand  for  raw  material  by  the  American 
Sugar  Refining  Company  must  be  in  excess  of  80  per  cent.,  so  far 
as  you  are  concerned? 

Witness:  Do  you  mean  this  part? 

Mr.  Lexow:  Yes,  sir. 

A.  I do  not  know  as  I am  familiar  enough  with  the  statistics; 
I have  generally  understood  80  per  cent.  here. 

Q.  What  portion  of  the  business  that  you  do  do  you  do  in  con- 
nection with  that  company?  A.  Probably  one-eighth. 

Q.  One-eighth  of  the  business?  A.  Seven-eighths  with  others. 

Witness:  Do  you  mean  the  American? 

Mr.  Lexow:  Yes,  sir. 

A.  Probably  three-fourths. 

Q.  Have  you  noticed  any  competition  in  the  price  of  sugar  be- 
tween these  various  companies?  I am  speaking  of  active  com- 
petition, bidding  against  each  other,  such  as  takes  place  among 
other  products?  A.  Yes,  sir. 

Q.  When?  A.  Day  before  yesterday;  day  before  that. 

Q.  In  the  price  of  raw  material?  A.  Yes,  sir. 

Q.  What  companies?  A.  B.  H.  Howell,  Son  & Co.,  and  the 
American;  we  will  say  within  the  last  ten  days. 

Q.  How  often  has  this  competition  been  experienced  by  you? 
A.  I could  state — off  and  on,  frequently. 

Q.  Is  it  not  a fact  that  the  American  Sugar  Refining  Company 
fixes  the  price  within  limits?  A.  No,  sir;  the  price  is  governed 
by  Europe. 

Q.  Is  not  the  demand  of  the  American  Sugar  Refining  Com- 
pany practically  that  which  fixes  the  price  within  the  limits  of 
European  competition?  A.  No;  they  do  not  fix  the  price;  it  is 
Europe  that  fixes  the  price,  and  they  do  not  fix  the  price  by 
withholding  their  orders,  or  by  purchasing,  as  the  case  may  be; 
they  do  not  fix  the  price;  of  course,  that  has  its  influence. 


304 


[Senate, 


Q.  I understand  that;  but  I want  you  to  put  a reasonable  inter- 
pretation upon  my  question;  is  not  their  demand  practically  what 
fixes  the  price?  A.  No,  sir. 

Q.  To  what  extent  does  it  influence?  A.  It  might  shade  the 
market  a trifle;  32d  or  16th;  it  does  not  fix  the  price;  it  depends 
on  the  price  of  beet  sugar. 

By  Senator  Cantor : 

Q.  Explain  that?  A.  The  price  of  beet  sugar  on  a higher  par- 
ity than  cane  makes  a strong  market;  if  beets  are  low,  the  prices 
here  are  susceptible  to  that;  if  the  stocks  are  large  here  and  the 
prices  of  beets  in  the  European  markets  are  low,  the  cane  is  low. 

By  Mr.  Lexow: 

Q.  You  do  not  understand  the  question;  I am  speaking  of  the 
price  as  between  these  diffei’ent  companies  that  are  outside  of  the 
Trust  and  the  Trust  itself;  doesn’t  the  demand  of  the  Trust, 
either  by  withholding  it,  or  making  it,  fix  to  some  extent  the  fig- 
ures that  are  placed  upon  the  product  for  the  other  companies 
that  are  not  in  the  Trust?  A.  No,  sir. 

Q.  Is  there  free  open  competition  in  raw  material?  A.  Yes, 
sir;  within  the  last  ten  days  the  Trust  has  bid  within  a thirty- 
second  less  than  I finally  sold  goods  to  their  competitors. 

Q.  Was  this  the  circumstance  that  you  mentioned  a moment 
ago?  A.  One  of  them. 

Q.  How  frequently  have  you  known  that  to  occur  in  your  ex- 
perience since  1887?  A.  I couldn’t  tell  you;  frequently. 

Q.  Is  there  ever  such  a thing  as  an  auction  sale  in  the  raw 
sugar  line?  A.  No,  sir. 

Q.  No  competitive  bids  in  that  way?  A.  No,  sir. 

Q.  Isn’t  the  reason  for  that  very  fact,  Mr.  Beardsley,  that  you 
have  never  had  an  auction  sale  because  of  the  fact  that  you  have 
really  only  one  customer,  and  that  that  customer  can  fix  the 
price  and  does  fix  it?  A.  I do  not  understand  what  you  mean; 
no,  sir;  I don’t  think  the  importers  want  to  sell  their  goods  at 
auction. 


No.  40.] 


305 


Q.  Do  you  know  of  any  other  branch  of  business  not  controlled 
by  one  concern,  in  which  there  are  no  auction  sales  of  raw  mate- 
rials; is  there  any  other  business  that  you  know  of  in  this  coun- 
try, not  controlled  by  a combination,  in  which  there  are  not  auc- 
tion sales,  or  public  auctions  of  raw  materials?  A.  To  my  per- 
sonal knowledge,  no,  sir;  I do  not  know  of  any  that  are  or  that 
are  not  that  I can  think  of  at  the  present  moment. 

Q.  You  don’t  know  of  any  auction  sales  in  this  city  of  raw  ma- 
terials in  other  directions?  A.  No,  sir;  not  at  the  moment. 

By  Mr.  McCarren: 

Q.  Do  you  know  about  auction  sales  of  fruits  from  the  Medi- 
terranean? A.  I don’t  know  positively. 

By  Mr.  Lexow: 

Q.  Dry  goods?  A.  I don’t  know;  I think  there  are,  but  I don’t 
know  it. 

Q.  You  do  know  that  there  are  no  auction  sales  of  sugar?  A. 
Yes,  sir. 

By  Mr.  Warner : 

Q.  Do  you  know  of  any  case  where  the  American  Sugar  Refin- 
ing Company  has  paid  more  for  raw  sugar  than  competing  com- 
panies since  18S7?  A.  I cannot  recall;  I think  I do,  but  I am 
not  sure;  I think  it  is  very  likely;  it  seems  so. 

Q.  It  has  paid  to  other  companies?  A.  I would  not  say  that; 
we  sell  it  to  others;  to  the  firm  that  will  pay  the  most. 

Q.  Y"ou  don’t  know  that  is  the  case?  A.  I say  it  is  not  the 
case. 

By  Mr.  Lexow: 

Q.  When  was  the  last  time  before  the  one  that  you  have  men- 
tioned when  you  knew  of  active  competition  between  other  com- 
panies and  the  American  Sugar  Refining  Company  as  to  the 
price  of  sugar,  the  raw  material?  A.  I couldn’t  state  exactly 
the  time;  probably  within  thirty  days,  roughly  speaking. 

20 


806' 


[Senate. 


Q.  How  frequently  lias  that  occurred  in  your  experience  since 
1887?  A.  I couldn’t  say. 

Q.  Can  you  state  any  other  instance  that  you  remember?  A. 
I think  that  there  have  been  plenty  of  other  instances;  but  how 
often  I do  not  know;  I do  not  know  how  many. 

By  Mr.  McCarren: 

Q.  I understand  you  to  say  that  the  reason  why  raw  sugar  is 
not  sold  at  public  auction  is  simply  because  the  foreign  owners 
of  the  raw  material  do  not  desire  to  have  it  sold  that  way?  Is 
that  your  opinion?  A.  Yes,  sir;  we  tried  a sugar  exchange  here 
but  we  could  not  bring  the  sugar  refining  companies  together; 
there  was  such  an  exchange  but  we  could  not  make  it  work. 

Q.  Is  sugar  generally  considered  a perishable  article?  A.  If 
it  is  poor  sugar  it  will  run  away. 

Q.  Will  it  spoil?  A.  No,  sir. 

Q.  It  can  be  held  for  an  indefinite  time  in  a state  of  preserva- 
tion and  still  remain  sugar?  A.  No  answer. 

By  Mr.  Lexow: 

Q.  Does  it  deteriorate?  A.  Yes,  sir;  I mean  to  say  that  some 
grades  of  raw  material  deteriorate;  there  are  a great  many 
grades. 

Q.  The  grade  in  common  use  does  that  deteriorate?  A.  There 
are  two  grades  in  common  use. 

Q.  I mean  that  which  is  most  generally  used;  do  you  speak 
of  a particular  grade  from  a particular  country?  A.  There  are 
different  grades  from  different  countries;  a low  grade  sugar 
would  lose  in  weight  if  it  was  a low  test  sugar;  the  centrifugal 
sugar  would  not. 

Q.  That  is  a standard  sugar?  A.  Yes,  that  of  the  hard  sugars 
is  the  standard. 

Q.  That  is  the  sugar  generally  used,  the  sugar  that  you  gener- 
ally sell?  A.  No,  sir;  we  sell  all  grades,  molasses  and  centrifu- 
gal and  all  the  raw  sugars;  sugars  from  different  countries  and 
the  different  kinds. 


No.  40.] 


307 


By  Mr.  Warner: 

Q.  What  proportion  of  the  raw  sugar  sold  by  you  do  you  sell 
to  the  American  Sugar  Refining  Company?  A.  Three-quarters, 
roughly  speaking. 

Q.  What  effect  would  it  have  upon  your  business  if  that  com- 
pany should  refuse  to  buy  from  you?  A.  I don’t  know;  I think 
we  could  find  an  outlet  with  competitors. 

Q.  It  would  injure  you  very  greatly?  A.  Yes,  I think  it  would; 
it  has  never  occurred. 

Q.  You  don’t  think  it  would  drive  you  out  of  business?  A. 
No,  sir. 

By  Mr.  Mazet: 

Q.  Why  is  it  that  there  is  no  more  raw  sugar  raised  in.  this 
country  in  proportion  to  the  amount  sold?  A.  That  I can  not 
answer;  I do  not  know. 

Q.  Can’t  we  compete  with  the  imported  raw  sugars?  A.  We 
can  not;  we  haven’t  the  soil. 

Q.  Seven-eighths  of  the  raw  material  is  imported?  A.  All 
those  figures  I answer  to  are  very  rough. 

Q.  Approximately?  A.  Yes,  sir. 

By  Mr.  McCarren: 

Q.  Do  you  consider  this  procedure  of  buying  sugars  by  the 
American  Sugar  Refining  Company  and  other  domestic  refiner- 
ies from  foreign  owners  a test  between  the  American  and  for- 
eigners as  to  who  shall  get  the  better  price?  A.  I do  not  quite 
understand  you. 

Q.  You  understand  this  practice  of  buying  sugars  by  the 
American  companies  from  foreigners  to  be  a test  between  the 
American  and  the  foreigners  as  to  which  shall  get  the  better 
price?  A.  Do  you  speak  of  the  beet  sugars? 

Q.  All  imported  sugars  that  come  into  this  country.  In  other 
words,  is  it  not  sharp  competition  between  the  foreign  owners 
and  domestic  manufacturers  as  to  who  shall  get  the  better  price 


308 


[Senate, 


‘for  tlie  raw  material?  A.  I do  not  comprehend  what  your  reply 
must  be.  Do  you  mean  foreign  sugars  here  in  New  York? 

Q.  It  is  a sharp  business  competition  between  the  buyer  and 
the  seller?  A.  Yes,  it  certainly  is. 


By  Mr.  Warner: 


Q.  Is  it  not  a fact  that  the  American  Sugar  Refining  Company 
get  a better  price  from  you  on  sugars  than  the  other  companies? 
A.  No,  sir;  on  the  contrary,  if  they  do  not  pay  as  much  for  the 
sugar  they  do  not  get  it. 


By  Mr.  McCarren: 

Q.  That  makes  it  a business  competition?  A.  Why,  certainly, 
as  I told  you;  B.  H.  Howell,  Son  & Co.  paid  a thirty-second  more 
than  the  American  Sugar  Refining  Company,  and  I sold  to  B.  H. 
Howell,  Son  & Co. 

By  Mr.  Warner: 

Q.  You  said  you  couldn’t  remember  of  any  case  where  they  had 
given  you  more?  A.  To  the  best  of  my  knowledge  and  belief  I 
will  say  that  it  has  occurred  often. 

Q.  More  often  the  other  way?  A.  I would  not  say  that. 


By  Mr.  Lexow: 

Q.  The  two  witnesses  who  have  preceded  you  said  that  if  the 
American  Sugar  Refining  Company  withdrew  its  trade  they 
would  have  to  close  up  business;  does  your  business  so  differen- 
tiate from  their  business  that  you  can  be  so  independent  and  not 
sell  them  if  you  don’t  want  to?  A.  I think  it  would  depend  con- 
siderably on  the  magnitude  of  their  business;  my  business  is  not 
so  large  that  that  competition  could  consume  it. 

Q.  I understand  you  to  say  that  75-100  of  your  business  is  done 
with  that  company?  A.  I could  take  that  75  per  cent,  and  place 
it  with  competitors  very  easily. 


No.  40.] 


309 


Q.  That  is  to  say  that  you  could  as  an  individual;  but  suppose 
all  the  brokers  attempted  to  do  the  same  thing?  A.  It  would  be 
different. 

Q.  So  that  practically  you  are  in  the  same  shape  that  the  other 
two  witnesses  were,  that  the  American  Sugar  Refining  Company, 
by  reason  of  its  large  demands,  controls  the  business  even  in  the 
hands  of  the  importers?  A.  No,  sir;  they  do  not. 

Q.  You  wouldn’t  go  out  of  business  if  they  ceased  buying? 
A.  No,  sir;  I would  not. 

Mr.  Lexow:  Owing  to  the  absence  of  Mr.  Searles,  who  ex- 
pected to  be  examined  this  morning,  and  rather  than  depart  from 
the  present  line  of  investigation  and  take  up  another  line  before 
concluding  with  the  American  Sugar  Refining  Company,  we  have 
concluded  to  take  an  adjournment  at  this  time  until  Monday 
morning,  February  15,  at  10  o’clock. 


FIFTH  PUBLIC  HEARING.  COMMON  COUNCIL  CHAM- 
BER, NEW  YORK  CITY,  FEB.  15,  1897,  10:30  A.  M. 

Chairman  Lexow : A quorum  being  present  the  committee  will 
please  come  to  order. 

Chairman  Lexow:  Mr.  Post  will  please  take  the  stand. 

Post,  James  H.,  being  duly  sworn,  testified  as  follows: 
Examined  by  Mr.  Lexow: 

Q.  You  answer  the  oath  administered  by  saying  “to  the  best 
of  your  own  knowledge  and  belief.”  There  is  no  use  of  making 
any  reservation.  You  solemnly  swear  that  the  evidence  you  shall 
give  will  be  true?  A.  Yes,  sir. 

Q.  In  what  business  are  you  engaged?  A.  Commission  mer- 
chant in  sugar,  molasses,  etc. 

Q.  Where?  A.  No.  109  Water  street,  New  York  city. 

Q.  How  long  have  you  been  engaged  in  that  business?  A.  I 
have  been  with  the  firm  for  twenty-three  years. 


310  [Senate, 

Q.  General  commission  merchants?  A.  Principally  sugar  and 
molasses. 

Q.  Is  it  not  exclusively  sugar  and  molasses?  A.  No,  sir;  some 
coffee  and  tea  at  times;  sometimes  we  do  a banking  business;  we 
loan  money  on  articles  of  merchandise. 

Q.  You  are  a representative  of  B.  H.  Howell,  Son  & Co.,  and 
the  Mollenhauer  Co.,  are  you  not?  A.  No,  sir. 

Q.  Don’t  you  do  their  business?  A.  I don’t  know  of  D.  H. 
Howell,  Son  & Co.;  I am  a partner  in  the  firm  of  B.  H.  Howell, 
Son  & Co. 

Q.  The  same  concern?  A.  Not  the  same  as  D.  B.  Howell  & 
Co. 

Q.  You  are  a representative  of  that  firm?  A.  Commercially, 
yes,  sir;  I am  a partner  in  H.  B.  Howell,  Son  & Co. 

Q.  You  deal  in  the  Mollenhauer  concern’s  sugars,  do  you  not? 
A.  We  sell  their  sugars. 

Q.  Do  you  buy  and  sell  for  them?  A.  Buy  their  raw  material 
and  sell  their  refined. 

Q.  Do  the  same  with  reference  to  Howell,  Son  & Co.?  A.  The 
National  Sugar  Refining  Company;  I guess  that  is  what  you  refer 
to. 

Q.  Then  you  are  representing  as  one  person  both  these  eastern 
concerns  that  are  stated  to  be  competing  against  the  American 
Sugar  Refining  Company?  A.  Commercially  we  represent  these 
concerns. 

Q.  Do  these  two  firms  compete  against  each  other  in  your  of- 
fice in  the  sale  and  purchase  of  sugar?  A.  They  do  at  times. 

Q.  Then  you  represent  yourself,  as  agent,  one  of  those  concerns 
against  the  other?  A.  Some  times  one  wants  to  buy  and  the 
other  doesn’t. 

Q.  There  are  stocks  of  those  concerns  on  hand  at  all  times?  A. 
We  must  carry  a large  stock. 

Q.  How  much  do  you  carry;  what  is  the  average?  A.  Fifteen 
thousand  tons  of  sugar  in  various  parts  of  the  world;  of  course  it 
is  not  all  here. 

Q.  Do  you  carry  this  as  agent  or  broker  for  the  Mollenhauer 


No.  40.] 


311 


Sugar  Refining  Company  or  for  the  National  concern,  or  for  both? 

A.  We  carry  them  as  owners  of  the  sugar. 

Q.  As  yourself  owner?  A.  Yes,  sir. 

Q.  And  sell  them  to  those  concerns  that  are  competing  with 

B.  H.  Howell,  Son  & Co.?  A.  Yes,  sir. 

Q.  Are  you  interested  in  either  of  those  sugar  refining  compan- 
ies? A.  Yes,  sir. 

Q.  In  both?  A.  No,  sir;  we  might  be  interested  in  this  way; 
that  we  deal  in  sugars  for  them;  we  have  stock  in  the  National 
Sugar  Refining  Company;  I have  personally. 

Q.  Have  you  any  financial  interest  in  the  other?  A.  Except- 
ing in  raw  sugars. 

Q.  Have  you  general  authority  from  both  of  these  concerns  to 
deal  in  sugar?  A.  We  sell  to  them  from  day  to  day  and  hour  to 

hour. 

Q.  Your  relations  are  the  closest  and  most  intimate?  A.  Yes, 

sir. 

Q.  Does  anybody  outside  of  yourself  represent  them?  A. 
There  are  other  partners  in  the  firm. 

Q.  Outside  of  your  concern  is  there  any  other  general  repre- 
sentative of  those  two  concerns  in  the  city  of  New  York  or  in 
the  State  of  New  York?  A.  No,  sir;  except  as  brokers  sell  their 
sugars  from  the  mill. 

Q.  When  they  do  it  is  through  you?  A.  Yes,  sir. 

Q.  So  that  their  business  practically  goes  through  your  com- 
pany? A.  Yes,  sir. 

Q.  Have  you  ever  known  anybody  representing  the  National 
Sugar  Refining  Company  or  the  Mollenhauer  Refining  Company 
attempting  to  compete  with  you  in  the  sale  of  their  sugars?  A. 
No,  sir;  we  have  a contract  with  them  to  handle  their  product. 

Q.  With  both  concerns?  A.  They  necessarily  do  it  through 
our  office. 

Q.  Upon  the  same  terms?  A.  Sometimes  it  varies;  sometimes 
we  sell  one  house  and  then  the  other. 

Q.  How  frequently  have  you  varied  prices?  A.  From  day  to 
day;  at  times  it  varies  on  certain  grades;  we  have  from  25  to  30 
different  grades  of  sugar. 


312  [Senate, 

Q.  I am  speaking  of  that  in  general  use;  granulated,  say?  A. 
It  varies  from  time  to  time. 

Q.  Do  you  mean  to  say  that  you  compete  against  yourself  in 
the  sale  of  this  sugar?  A.  Sometimes  one  wants  to  buy  one 
brand  and  sometimes  another;  sometimes  we  cannot  sell  to  one, 
but  we  can  sell  to  the  other._ 

Q.  Does  your  contract  include  an  obligation  on  your  part  to 
keep  the  price  of  material  of  the  same  character  of  both  these 
concerns  at  the  same  figure?  A.  Not  at  all;  no,  sir. 

Q.  Then  you  mean  to  say  that  you  have  the  product  of  these 
two  concerns  competing  in  your  own  office  at  different  times? 
A.  Yes,  sir;  it  may  seem  strange,  but  it  is  a fact;  it  is  easy  to 
demonstrate. 

I 

Q.  With  other  words,  if  you  have  two  stocks  on  hand,  one  for 
the  Mollenhauer  Sugar  Refining  Company  and  the  other  belong- 
ing to  the  National  Company,  simultaneously  in  your  office,  you 
occupy  the  position  that  you  permit  competition  between  the  two 
concerns,  for  both  of  which  you  act  as  confidential  agent?  A. 
We  cannot  help  it;  sometimes  a grocer  comes  and  says  that  he 
wants  Mollenhauer  and  sometimes  he  says  he  wants  the  National. 

Q.  Do  you  mean  to  say  that  that  is  competition  in  any  sense? 
A.  I think,  so. 

Q.  It  depends  simply  upon  the  demand  created  for  one  as 
against  the  other;  is  that  the  way  the  competition  makes  itself 
apparent?  A.  At  times  there  is  competition;  there  are  two  differ- 
ent articles. 

Q.  Is  the  kind  of  competition  that  exists  between  the  two  con- 
cerns for  which  you  act  the  same  kind  of  competition  that  exists 
in  the  general  market  between  the  American  Sugar  Refiniug 
Company  and  these  two  companies  that  you  represent?  A.  At 
times  some  of  their  brands  are  wanted  in  one  place  and  not  in 
another. 

Q.  That  is  all  there  is  of  the  competition?  A.  Yes,  sir. 

Q.  When  you  speak  of  competition  that  is  what  you  mean? 
A.  Not  entirely  so. 

Q.  What  other  ingredient  is  there  of  competition?  A.  I mean 


No.  40.] 


313 


there  are  times  when  one  refiner  wants  to  sell  and  the  other  does 
not;  at  times  one  grocer  wants  one  brand  and  does  not  want  the 

other. 

Q.  Let  us  go  back  to  the  original  proposition;  there  are  times 
when  one  refiner  wants  to  sell  and  the  other  does  not ; is  that  the 
kind  of  competition  that  you  say  prevails  in  the  sugar  market? 
A.  In  our  particular  business;  yes,  sir. 

Q.  Then  there  are  times  when  refiners  don’t  want  to  sell?  A. 
Yes,  sir. 

Q.  What  are  those  times?  A.  When  they  have  paid  a big 
price  on  a high  market  they  hold  the  sugars  expecting  to  do  bet- 
ter, just  as  any  other  merchant  does  with  any  other  product. 

Q.  The  testimony  here  is  that  the  margin  of  difference  between 
the  raw  material  and  the  refined  product  is  held  at  about  one 
cent?  A.  It  varies,  of  course. 

Q.  That  is  right,  is  it  not?  A.  No,  sir;  just  at  present  it  is  less 
than  that;  it  has  been  at  different  times  during  the  year. 

Q.  It  was  a great  deal  more  at  times  in  1S96  than  one  cent  per 
pound?  A.  I should  think  it  would  be. 

Q.  Don’t  you  know  that  in  September,  October  and  November 
the  difference  between  the  refined  product  and  the  raw  material 
was  one  and  one-half  cents  owing  to  the  fall  of  the  raw  material? 
A.  I don’t  know  positively;  I would  have  to  look  it  up. 

Q.  Don’t  you  remember  such  a remarkable  circumstance  as 
that?  A.  No,  sir;  I do  not  at  the  time. 

Q.  The  margin  between  the  refined  article  and  the  raw  material 
would  be  almost  equal  to  the  value  of  the  raw  material  in  the 
market?  Don’t  you  remember  that  circumstance?  A.  No,  sir;  I 
do  not  without  referring  to  our  records. 

Q.  Was  the  raw  material  more  than  three  cents  per  pound?  A. 
It  has  been  as  low  as  three  cents,  duty  paid;  yes. 

Q.  Did  a condition  obtain  November  when  the  refined  sugars 
were  selling  in  the  market  at  about  4J  and  4|?  A.  You  have  the 
long  price  of  refined  sugar. 

Q.  I am  speaking  of  the  price  at  which  the  refiner  bills  it  to 
the  factor?  A.  I would  have  to  look  at  our  records  to  be  sure  as 

to  the  price. 


314 


[Senate, 


Q.  Don’t  you  know  that  an  abnormal  profit  was  being  made; 
that  an  enormous  profit  was  being  made?  A.  It  does  not  follow 
that  an  enormous  profit  was  being  made;  we  may  have  paid  a 
great  deal  for  the  raw;  in  fact  I think  we  did. 

Q.  If  the  raw  material  was  three  and  one-quarter  cents  and  the 
refined  product  four  and  three-quarters,  that  means  one  and  one- 
half  cent  margin?  A.  No,  sir. 

Q.  You  mean  that  you  had  to  put  in  the  stock  in  advance?  A. 
Yes,  sir;  everybody  did  that  and  they  were  all  deceived;  we  were 
deceived;  it  does  not  follow  because  you  see  quotations  that  way 
that  they  are  positive  proof. 

Q.  Mr.  Havemeyer  explained  that  the  margin  of  difference  was 
kept  at  about  one  cent  per  pound;  was  that  testimony  true?  A. 
I don’t  doubt  that  it  was. 

Q.  Don’t  you  know?  A.  I could  tell  you  by  referring  to  our 
records;  in  a general  way  I would  say — 

Q.  I am  not  asking  you  to  swear  to  the  one-tenth  part  of  a cent; 
I am  asking  you  whether  the  general  average  obtaining  was  not 
kept  at  one  cent?  A.  I think  when  they  bought  it  it  was  only 
nine-tenths  of  one  cent. 

Q.  It  is  nine-tenths  now?  A.  Not  so  much  as  that. 

Q.  How  much?  A.  What?  The  price  of  granulated  is  4.10;  for 
raw  we  have  paid  three  and  one-quarter. 

Q.  The  price  of  refined  is  what?  A.  4.10. 

Q.  What  would  be  the  difference  between  the  refined  and  the 
raw?  It  would  be  .85,  would  it  not?  A.  No  answer. 

Q.  How  much  does  it  cost  to  refine?  A.  I am  not  a refiner. 

Q.  Don’t  you  know?  A.  I do  not  know  from  my  own  knowl- 
edge. 

Q.  Are  you  a factor?  A.  A factor?  In  what  respect? 

Q.  Do  you  occupy  in  addition  to  the  position  that  you  have 
mentioned  the  position  of  a factor  of  the  company?  A.  No,  sir; 
not  as  I understand  a factor. 

Q.  How  do  you  fix  your  own  profits?  A.  We  are  paid  a com- 
mission for  doing  the  business. 

Q.  On  the  bulk  of  the  business?  A.  We  do  all  their  business. 


No.  40.] 


315 


Q.  Don't  you  know  liow  much  it  costs  to  refine  sugar?  A.  No, 
sir;  I don’t  know;  I am  not  a refiner;  I don’t  know;  it  varies 
greatly. 

By  Mr.  Mazet: 

Q.  Do  you  know  that  the  cost  of  refining  varies  greatly?  A. 
Yes,  sir. 

By  Mr.  Lexow: 

Q.  In  what  way?  A.  I think  at  certain  seasons  it  costs  more 
than  at  others. 

Q.  It  costs  you  more  to  refine  when  the  mill  is  running  at  less 
than  its  full  capacity?  A.  Yes,  sir. 

Q.  Have  your  two  mills  been  running  to  their  full  capacity? 
A.  No,  sir. 

Q.  The  testimony  here  is  to  the  effect  that  profits  on  sugar 
amounted  to  in  the  vicinity  of  $12,000,000  or  $14,000,000  per  year, 
and  have  so  amounted  for  the  past  ten  or  fifteen  years;  is  that  not 
an  enormous  profit  to  make  upon  sugar?  Explain  how  it  is  that 
your  mills  do  not  run  at  their  full  capacity?  A.  I do  not  believe 
they  made  any  such  profit. 

Q.  Then  you  dispute  those  figures?  A.  I do;  I do  not  be- 
lieve them. 

Q.  Do  you  know  anything  about  it?  A.  In  a general  way; 
just  as  anybody  else  would. 

Q.  What  is  your  knowledge?  A.  As  to  the  profits;  I have  not 
figured  it  out;  I could  not  tell. 

Q.  Are  you  not  guessing?  Do  you  know  what  the  profit  would 
be  if  they  got  one  cent  a pound,  as  they  did,  as  the  difference  be- 
tween the  price  of  the  raw  material  and  the  refined  product?  A. 
No,  sir. 

Q.  Can  you  specifically  approximate  the  profit?  A.  I should 
say  about  a quarter  of  a cent  per  pound. 

Q.  Is  that  it?  A.  That  is  about  it. 

Q.  That  is  to  say  with  a margin  of  one  cent  per  pound?  A. 
Yes,  sir. 


316 


[Senate, 


Q.  Where  did  you  get  those  figures?  A.  Well,  in  a general 
way,  it  is  my  knowledge  of  the  business;  but  as  I have  said,  I do 
not  give  exact  figures. 

Q.  Do  you  mean  now  that  the  margin  of  profit  1-4,  is  the  mar- 
gin of  profit  of  the  two  concerns  you  represent  or  of  the  Ameri- 
can Sugar  Refining  Company?  A.  I think  our  house  last  year 
made  less  than  a quarter  of  a cent. 

Q.  Which  is  it?  A.  I think  if  they  made  one-eighth  they  were 
lucky;  one-eighth  of  one  cent  per  pound. 

Mr.  Lexow:  Please  answer  my  question  and  do  not  beat  around 
the  bush?  A.  I am  not  beating  around  the  bush;  I do  not  be- 
lieve that  our  house  made  three-quarters  of  a cent  per  pound;  I 
mean  one-quarter  of  a cent  per  pound;  I refer  to  our  particular 
house. 

Q.  You  don’t  refer  to  the  American  Sugar  Refining  Company? 
A.  I have  no  knowledge  as  to  what  their  profits  are;  no  more 
than  any  other  person  has. 

Q.  How  long  have  you  been  in  the  business  of  dealing  in 
sugars?  A.  I have  grown  up  with  this  firm;  twenty-three  years. 

Q.  How  long  have  you  acted  as  the  representative  of  these 
two  concerns  that  you  speak  of?  A.  Our  house  has  for  thirty 
odd  years;  of  course,  in  different  relations;  they  have  grown 
from  one  kind  of  business  to  another;  we  have  been  associated 
with  them  that  long. 

Q.  Do  you  do  business  through  the  same  factors  that  the 
American  Sugar  Refining  Company  does  business  through?  A. 
Yes;  to  a great  extent;  they  are  wholesale  grocers. 

Q.  You  have  the  same  understanding  with  the  wholesale  gro- 
cers as  with  the  American  Sugar  Refining  Company?  A.  We 
have  practically  the  same  method. 

Q.  And  the  same  understanding?  A.  Practically  so. 

Q.  Same  factors’  agreement?  A.  Not  exactly;  but  to  all  pur- 
poses the  same. 

Q.  Do  these  wholesale  grocers  selling  the  product  of  the 
American  Sugar  Refining  Company  sell  your  product  simultane- 
ously under  the  same  agreements,  thus  permitting  those  pro- 


No.  40.] 


317 


ducts  to  compete  with  each  other  in  the  market?  A.  They  do, 
because  some  brands  are  more  popular  than  others. 

Q.  It  is  brand  against  brand?  A.  To  some  extent;  yes,  sir. 

Q.  What  is  the  name  of  your  brand?  A.  The  Mollenhauer 
Sugar  Refining  Company,  and  we  have  the  National  Sugar  Re- 
fining Company;  they  have  at  least  twenty-five  brands  of  the 
different  kinds  of  sugar. 

Q.  Is  not  sugar  sold  according  to  grade  in  bulk,  without  any 
reference  to  the  brand?  A.  I think  not;  no,  sir. 

Q.  Is  it  not  put  into  packages  under  a brand?  A.  Yes,  sir 

Q.  How  much?  A.  Barrels,  principally;  and  in  bags  of  100 
pounds  and  340  pounds. 

Q.  I am  speaking  now  of  the  consumer  who  does  not  buy  bags 
and  barrels  in  the  sale  of  sugars;  is  any  particular  brand  sold  or 
is  it  sold  simply  as  sugar  of  a certain  grade?  A.  I think  a great 
many  have  different  brands;  some  prefer  one  brand,  and  some 
prefer  another. 

Q.  Do  you  know  anything  about  it?  A.  Yes,  sir. 

Q.  Do  you  know  the  fact  to  be  as  you  state?  A.  I know  such 
cases. 

Q.  Many?  A.  Yes,  sir;  quite  a good  many  here  in  this  city. 

Q.  Have  you  named  all  the  instances  where  you  compete  in 
price  against  the  American  Sugar  Refining  Company?  A.  In 
raw  sugar;  I think  so. 

Q.  Refined?  A.  It  happens  in  some  cases,  I suppose,  nearly 
every  day. 

Q.  Through  what  channel?  A.  Through  various  brokers  here 
and  throughout  the  country 

Q.  Through  factors?  A.  Yes,  sir;  and  those  who  are  not  fac- 
tors. 

Q.  Representing  both  sides?  A.  There  are  wholesale  grocers 
that  sell  both  products. 

Q.  Is  it  not  a fact  that  you  have  the  same  facilities  to  operate 
through  the  same  channel,  employ  the  same  persons,  as  does  the 
American  Sugar  Refining  Company?  A.  To  a great  extent;  yes. 

Q.  Have  you  any  other  medium  of  selling  your  sugar  than 


318  [Senate, 

through  that  medium?  A.  We  have  our  particular  brokers;  the* 
same  brokers;  they  are  each  competing  for  the  business. 

Q.  I am  speaking  now  of  the  distribution  of  the  product 
through  the  agency  of  wholesale  grocers?  A.  They  are  practi- 
cally the  same, 

Q.  They  are  exactly?  A.  No,  sir;  there  is  some  variation. 

Q.  Name  a man  in  the  whole  United  States  that  you  do  not 
operate  through  and  the  American  Sugar  Refining  Company  does. 
A.  There  are  some  people  that  we  would  not  sell  our  sugar. 

Q.  It  is  a question  of  credit?  A.  Yes,  sir;  sometimes. 

Q.  You  operate  through  the  same  men,  through  the  same  chan- 
nel, the  same  agencies?  A.  Practically  the  same. 

Q.  Does  anybody  else?  A.  There  are  other  refineries  in  other 
States. 

Q.  Who  operate  conjointly  with  the  American  Refining  Com- 
pany through  the  same  agencies?  A.  W.  J.  MeCahan  of  Phila- 
delphia. 

Q.  Outside  of  Philadelphia?  A.  Nash,  Spaulding  & Co.  of 
Boston;  Henderson,  of  New  Orleans;  Cogswell,  of  New  Orleans; 
Cunningham,  of  Texas;  and  there  are  a great  many  smaller  ones; 
several  hundred,  I think,  that  make  grocers’  sugars  and  distrib- 
ute through  the  same  means  exactly. 

Q.  Are  there  any  besides  those  you  have  mentioned  that  have 
been  called  competing  concerns?  A.  I think  you  have  before  you 
the  names  of  all  there  are. 

Q.  Do  you  utilize  the  same  factors’  agreement,  so-called,  that 
was  put  in  evidence?  A.  It  is  nearly  the  same. 

Q.  With  the  exception  of  a change  in  the  name  is  it  not  exactly 
the  same?  A.  There  is  some  difference  in  the  wording. 

Q.  What  is  the  difference?  You  would  have  to  compare  them, 
I suppose?  Have  you  them  both  here?  I hand  witness  copy  of 
factors’  agreement  put  in  evidence  the  other  day. 

Q.  Have  you  a copy  of  your  agreement?  A.  No,  sir. 

Q.  You  will  probably  remember  if  there  is  any  change  in  the 
phraseology? 


No.  40.] 


319 


By  Mr.  Warner: 

Q.  Have  you  a copy  of  your  factors’  agreement?  A.  No,  sir;  I 
have  not;  but  I would  be  very  glad  to  give  it  to  you  if  I had  it;  I 
can  send  for  one  for  you. 

By  Mr.  Lexow : 

Q.  How  long  would  it  take  to  send  for  one?  A.  I don’t  think 
it  would  take  more  than  half  an  hour;  I will  employ  a messenger 
and  send  for  one  if  you  wish. 

Mr.  Lexow:  If  you  will  please  give  an  order  for  a copy  the 
messenger  will  take  it  to  your  place  of  business. 

Q.  Now,  for  the  purpose  of  getting  this  on  record,  will  you 
state  whether  or  not  there  is  any  substantial  difference  between 
your  agreement  and  the  one  I just  handed  you?  A.  I understand 
it  says  “affidavit”;  we  do  not  require  an  affidavit  in  ours. 

Q.  You  do  not  require  an  affidavit?  A.  No,  sir;  of  course  I 
would  not  like  to  say  in  what  way  it  differs;  that  is  principally 
the  difference,  I think. 

Q.  It  is  therefore  under  substantially  the  same  agreement? 
A.  Substantially  the  same., 

Q.  That  you  make  your  sales  on  consignments?  A.  We  sell 
sugar  without  consignment;  we  sell  both  ways;  we  sell  to  some 
and  consign  to  others;  I am  willing  to  state,  in  regard  to  those 
that  it  is  practically  the  same  as  our  method  of  doing  it  even  if 
worded  somewhat  differently;  it  is  practically  the  same;  I have 
not  looked  ours  over  for  a year  or  so. 

Q.  There  is  no  rebate  when  you  sell  direct?  A.  No,  sir. 

Q.  When  you  sell  them  to  anybody  not  a favored  factor  mak- 
ing that  agreement,  there  is  no  rebate  of  3-16?  A.  We  have  no 
favored  factors;  they  are  glad  to  sign  our  agreement. 

Q.  Any  wholesale  grocer  submitting  himself  to  the  terms  of 
your  agreement  can  get  this  rebate?  A.  Yes;  and  they  are  very 
glad  to  submit  themselves  to  that  agreement;  it  is  no  benefit  to 
the  refiner,  particularly. 


320 


[Senate,. 


By  Mr.  Mazet: 

Q.  You  mean  others  that  do  not  get  a reduction?  A.  They  do 
not  get  their  commission;  if  they  choose  to  buy  it  right  they  do. 

By  Mr.  Barry: 

Q.  If  you  sell  a man  sugar  he  will  get  the  same  rebate?  A. 
He  gets  it  at  the  market  quotations;  if  we  consign  it  to  a man 
and  he  takes  no  risk  we  pay  3-16  per  pound. 


By  Mr.  Lexow: 

Q.  Therefore,  the  man  who  puts  up  no  money,  takes  no  risk  of 
any  kind,  he  gets  3-16  per  cent,  profit;  whereas  the  man  who  puts 
up  his  money  and  buys  the  material  outright  gets  none?  A.  That 
is  not  correct  because  the  factors’  agreement  calls  for  payment 
within  thirty  days  or  seven  days,  so  that  he  does  not  put  up  the 
money. 

Q.  He  gets  a reduction  of  one  per  cent.?  A.  Yes;  but  while  he 
does  put  up  money  he  takes  risks,  so  far  as  the  market  is  con- 
cerned; if  that  market  goes  down  he  loses. 

Q.  But  he  does  not  take  a risk  until  thirty  days?  A.  No,  sir; 
if  the  market  goes  off  the  next  day  he  takes  a risk. 

Q.  Isn’t  it  simply  an  evasion  of  sale?  A.  No,  sir. 

Q.  And  for  the  purpose  of  holding  a club  over  these  factors? 
A.  It  is  not  for  the  “purpose  of  holding  a club  over  them;”  that 
profit,  in  my  opinion,  is  little  enough. 

Q.  Do  you  figure  that  as  being  little  enough  as  compared  with 
what  you  say  is  the  profit  of  the  refiner  when  you  say  it  is  only 
one-quarter?  A.  I did  not  say  that  the  profit  of  the  refiner  was 
a quarter;  you  asked  me  on  raw  sugar;  whether  I considered  that 
the  profit;  I didn’t  say  that  the  refiner  makes  a quarter  of  a cent; 
I said  I didn’t  know  what  they  made  last  year. 

Q.  Then  the  factor  who  takes  sugar  and  transfers  it  to  another 
person,  to  a third  person,  receives,  in  your  judgment,  a small 
profit,  even  when  they  get  3-16  per  cent,  and  the  refiner  only  re- 
ceives one-quarter  or  less?  A.  I didn’t  say  that  the  refiner  re- 


No.  40.] 


321 


ceived  one-quarter  or  less;  the  grocer  takes  the  risk  of  credit;  has 
salesmen,  pays  cartage,  and  sells  to  people  on  thirty  days’  time; 
he  has  the  risk  of  debts  and  many  things  that  enter  into  the  profit 
which  must  be  small. 

Q.  Does  it  compare  with  the  risk  taken  by  the  refiner?  A.  He 
doesn't  have  any  such  large  amount. 

Q.  No  such  large  investment?  A.  No,  sir. 

Q.  I mean  comparatively  to  the  refiner?  A.  Yes,  sir. 

Q.  And  you  think  the  3-16  per  cent,  is  small  although  the  other 
does  not  receive  a quarter?  A.  Yes,  sir. 

Q.  Are  you  giving  honest  testimony  on  this  subject?  A.  I 
wouldn't  take  my  oath  if  I was  not. 

Q.  Do  you  candidly  think  this  statement  of  yours  is  a reason- 
able or  honest  statement?  A.  I am  giving  my  opinion  when  I say 
the  profit  is  little  enough. 

Q.  Then  you  think  the  refiner  ought  to  have  more  than  3-16  per 
cent.?  A.  Yes,  sir. 

Q.  Did  you  testify  before  the  United  States  Senate  Committee, 
the  Ways  and  Means  Committee?  A.  Never. 

Q.  Do  you  know  what  the  testimony  is  there  on  the  subject  of 
the  profit  of  the  refiner?  A.  I have  seen  it  quoted  in  the  papers; 
but  if  it  is  not  nearer  correct  than  the  reports  of  what  is  said 
here,  it  has  no  basis  of  foundation. 

Q.  You  have  not  kept  yourself  informed?  A.  I have  so  far  as 
the  papers  are  concerned;  I have  no  other  means  of  information. 

By  Mr.  Warner: 

Q.  How  do  you  know  that  the  reports  are  not  accurate?  A. 
I am  judging  from  what  I do  know  of  reports. 

By  Mr.  Lexow: 

Q.  Who  is  the  person  connected  with  the  Mollenhauer  on  the 
one  hand  and  with  the  National  on  the  other  who  knows  the  cost, 
of  refining  sugar?  A.  They  have  their  records  in  the  office;  I 
suppose  they  would  know. 

Q.  Don't  you  know?  A.  I do  not  know. 

21 


322 


[Senate, 


Q.  Do  you  mean  to  say  that  after  having  been  for  several  years 
a general  agent  you  don’t  know  the  cost  of  refining?  A.  They 
have  a record  in  the  office;  they  would  know. 

Q.  Who  are  “they”?  A.  They  are  matters  of  record  which 
they,  the  President  and  Vice-President  have. 

Q.  Do  you  know  who  they  are?  A.  Yes,  sir. 

Q.  The  general  officers  of  a corporation?  A.  Do  you  want  to 
know  which  one? 

Q.  I want  to  know  the  man  in  charge  of  the  Mollenhauer  con- 
cern, the'  man  who  knows  the  cost  of  refining?  A.  J.  Adolph 
Mollenhauer  is  Vice-President,  Fred  Mollenhauer  is  Secretary. 

Q.  Has  he  charge  of  the  refinery?  A.  In  a general  way. 

Q.  Do  you  know  the  man  able  to  give  the  cost  of  refining?  A. 
They  would  be  able  to  give  it., 

Q.  Who?  A.  Nathaniel  Bucker  is  the  President  of  the  com- 
pany. 

Q.  I am  not  asking  you  who  is  President  of  the  company;  I 
want  to  know  who  is  the  person  who  will  be  able  to  give  the  fig- 
ures? A.  I would  have  to  give  the  names  of  the  officers;  I am 
willing  to  give  them 

Q.  Do  you  know  the  person  in  charge  of  the  refining?  A.  Mr. 
George  R.  Bunker;  he  is  the  General  Manager. 

Q.  Has  he  charge  of  the  refinery?  A.  Yes,  sir. 

Q.  What  is  the  capacity  of  the  National  Refining  Company? 
A.  About  2,300  barrels  per  day. 

Q.  What  was  the  cost  of  the  property?  A.  It  cost  $750,000;  I 
think  a great  deal  more. 

Q.  How  much  more?  A.  Do  you  mean  the  real  estate,  the 
bricks  and  the  machinery?  I think  $1,000,000  would  be  nearer. 

Q.  Don’t  you  know  that  it  cost  from  $750,000  to  $1,000,000? 
A.  Yes,  sir;  there  is  margin  enough  there. 

Q.  Is  it  the  custom  in  estimating  the  value  of  a refinery  to  es- 
timate according  to  its  output,  its  capacity?  A.  I do  not  think 
there  is  any  great  distinction. 

Q.  Isn’t  that  the  way  to  get  a fair  average  estimate  of  the  value 


No.  40.] 


323 


of  a refinery?  A.  I think  that  would  be  a fair  way  to  get  the 

value. 

Q.  According  to  its  barrel  capacity?  A.  Yes;  that  would  be  a 
fair  way. 

Q.  Has  the  National  Refining  Company  been  running  to  its 
full  capacity?  A.  No,  sir. 

Q.  Has  the  Mollenhauer  Refining  Company?  A.  No,  sir. 

Q.  To  what  extent  of  its  capacity  has  it  been  running?  A. 
I should  think  about  half  its  capacity,  perhaps. 

Q.  Since  when?  A.  Since  last  November,  I should  think. 

Q.  It  wms  not  running  to  its  full  capacity  prior  to  that  time? 
A.  I don’t  think  to  its  full  capacity. 

Q.  Has  it  ever  run  to  its  full  capacity?  A.  Yes,  sir. 

Q.  When?  A.  I suppose  within  the  last  year ; some  time  when 
there  was  a demand  for  sugar, 

Q.  When  wTas  that?  A.  The  largest  demand  is  during  the 
summer  months,  along  through  the  fall. 

Q.  How  often  since  then  has  it  ever  run  to  its  full  capacity? 
A.  How  frequently? 

Q.  Yes,  sir.  A.  I suppose  three-quarters  of  the  time. 

Q.  Does  it  run  to  its  full  capacity  at  the  same  time  that  the 
Mollenhauer  concern  runs  to  its  full  capacity?  A.  It  varies 
somewhat. 

Q.  And  the  McCahan  concern  runs  to  its  full  capacity?  A. 
I don't  know  anything  about  that  concern. 

Q.  And  the  American  runs  to  its  full  capacity?  A.  I have  no 
knowledge  on  that. 

Q.  Don't  you  keep  yourself  informed?  A.  Only  in  a general 
wray;  sometimes  from  rumors  around  the  street;  w7hen  a refinery 
closes,  we  sometimes  hear  about — 

Q.  Does  the  American  run  to  its  full  capacity  at  any  time 
when  the  Mollenhauer  and  the  National  does  not?  A.  I don’t 
know. 

Q.  Don’t  you  know  that  w?hen  one  slacks  up  that  the  other 
does?  A.  Not  necessarily  so. 


324 


[Senate. 


Q.  Isn’t  it  a fact  that  during  the  winter  months  when  they 
can’t  sell  their  product,  they  do;  don’t  you  know  that  when  the 
American  decreases  its  output  you  decrease  your  output?  A. 
No,  sir;  we  don’t  know  that. 

Q.  Don’t  you  do  it?  A.  No,  sir. 

Q.  Isn’t  it  the  fact?  A.  Probably  the  same  reason  why  they 
would  have  to  restrict  their  output  wTould  have  its  influence  upon 
us. 

Q.  Don’t  argue  the  proposition;  isn't  it  a cold-blooded  fact 
that  when  they  decrease  their  output,  you  decrease  yours?  A. 
No,  sir;  not  always. 

Q.  Do  you  know  a single  case?  A.  I don’t  know  whether  they 
are  running  full  or  not. 

Q.  General  rumors  come  to  you  directly?  A.  No,  sir. 

Q.  Have  you  ever  known  a time  in  your  connection  with  those 
two  companies  that  you  have  been  running  full  when  the  Ameri- 
can was  not?  A.  Yes,  sir;  lots  of  times;  they  don’t  run  their  re- 
fineries when  they  can’t  sell  their  product;  maybe,  within  the 
last  year. 

Q.  Do  you  keep  the  same  percentage  of  sugar  in  proportion  to 
your  capacity  that  they  keep?  A.  No,  sir;  not  to  my  knowledge. 

Q.  Why  is  it  that  you  cannot  get  the  entire  capacity  of  your 
product  taken  when  there  is  forty  times  as  much  as  your  product 
used  in  the  eastern  States?  A.  Foreign  sugar  can  be  sent  here 
very  much  cheaper  at  certain  seasons  of  the  year;  certain  seasons 
of  the  year  when  the  beet  sugars  come  from  foreign  countries; 
they  can  be  sent  here  at  a much  smaller  margin;  then,  there  is 
less  loss  in  closing  than  in  trying  to  do  business. 

Q.  Isn’t  it  a peculiar  coincidence  that  you  do  that  closing 
about  the  same  time  that  the  American  Sugar  Refining  Company 
does  its  closing;  the  same  time  they  close,  you  close?  A.  The 
same  reason  that  would  apply  to  them  would  apply  to  us. 

Q.  The  fact  remains,  nevertheless?  A.  I told  you  there  is  the 
beet  sugars  from  foreign  countries;  there  is  also  the  Louisiana 
beet  sugar  crop;  there  are  times  when  we  must  curtail  and  re- 


No.  40.] 


325 


strict;  the  same  reason  that  would  apply  to  them  would  apply  to 
us. 

Q.  The  American  Sugar  Refining  Company  has  an  annual  out- 
put of  1.200,000;  it  disposes  of  that  amount  of  refined  sugar  an- 
nually; you  know  that?  A.  I don’t  know  that;  those  figures  are 
given. 

Q.  Is  it  possible  that  we  know  more  about  it  than  you  do;  that 
we  have  learned  more  about  the  sugar  business  in  three  days 
than  you  have  learned  in  ten  years?  A.  Apparently,  you  do. 

Q.  How  much  do  you  produce  during  the  year  in  both  of  your 
concerns?  A.  I would  have  to  figure  it  out;  do  you  mean  in 
pounds? 

Q.  Or  tons?  A.  I haven’t  any  figures;  I could  guess  some- 
where near  it. 

Q.  Make  as  close  a guess  as  you  can?  A.  I should  say  from 
450,000,000  to  500,000,000  pounds. 

Q.  How  much  is  that  in  tons?  A.  Divide  it  by  2240. 

Q.  Will  you  do  that  for  the  benefit  of  the  committee;  I as- 
sume you  are  skilled  at  figures?  A.  I don't  claim  to  be  skillfcl. 

By  Mr.  Mazet: 

Q.  We  will  assume  that  you  are;  we  may  be  mistaken.  (Wit- 
ness figures.)  A.  It  is  about  200,000  tons. 

Q.  200.000  is  the  product  that  you  make,  approximately;  it  is 
the  total  of  your  possible  capacity,  if  you  run  at  full  capacity 
during  the  year?  A.  I don’t  know. 

Q.  How  much  capacity  has  the  Mollenhauer  concern?  A. 
About  3,300  barrels  per  day,  I believe. 

Q.  Will  you  please  figure  out  its  total  capacity?  A.  That 
would  be  about  900,000  barrels  for  Mollenhauer. 

Q.  How  much  for  the  National?  A.  About  600,000  barrels. 

Q.  That  is  1,500,000  barrels,  which  would  represent  how  much? 
A.  About  200,000,  I should  say. 

Q.  200,000  tons?  I thought  you  said  that  the  amount  that  you 
actually  produced  amounted  to  200  and  odd  thousand  tons?  A. 
You  could  figure  it  out. 


826 


[Senate, 


Q.  You  stated  that  your  production  was  about  one-half  of  your 
total?  A.  I said  that  it  varied  from  one-half  to  three-quarters. 

Q.  I misunderstood  you,  then;  what  are  the  figures  of  the 
amount  that  you  do  produce?  A.  I would  have  to  figure  it  out 
exactly ., 

Q.  Approximately?  A.  From  175,000  to  200,000  tons;  about 

200.000  tons  is  what  we  produce. 

Q.  How  much  is  your  capacity?  A.  About  230,000  or  240,000. 

Q.  Then  you  produce  within  30,000  or  40,000  of  your  full  ca- 
pacity? A.  I would  have  to  get  the  figures  from  the  refiner. 

Q.  Is  that  your  best  judgment?  A.  I am  perfectly  willing  to 
give  you  the  exact  figures. 

Q.  We  will  get  those  afterward;  the  testimony  before  this 
committee  is — and  I ask  you  whether  you  accede  to  it — that  in 
order  to  get  the  most  economical  result  the  full  capacity  of  the 
factory  must  be  utilized?  A.  I don’t  know  about  that. 

Q.  It  is  a general  proposition  of  universal  application?  A. 
Yes,  sir., 

Q.  That  being  the  case  and  your  having  a capacity  of  250,000 
tons,  why  do  you  manufacture  only  190,000  tons  annually,  there- 
by running  below  your  capacity,  when  the  American  Sugar  Re- 
fining Company,  operating  through  the  same  agents,  can  market 

1.200.000  and  make  profits  on  stock  amounting  to  $75,000,000  of 
an  average  of  9 per  cent,  and  create  a surplus  besides?  A.  I do 
not  believe  they  made  any  such  profits  during  the  last  year. 

Q.  That  doesn’t  answer  my  question.  (Question  repeated). 
A.  You  said  surplus. 

Q.  You  don’t  claim  that  they  have  not  paid  such  dividends; 
that  they  have  not  accumulated  a surplus?  A.  I don’t  believe 
they  have;  they  know  it., 


By  Mr.  Mazet: 

Q.  You  don’t  believe  that?  A.  I have  not  seen  it  so  stated;  if 
I knew  who  told  it  I could  tell. 


No.  40.] 


327 


By  Mr.  Lexow: 

Q.  I have  not  asked  you  about  your  belief;  I ask  you  the  ques- 
tion aud  want  an  answer;  assume  that  the  statement  in  question 
is  true.  ‘A.  I cannot  answer  it  because  I do  not  know  that  it  is 

true. 

Q.  I am  asking  you  to  assume  that  the  statement  is  true?  A. 
I do  not  believe  they  have  paid  9 per  cent,  on  the  stock  and  ac- 
cumulated a large  surplus  during  the  past  year. 

Mr.  Lexow:  The  stenographer  will  repeat  the  question  which 
I put  a minute  ago. 

“That  being  the  case  and  you  having  a capacity  of  250,000  tons, 
“why  do  you  manufacture  only  190,000  tons  annually,  thereby 
“running  below  your  capacity,  when  the  American  Sugar  Refin- 
ing Company,  operating  through  the  same  agents,  can  market 
“1,200,000  tons  and  make  profits  on  stock  amounting  to  $75,000,- 
“000  of  an  average  of  9 per  cent,  and  create  a surplus  besides?” 

Q.  Please  answer  that  question.  A.  I should  think  that  the 
question  should  be  separated,  there  being  two  questions — - 

Q.  You  refuse  to  answer?  A.  I cannot  understand — 

Mr.  Lexow:  The  witness  is  directed  to  answer  the  question. 
A.  I would  have  to  answer  it  in  one  way  in  the  first  instance  and 
in  another  way  in  the  second. 

Q.  You  may  separate  your  answers  if  you  wish.  A.  Why  we 
don’t  run  our  full  capacity;  well,  there  is  more  profit  for  a refiner 
during  certain  seasons  of  the  year  to  not  run  his  full  capacity, 
because  there  are  times  when  you  cannot  market  the  product, 
when  we  cannot  sell  the  sugar;  the  American  Refining  Company 
may  be  able  to  sell  its  sugar;  it  has  a great  many  more  facilities 
than  we  have  for  doing  it;  as  to  the  last  part  of  the  question  I 
would  say  that  I do  not  believe  from  my  knowledge  of  the  busi- 
ness that  they  have  accumulated  a large  surplus  in  addition  to 
paying  dividends  of  9 per  cent. 

Q.  You  say  “you  believe?”  A.  That  is  my  belief. 

Q.  How  is  it  that  the  American  Sugar  Refining  Company  can 
market  through  the  same  channel,  the  same  agents,  the  same 
factors,  and  under  the  same  agreements,  1,200,000  tons  and  you 


328  [Senate, 

can't  market  more  than  200,000  tons?  A.  They  may  have  more 
skillful  salesmen  and  brokers  than  we  have. 

Q.  You  have  the  same?  A.  Not  brokers  and  salesmen;  no. 

Q.  Isn’t  the  bulk  of  the  business  done  through  factors  under 
the  factors’  agreement?  A.  It  is  done  through  brokers  and  vari- 
ous wholesale  grocers  throughout  the  United  States. 

Mr.  Lexow : • The  stenographer  will  please  repeat  the  question. 

(Question  repeated.) 

Q.  You  can  answer  that  question  “yes”  or  “no.”  A.  It  is  done 
through  brokers  who  give  orders  from  different  wholesale  gro- 
cers; the  bulk  of  the  business  is  done  through  factors  under  the 
factors’  agreement. 

Mr.  Lexow:  It  has  taken  ten  minutes  to  get  that  simple  an- 
swer; 

A.  It  does  not  follow  that  it  comes  from  the  grocer  direct. 

Q.  You  have  expressed  some  doubt  as  to  whether  the  figures 
given  by  the  American  Sugar  Refining  Company  are  correct? 
Do  you  bear  that  doubt  because  your  profits  have  been  less?  A. 
I don’t  know  what  our  profits  have  been. 

Q.  Then  why  do  you  doubt?  A.  I doubt  because  I have  a gen- 
eral knowledge  as  to  the  business;  I do  not  think  it  is  possible  to 
make  that  profit  and  accumulate  a large  surplus. 

Q.  Your  general  knowledge  extends  more  particularly  to  the 
business  that  you  represent?  A.  Yes,  sir. 

Q.  Then  I repeat:  Is  it  because  the  business  that  you  repre- 
sent has  not  made  a quarter  of  a cent  profit  per  pound  that  you 
dispute  the  correctness  or  express  your  disbelief  in  the  correct- 
ness of  the  earning  capacity  of  the  American  Sugar  Refining 
Company?  A.  Yes,  sir. 

Q.  Is  it  because  there  are  underlying  agreements  that  you  shall 
make  the  same  profits?  A.  There  is  no  agreement  as  to  profits. 

Q.  It  has  been  the  custom?  A.  No,  sir. 

Q.  You  maintain  the  same  prices?  A.  Yes;  we  might  be  less; 
to  some  extent;  it  varies;  they  control  a larger  capital,  greater 
factories  as  compared  with  ours;  because  they  can  purchase  at  a 
greater  advantage  than  we  do. 


No.  40.] 


329 


Q.  Do  you  mean  speculating?  A.  Sometimes  they  carry  very 
heavy  stocks;  sometimes  we  carry  20,000  tons;  sometimes  the 
market  goes  one  way  and  sometimes  another;  they  may  carry  six 
or  eight  times  that  amount. 

Q.  How  much  do  you  carry  on  the  average?  A.  I suppose 
about  15,000  tons,  probably. 

Q.  Right  along?  A.  From  15,000  to  20,000  tons. 

Q.  How  many  tons  does  the  American  Sugar  Reilning  Com- 
pany carry?  A.  I have  no  knowledge. 

Q.  When  you  speak  of  these  tons  do  you  mean  both  of  your 
companies?  A.  Yes,  sir. 

Q.  Do  you  mean  that  is  the  average  amount  carried  per  day? 
A.  Every  year;  we  have  that  stock  practically  most  of  the  time. 

Q.  How  much  of  it  do  you  use  per  day?  A.  From  800  to  1,000 
tons. 

Q.  Then  you  have  fourteen  or  fifteen  days  stock  on  hand  all  the 
time?  A.  Yes,  sir;  during  the  last  three  years  thirty  days  stock 
at  times. 

Q.  When  I say  between  you,  I mean  between  the  two  compan- 
ies that  you  represent  and  the  American  Sugar  Refining  Com- 
pany; you  fix  the  price  of  the  product,  don’t  you?  A.  No,  sir;  I 
don’t  think  we  do. 

Q.  Don’t  you  fix  the  price  of  the  raw  material?  A.  No,  sir;  we 
do  not;  I don’t  think  we  do. 

Q.  Don’t  you  fix  the  price  of  the  raw  material?  A.  No,  sir;  we 
do  not;  how  could  we? 

Q.  Don’t  your  demand?  A.  It  has  its  influence;  it  certainly 
does  not  fix  the  price. 

Q.  Well,  when  you  speak  of  your  demand,  isn’t  that  all  the  de- 
mand there  is  in  the  market?  A.  Oh,  no,  sir;  the  whole  world 
uses  sugar. 

Q.  Well,  I mean  America;  I am  speaking  of  the  American  mar- 
ket? A.  No,  not  America;  if  they  can’t  get  the  price  here  for  the 
raw  material  they  ship  it  somewhere  where  they  can  get  the 


330  [Senate, 

price;  the  whole  world,  fixes  the  price  of  raw  sugar;  the  law  of 
supply  and  demand. 

Q.  Well,  after  sugar  has  once  been  on  storage  here,  then  it  de- 
pends entirely  on  the  American  market?  A.  Well,  of  course  it 
doesn’t;  if  the  market  and  the  price  are  not  here  it  is  shipped  else- 
where; to  all  parts  of  the  world;  we  have  bought  sugar  in  London 
that  was  brought  here  from  Peru;  the  freight  rates  are  very  low; 
from  one-sixteenth  to  one-eighth  would  carry  to  any  part  of  the 
world. 

Q.  I am  speaking  of  the  American  market?  A.  There  are  lots 
of  people  who  believe  in  sugar  and  they  buy. 

Q.  For  speculation?  A.  Yes,  sir;  lots  of  them. 

Q.  Well,  for  normal,  natural  consumption,  are  there  any  be- 
sides the  concerns  that  I have  mentioned?  The  demand  for 
sugar  is  always  here?  A.  In  this  particular  market  it  is  likely 
to  help  fix  the  price  of  sugar. 

Q.  Do  you  mean  to  say  that  there  are  fluctuations  in  the  money 
market  during  the  fourteen  days  that  you  hold  the  sugar  that 
would  warrant  you  shipping  to  other  parts  of  the  world  for  the 
one-sixteenth  or  the  one-eighth?  A.  Yes,  sir. 

Q.  Do  you  know  anything  about  it  except  the  period  of  last 
April  and  May.  A.  Of  how  much  per  pound? 

Q.  From  one-eighth  to  one-sixteenth?  A.  Lots  of  times  they 
have  records  that  will  show  you;  it  is  quoted  from  day  to  day  in 
the  papers. 

Q.  Was  not  refined  sugar  shipped  abroad  last  year?  A.  There 
was  some  through  the  American;  but  very  little. 

Q.  How  much?  A.  I think  we  shipped  200  barrels,  so  far  as 
we  are  concerned. 

Q.  Two  hundred  barrels?  A.  Yes;  to  South  American  coun- 
tries. , 

By  Mr.  Warner  J 

Q.  I understood  you  to  say  that  there  are  persons  to  whom  you 
do  not  sell?  A.  I did  not  say  that  we  would  not  sell  to  persons; 
we  will  not  sell  to  an  individual  whose  credit  is  not  satisfactory. 


No.  40.] 


331 


Q.  Does  that  include  persons  who  do  not  consign?  A.  We  will 
sell  to  anybody  whose  credit  is  satisfactory. 

Q.  You  do  not  require  factors’  agreements  from  those  persons 
who  purchase  sugar  from  you?  A.  No,  sir. 

By  Mr.  Mazet: 

Q.  You  have  a difference  in  price  on  the  same  day  for  the  same 
grade  of  sugar?  A.  We  do — 

Q.  Let  me  finish  my  question — as  between  the  Mollenhauer 
and  other  companies?  A.  There  have  been  times. 

Q.  Does  that  happen  frequently?  A.  No,  sir. 

Q.  What  is  your  explanation  of  this  difference  in  grades?  A. 
At  one  time  we  might  happen  to  have  a certain  grade  that  they 
would  not  want. 

Q.  I mean  the  same  grade?  A.  Sometimes  they  want  one 
grade  and  sometimes  another,  and  we  sometimes  have  to  shade 
the  price. 

By  Mr.  McCarren : 

Q.  You  spoke  about  the  output  in  capacity  of  the  refineries  in 
which  you  are  interested;  do  you  know  whether  the  output  in 
capacity  of  the  refineries  in  which  you  are  interested  bears  the 
same  ratio  as  to  the  output  and  capacity  of  the  American  Sugar 
Refining  Company?  A.  I do  not  know. 

Q.  Then  I understand  you  to  say  substantially  that  you  don’t 
know  anything  at  all  about  the  output  of  the  American  Sugar 
Refining  Company?  A.  Only  as  published  from  week  to  week  in 
the  trade  journals;  they  are  gotten  up  by  people  who  get  the  best 
information  they  can  get. 

Q.  Were  you  familiar  with  the  status  of  the  sugar  refineries 
prior  to  the  formation  of  the  Trust;  that  is  to  say,  from  the  stand- 
point of  output  and  capacity?  A.  No,  sir. 

Q.  Have  you  any  knowledge  as  to  whether  the  refineries  in  ex- 
istence prior  to  the  formation  of  the  Trust  always  produced  to 
their  mill  capacity?  A.  I don’t  think  they  did;  they  were  often 
closed  up  for  months  at  a time, 


632 


[Senate, 


Q.  There  were  periods  in  the  year  when  they  shut  down?  A. 
Yes,  sir. 

Q.  Is  there  any  agreement  between  the  companies  that  you 
represent  and  the  American  Sugar  Refining  Company  as  to  what 
the  price  of  sugar  shall  be?  A.  Not  a particle;  no,  sir. 

Q.  Do  you  know  whether  the  American  Sugar  Refining  Com- 
pany refuses  to  sell  to  wholesale  grocers  or  retailers  below  a cer- 
tain number  of  barrels  of  sugar?  A.  I think  the  minimum  is  25 
barrels. 

Q.  Are  any  of  the  refineries  outside  of  the  American  Sugar  Re- 
fining Company  willing  to  sell  less  than  25  barrels?  A.  Maybe 
of  different  grades ; we  try  to  have  that  as  a minimum ; they  may 
take  five  or  six  different  grades. 

Q.  Well,  Mollenhauer  sells  less  than  this?  A.  They  would  to 
the  regular  people. 

Q.  How  much  less  than  five  barrels?  A.  I suppose,  of  course — 
well,  we  don’t  get  orders  of  that  kind. 

Q.  Do  you  consider  that  competition  between  the  Mollenhauer 
Sugar  Refining  Company  and  the  American  Sugar  Refining  Com- 
pany, when  each  sell  a different  number  of  barrels?  A.  We 
sometimes  do  anything  to  get  trade  that  the  others  wouldn’t  do. 

Q.  Do  you  consider  that  competition?  A.  I think  it  is,  to  some 
extent,  even  in  that  particular. 

By  Mr.  Lexow: 

Q.  When  have  you  done  that?  A.  Of  course  I am  not  a sales- 
man ; I cannot  give  the  exact  date. 

Q.  Are  you  guessing  or  telling  facts?  A.  If  you  have  any 
question — 

Q.  Don’t  your  own  agreement  preclude  an  arrangement?  A. 
No,  sir;  it  does  not;  we  sell  them  to  anybody  that  we  choose. 

Q.  You  don’t  give  them  the  only  living  profit  that  you  give  to 
other  people  in  the  business  on  factors’  agreement,  and  that  is 
only  living  profit — have  you  what  is  called  an  “equality  book?” 
A.  No,  sir;  the  wholesale  grocers  have  one. 

Q.  Have  you  got  one  yourself?  A.  No,  sir. 


No.  40.] 


333 


Q.  Don’t  you  make  it  a part  and  parcel  of  your  trade?  You 
know  the  equality  books  that  are  used  by  the  American  Sugar 
Kefining  Company  and  by  every  other  refiner  in  the  United  States; 
don't  your  companies  use  those  books  as  part  of  the  factors’ 
agreement?  A.  It  does  say  so  in  the  factors’  agreement. 

Q.  Don’t  you  want  to  change  your  statement  of  a moment  ago? 
You  said  that  the  price  was  not  fixed  under  any  arrangement 
with  the  refineries?  A.  It  is  not  fixed  under  any  arrangement 
with  other  refineries. 

Q.  Don’t  that  “equality  book’’  fix  the  price?  A.  It  only  fixes 
the  freight  rate;  it  doesn’t  fix  the  price. 

By  Mr.  McCarren: 

Q.  Is  there  any  arrangement  between  you  and  outside  refiners? 
I mean  those  outside  of  the  American  Sugar  Refining  Company; 
that  they  take  advantage  of  the  fact  of  the  American  Sugar  Re- 
fining Company’s  large  business,  such  a large  percentage  of  the 
business  as  it  does;  being  enabled,  so  to  speak,  to  fix  the  price, 
that  outside  refiners  take  advantage  of  that  fact  and  refuse  to 
sell  to  the  consumer  for  a price  less  than  that  fixed  by  the  Amer- 
ican Sugar  Refining  Company?  A.  As  a matter  of  fact  we  do  not 
pretend  to  sell  to  the  consumer  at  all;  we  sell  to  the  wholesale 
grocers. 

Q.  Well,  through  the  wholesale  grocers?  A.  The  wholesale 
grocers  have  this  agreement;  it  is  for  their  benefit. 

Q.  I am  speaking  now  from  a business  standpoint;  isn’t  it  a 
fact  that  the  outside  refiners  regulate  their  prices,  to  a very  great 
extent,  to  that  fixed  by  the  American  Sugar  Refining  Company? 
A.  No,  sir;  as  in  any  other  line  of  business,  if  it  be  fixed  by  the 
large  dealers  and  large  handlers  of  sugar,  it  regulates  the  price 
to  an  extent. 

Mr.  Lexow:  I don't  want  to  mislead  you,  and  I don’t  want  to 
have  you  give  testimony  that  will  prove  troublesome — A.  I am 
not  afraid  of  any  testimony  that  I give. 

Q.  I call  your  attention  to  this  statement  (reading):  “The  sugar 
shall  not  be  sold  or  disposed  of  by  you,  either  directly  or  indirect- 
ly, for  less  than  daily  quotations,  with  freight  added  from  the 


334 


[Senate, 


refining  point  to  the  point  of  sale,  as  per  equality  rate  book.”  Is 
that  equality  rate  book  the  same  book  used  by  all  the  refiners? 
A.  It  is  issued  by  the  wholesale  grocers,  not  by  the  refiners. 

Q.  But  you  adopted  it  in  your  trade?  A.  Yes,  sir;  we  did. 

Q.  Do  you  claim  that  to  make  any  less  of  an  issuance  by  you, 
you  having  adopted  the  book  as  a book  to  regulate. your  price; 
does  that  make  it  any  less  of  an  agreement,  that  you  don’t  issue 
it?  A.  It  is  a part  of  the  agreement  under  which  they  sell  our 
sugars  on  consignment. 

Q.  Is  the  price  fixed  by  you?  A.  The  price  of  the  sugar  is 
fixed  by  us. 

Q.  In  the  equality  rate  book?  A.  No,  sir;  that  book  does  not 
have  the  price;  I have  not  seen  one  for  many  years;  I don’t  think 
it  has  the  price  at  all. 

Q.  I will  show  you  one?  A.  I have  not  seen  one  for  over  a 
year,  perhaps. 

Q.  This  comes  all  the  way  from  Kentucky;  they  seem  to  be 
taking  some  interest  in  this  investigation  down  there?  A.  Why 
don’t  you  get  one  nearer  home;  we  don’t  sell  very  much  sugar 
down  there;  it  is  supplied  from  other  markets;  I can  get  one  for 
you  by  sending  to  the  wholesale  grocers. 

Q.  Do  you  know  Willet  & Gray?  A.  Yes,  sir;  they  are  sugar 
brokers. 

Q.  Are  they  nothing  more?  Are  they  not  an  authority  in 
the  sugar  business?  A.  I do  not  think  they  are,  except  in  so  far 
as  they  publish  this  paper;  they  get  the  best  information  they 
can  and  publish  it  as  the  best  information  they  can  obtain. 

Q.  Don’t  they  get  information  from  you?  A.  I don’t  think 
think  they  do. 

Q.  Are  they  not  employed?  A.  I don’t  remember  that  they 
are. 

Q.  Of  the  American  Sugar  Refining  Company?  A.  I should 
think  they  wofild  be;  they  sell  both  foreign  and  refined  sugar, 
and  they  publish  this  paper  and  give  the  best  figures  obtainable; 
and  they  are  very  often  out  of  the  way;  I know  that  they  have 
been  from  experience. 


No.  40.] 


335 


Q.  You  do  not  regard  them  as  an  authority  in  the  sugar  busi- 
ness? A.  Except  in  so  far  as  they  publish  that  paper  and  get 
information  as  to  stock;  but  they  don’t  know  what  our  stock  is. 

Q.  As  to  figures;  as  to  the  difference  between  the  price  of  the 
raw  material  and  the  price  of  the  manufactured  article?  A. 
They  take  the  purchases  from  day  to  day  and  average  the  price; 
they  take  the  price  of  the  refined  and  average  that. 

Q.  Mr.  Havemeyer  has  stated  on  that  question  that  Willet  & 
Gray  are  the  refiners’  authority  in  the  sugar  world?  A.  He  may 
so  consider  them. 

Q.  Did  he  state  what  was  true  or  false?  A.  I believe  that  he 
stated  what  was  true,  in  his  opinion ; there  is  room  for  difference 
of  opinion  on  that  question. 

Q.  Is  it  the  only  recognized  authority  of  the  American  Sugar 
Refining  Company;  is  it  only  recognized  as  an  authority  by  that 
company?  A.  There  are  a great  many  dealers  that  issue  circu- 
lars as  to  stock,  etc.,  all  over  the  world ; there  are  a great  many 
that  make  estimates,  etc. 

Q.  (Reads)  “Discount  of  one  per  cent,  thirty  days,  on  not  less 
than  one  hundred  barrel  lots,”  a discount  not  less  than  that  is 
not  given  to — it  is  thirty  days  or  one  per  cent,  for  cash,  and  if  a 
man  buys  less  than  100  barrels  he  loses  his  discount?  A.  Yes, 
sir. 

Q.  One  per  cent,  additional  for  cash?  A.  Yes,  sir. 

Q.  Allowed  factors  only?  A.  In  selling  it  is  allowed  to  any- 
body; it  is  allowed  to  anybody  that  will  buy  sugar. 

Q.  Do  you  mean  to  say  that  one  per  cent,  on  hundred  barrel 
lots  and  the  one  per  cent,  for  cash  is  allowed  to  anybody  but  fac- 
tors? A.  Yes,  anybody  that  buys  sugar. 

Q.  Then  this  is  a false  statement?  A.  No. 

Q.  On  the  part  of  Willet  & Gray  that  you  give  discounts  of 
less  than  one  per  cent.?  A.  I think  it  is  a misstatement. 

Q.  The  commission  of  3-16  paid  to  factors  at  the  end  of  three 
months  under  certain  conditions?  A.  They  have  a condition 
there;  yes. 

Q.  That  is  the  factors’  agreement  referred  to  in  Willet  & 


336 


[Senate, 


Gray’s  bulletin?  A.  If  it  states  that  it  is  not  allowed  to  any- 
body but  factors  it  is  mistaken. 

Q.  Look  at  this  equality  rate  book  and  see  whether  this  one 
from  Kentucky  is  the  same  substantially  in  terms  as  the  one  that 
circulates  in  the  State  of  New  York?  (Witness  examines  book.) 
A.  I believe  that  the  grocers  throughout  the  country  have  prac- 
tically the  same  thing;  although  I would  like  to  get  one  to  com- 
pare with  it. 

Q.  I am  speaking  now  of  the  rules  of  the  members?  A.  They 
are  the  same  throughout  the  country. 

Q.  The  rules  governing  a traveling  man?  A.  They  are  the 
same. 

Q.  Don’t  you  know  whether  these  rules  state  in  this  equality 
rate  book — the  rules  stated  in  this  equality  rate  book  as  being 
the  rules  governing  the  State  of  Kentucky  also  govern  the  State 
of  New  York?  A.  I don’t  know;  there  may  be  some  variation. 

Q.  Your  factors’  agreement  dictates  the  price?  A.  As  to  the 
freight;  I don’t  know  without  comparing. 

Q.  Cannot  you  say  whether  these  rules  agree  with  the  rules  of 
the  New  York  agreement?  A.  I haven’t  a copy  of  the  New  York 
rules  here. 

I • 

Q.  Don’t  you  know  them?  A.  No,  sir. 

Q.  You  mean  the  equality  rate  book,  not  equality  freight  book? 
A.  It  is  a freight  book,  of  course., 

Q.  Now,  let  me  read  for  you,  “Must  not  be  sold  for  less  than  the 
“daily  quotations,  with  freight  added  from  refining  point  to  point 
“of  sale”?  A.  That  is  right. 

Q.  “As  per  equality  rate  book,  nor  in  more  liberal  terms  as  to 
“credit  or  cash  discount.”  A.  That  is  right. 

Q.  Will  you  answer  me  how  a man  in  the  interior  part  of  the 
State  can  get  the  daily  quotations  for  sugar  as  made  unless  he 
gets  it  in  compliance  with  the  terms  of  the  equality  rate  book? 
A.  That  has  nothing  to  do  with  the  price  except  as  to  the  freight 
added;  the  price  he  gets  through  the  published  reports  and  the 
brokers  who  post  him  as  to  the  market. 

Q.  Don’t  your  book  say  the  way  in  which  he  shall  get  the  price? 


No.  40.] 


337 


A.  He  adds  this  rate  to  the  price;  for  instance,  he  adds  60  cents 
to  the  price. 

Q.  Don’t  that  equality  rate  book  show  how  the  man  who  sells 
your  sugar  shall  get  your  daily  quotations?  A.  No,  sir;  it  only 
shows  as  to  the  freight  that  is  to  be  added,  so  far  as  I can  see. 

Q.  You  don’t  seem  to  know  very  much  about  the  business?  A. 
I am  not  a wholesale  grocer;  I don’t  pretend  to  know  as  to  the 
rules  that  they  may  adopt. 

Q.  Is  this  a rule;  when  a notice  of  a change  in  the  price  of  su- 
gar is  received  by  you,  or  shown  to  you  by  another,  you  must  ac- 
cept such  notice  and  adopt  the  price?  A.  It  says  that;  that  must 
be  the  rule, 

Q.  That  is  the  rule?  A.  In  that  particular  book? 

Q.  Yes,  sir.  A.  It  probably  is  the  same  in  every  one;  I am 
willing  to  say  that. 

Q.  That  rule  governs  every  salesman  selling  the  sugar  of  all 
these  so-called  competing  companies?  A.  Yes,  sir. 

Q.  Then,  where  is  the  competition?  A.  That  has  nothing  to 
do  with  the  competition  of  refiners;  it  is  only  competition  of 
grocers. 

Q.  Was  not  the  American  Wholesale  Grocers’  Association 
started  at  the  instance  of  the  refiners  of  the  country?  A.  It  was 
not  started  at  the  instance  of  the  refiners  of  the  country,  in  my 
opinion. 

Q.  Do  you  know  anything  about  it?  A.  Yes,  sir;  it  was 
brought  about  because  the  grocers  wanted  to  make  a little  profit, 
instead  of  selling  at  a loss,  as  they  had  been  doing. 

By  Mr.  Warner: 

Q.  Why  do  you  compel  the  signing  of  this  factors’  agreement 
before  you  will  consign  sugar?  A.  We  choose  our  own  factors 
as  any  other  merchant  would  do.: 

Q.  You  compel  them  to  sign  this  contract?  A.  Yes,  sir;  they 
make  application  to  be  appointed  as  factors. 

Q.  You  would  not  sell  sugar  without  that? 

22 


A.  Yes,  sir. 


338 


[Senate, 


By  Mr.  Mazet: 

Q.  You  would  give  them  the  3-16?  A.  No,  sir;  unless  they 
acted  as  our  factor;  but  they  can  sell  at  any  price  they  please. 

By  Mr.  Lexow: 

Q.  Isn’t  it  a fact  that  instead  of  applying  to  you  for  the  posi- 
tion of  factor  that  you  send  out  a circular  requesting  them  to  make 
application?  A.  We  never  have;  it  goes  through  their  brokers; 
they  make  the  first  application,  and  we  send  them  an  application 
blank  if  they  wish  to  be  appointed  factor,  and  they  sign  this 
blank  if  they  wish. 

Q.  Now,  the  fact  is  that  no  man  can  act  as  agent  unless  he  be- 
comes a factor?  A.  No,  sir;  I don’t  think  so. 

Q.  If  he  depends  entirely  upon  selling  sugar?  A.  They  don’t 
depend  upon  sugars, 

Q.  I mean  to  say  that  so  far  as  sugar  is  concerned  this  3-16  en- 
ables them  to  live  and  the  man  who  does  not  get  that  cannot  make 
a living?  A.  He  can  sell  other  goods;  if  he  is  a factor  he  can 
sell  any  other  kind  of  goods  he  chooses  at  any  price  he  chooses. 

Q.  He  cannot  sell  sugar  without  profit;  he  cannot  sell  in  com- 
petition with  a man  who  gets  a rebate  of  3-16  per  cent,  from  you 
and  make  a profit?  A.  No,  sir;  that  is  very  evident. 

Q.  If  every  other  business  in  the  United  States  were  carried  on 
on  the  same  principle  would  any  business  man  in  competition 
make  any  profit  in  anything  unless  he  became  a factor?  A.  It  is 

the  object  of  every  business  man  to  make  a profit. 

Q.  Why  do  you  make  that  agreement  in  the  form  of  an  affi- 
davit? A.  I suppose  it  is  for  the  purpose  of  protecting  the  hon- 
esty of  men ; it  also  protects  the  consumer  because  he  knows  that 
he  is  not  paying  any  more  for  his  sugar  than  his  neighbor;  they 
all  get  the  same  freight  rates  on  25  barrels  and  they  are  satisfied 
to  sell  at  that  little  profit. 

Q.  In  order  to  obtain  an  absolutely  fixed  certain  price?  A.  In 
order  to  obtain  a profit,  not  a fixed  price. 

Q.  And  in  order  that  the  consumer  may  know  that  he  is  getting 


No.  40.] 


339 


the  goods  for  the  same  price  that  anybody  else  is?  A.  He  is  per- 
fectly satisfied  to  do  it. 

Q.  If  that  same  principle  applied  to  every  business  in  this  coun- 
try would  there  be  any  competition?  A.  Yes,  sir. 

Q.  How  could  there  be?  A.  Because  some  have  more  facilities 
and  they  are  all  competing  for  the  business  in  various  ways. 

Q.  Do  you  consider  that  it  is  a good  business  proposition  or  a 
good  business  pifinciple  that  there  should  be  one  concern  in  the 
United  States,  or  two  or  three  concerns  operating  together  under 
this  equality  rate  book  and  factors’  agreement,  when  they  can  ab- 
solutely fix  and  determine  what  the  price  to  the  consumer  shall 
be?  A.  I believe  that  the  consumer  is  better  off  under  that  agree- 
ment than  before. 


By  Mr.  Warner:  ' 

Q.  Wouldn’t  the  people  get  sugars  cheaper  if  this  system  did 
not  exist?  A.  They  might  temporarily;  possibly  at  times  1-6  of 
a cent  a pound  cheaper. 

Q.  You  don’t  mean  that  this  system  is  for  the  benefit  of  the 
people?  A.  For  the  benefit  of  the  wholesale  grocers. 

Q.  And  for  the  benefit  of  the  people  also?  A.  Why  doesn’t  it? 

Q.  I am  not  on  the  stand;  it  is  for  your  benefit  also?  A.  How 
does  it? 

Q.  I am  not  on  the  stand.  A.  I don’t  see  where  it  benefits  us. 

Q.  Why  do  you  insist  that  they  shall  sign  this  contract  and 
make  this  affidavit  before  you  allow  them  a commission  of  3-16 
per  cent.?  A.  Because  it  gives  them  that  profit  per  pound. 

Q.  It  is  entirely  at  their  instigation  that  you  enter  into  this 
contract?  A.  Yes,  sir. 

Q.  Is  it  not  to  destroy  competition?  A.  It  does  to  that  extent. 

Q.  Absolutely  and  entirely?  A.  They  have  their  different  fa- 
cilities for  distributing;  some  are  located  better  than  others. 

Q.  You  say  they  are  intended  to  prevent  competition  among 
wholesale  grocers  on  refined  sugars?  A.  Yes,  sir. 


340 


[Senate, 


By  Mr.  Lexow: 

Q.  Where  do  they  get  the  benefit;  don’t  you  as  the  result  of 
this  factors’  agreement  absolutely  control  through  your  factors 
the  naming  and  the  fixing  of  the  price  of  sugar,  they  surrendering 
and  losing  their  commission  of  3-16  per  cent,  under  that  agree- 
ment unless  they  act  in  conformity  with  its  provisions,  which  pro- 
vides that  you  shall  from  day  to  day  fix  the  price?  A.  Somebody 
must  fix  the  price,  of  course. 

Q.  And  in  doing  that  you  operate  through  the  same  men  that 
fix  the  price  of  sugars  for  every  refiner  in  the  United  States?  A. 
It  has  its  influence;  yes,  sir. 

By  Mr.  Warner: 

Q.  Before  you  allow  this  commission  to  grocers  under  this  fac- 
tors’ agreement  of  3-16  per  cent,  don’t  you  require  an  affidavit? 
A.  Yes,  sir;  we  do  now. 

Q.  Have  you  one  of  those  here  or  in  your  office?  A.  Yes,  sir. 

Q.  Will  you  produce  it  for  this  committee?  A.  We  will  be 
glad  to  send  it;  I will  do  it  with  pleasure. 

By  Mr.  Lexow: 

Q.  I desire  to  put  this  paper  in  evidence  (marked  exhibit  A, 
Feb.  15,  1897). 

By  Mr.  Warner: 

Q.  In  the  affidavit  that  they  are  required  to  make  they  have 
to  swear-  to  the  fact  that  they  have  not  sold  or  disposed  of  any 
of  the  sugar  for  less  than  the  daily  quotations  of  your  com- 
pany? A.  With  freight  added;  yes,  sir. 

Q.  From  the  refining  point  to  the  point  of  sale  as  per  equality 
rate  book?  A.  Yes,  sir. 

By  Mr.  Mazet: 

Q.  I understood  you  to  say  that  you  didn’t  require  any  affida- 
vit? A.  At  the  request  of  the  grocers,  we  have  an  affidavit  now. 


No.  40.] 


341 


By  Mr.  Warner: 

Q.  That  is  exactly  the  same  form  as  the  affidavit  of  the  Ameri- 
can Sugar  Refining  Company?  A.  I think  it  is  worded  differ- 
ently, but  it  has  the  same  effect. 

By  Mr.  Lexow : 

Q.  Will  you  produce  also  the  equality  rate  book  that  has  been 
mentioned?  A.  I will  ask  the  grocers  to  give  me  one;  they  have 
an  office  across  town. 

Q.  Do  you  know  of  any  change  being  made  in  the  rules  of  the 
equality  plan?  A.  I do  not  know  of  any. 

Q.  Recently,  you  mean?  A.  I don’t  know  of  any. 

Q.  Now,  this  equality  plan,  in  rate,  without  reference  to  the 
agreement,  is  for  the  purpose  of  producing,  according  to  its 
terms,  an  absolute  equality?  A.  Yes,  sir. 

Q.  In  the  price  of  sugar?  A.  Yes,  sir;  in  the  price  at  which  it 
is  sold. 

Q.  So  that  you  don’t  even  want  a distributing  element  of  com- 
petition in  the  freight  rates?  A.  The  grocers  do  not  want  it. 

Q.  And  by  adopting  in  that  agreement  you  don't — A.  Wo 
help  them  to  make  that  profit  of  3-16. 

Q.  With  other  words,  after  having  fixed  the  price  of  sugar  and 
keeping  the  price  of  the  sugar  itself  in  the  hands  of  the  whole- 
sale grocers,  through  your  factors’  agreements,  you  go  one  step 
further  and  equalize  still  more  by  preventing  any  competition  in 
the  freight  rates  as  well?  A.  Yes,  sir. 

By  Mr.  Warner’: 

Q.  Then,  this  agreement  is  entirely  for  the  benefit  of  the  gro- 
cers, that  you  require  this  affidavit?  A.  It  is  for  their  benefit 
to  help  maintain  the  price. 

Q.  You  won’t  allow  any  commission  unless  they  make  an  affi- 
davit? A.  No,  sir;  you  can  see  it  is  very  plain. 

Q.  Out  of  regard  to  their  wishes?  A.  Out  of  regard  to  their 
wishes. 

f 


342 


[Senate, 


Q.  They  are  very  desirous  of  making  this  affidavit  before  they 
get  this  commission?  A.  Yes,  sir;  it  helps  them  to  get  a profit 
on  sugar. 

Q.  In  that  way  they  are  desirous  of  making  the  affidavit?  A. 
Yes,  sir. 

By  Mr.  Bedell : 

Q.  Is  your  company  the  solicitor  or  do  the  people  who  desire 
to  become  factors  solicit  you?  A.  They  solicit  us  through  their 
brokers. 

Q.  I desire  to  read  to  you  from  your  circular  letter?  A.  That 
we  send  out  after  we  learn  that  they  have  made  a proposal  to 
act  as  such;  if  a firm  wants  to  become  factors,  we  send  them  this 
application. 

Q.  Then  there  is  some  desire  upon  your  part?  A.  Yes, 
through  their  brokers. 

Q.  You,  also?  A.  Yes,  it  helps  them. 

Q.  Don’t  you  prefer  to  do  business  with  factors?  A.  Yes,  sir; 
we  do. 

By  Mr.  Barry: 

Q.  Notwithstanding  the  fact  that  you  would  save  1-16?  A. 
How  would  we  save  it? 

By  Mr.  Lexow: 

Q.  They  couldn’t  sell  because  they  hadn’t  established  fhis 
plan;  you  cannot  sell  to  the  general  public?  A.  We  don’t  want 
to  sell  to  the  consumer  direct. 

Q.  Why?  A.  Because  we  believe  that  grocers  have  better 
distributing  facilities;  we  couldn’t  afford  to  sell  to  every  man 
that  comes  to  us  for  a barrel  of  sugar. 

Q.  If  they  desire  it,  why  shouldn’t  you  do  it?  A.  Why  should 
we?  I don’t  know  any  reason  why  we  should;  we  simply  could 
not  undertake  to  manage  our  business  in  that  way. 

Q.  It  is  simply  to  keep  up  the  price  of  sugar?  A.  No,  sir;  it 
helps  the  grocers  to  make  a profit. 


No.  40.] 


343 


Q.  And  prevent  competition  at  the  same  time?  A.  To  restrict 

it. 

Q.  And  to  stamp  it  out  completely?  A.  No,  sir. 

Q.  Isn’t  that  the  practical  result?  A.  I don’t  know — I think 
that  there  are  just  as  many  handling  sugar  now  as  there  were 
before  it  was  formed. 

By  Mr.  Warner : 

Q.  You  are  incorporated  under  the  laws  of  this  State?  A.  The 
National  under  the  laws  of  the  State  of  New  Jersey;  the  Mollen- 
hauer  in  this  State. 

Q.  Do  you  think  that  you  get  an  advantage  by  incorporating 
under  the  laws  of  a State  whereby  you  can  refuse  absolutely  to 
sell  to  anybody  that  may  make  application?  A.  Yes,  sir;  in  one 
barrel  lots  we  could  not  undertake  to  do  our  business;  the  ex- 
pense would  be  too  great;  we  could  do  it  by  charging  more  money 
to  make  up  the  extra  expense. 

By  Mr.  McCarren : 

Q.  Some  reference  is  made  in  the  agreement  that  has  been  re- 
ferred to  here  about  daily  quotations;  who  regulates  the  daily 
quotations?  A.  We  put  them  up  every  morning;  we  have  a 
paper  printed  and  the  brokers  can  get  it  if  they  want  to,  and  so 
can  the  salesmen. 

Q.  That  is  the  way  the  quotations  are  regulated?  A.  Every 
morning  about  nine  or  ten  o’clock  we  put  up  our  list  of  prices. 

By  Mr.  Lexow : 

Q.  And  send  them  where?  A.  Brokers  can  get  them  and  we 
telegraph  to  some  markets. 

Q.  Do  you  telegraph  your  price  daily  to  the  different  wholesale 
grocers  throughout  the  country?  A.  We  don’t. 

Q.  Who  does?  A.  I think  the  association  has  secretaries  at  dif- 
ferent places  and  they  could  perhaps  do  the  telegraphing. 

Q.  From  what  center?  A.  I think  New  York;  in  different 
States  they  have  cities  that  are  centers. 


344 


[Senate, 


Q.  How  do  you  get  your  current  daily  quotations  into  the 
hands  of  the  various  traveling  salesmen  and  factors  through  the 
country?  A.  We  have  no  traveling  salesmen  throughout  the 
country. 

Q.  Well,  traveling  salesmen  representing  factors  that  you  have 
appointed?  A.  There  are  thirty  or  forty  different  brokers  who 
are  paid  to  keep  them  posted  as  to  the  price  and  they  telegraph; 
sometimes  one  broker  will  tell  two  or  three  others. 

Q.  The  brokers  are  intermediaries  between  you  and  the  fac- 
tors? A.  They  are  paid  a brokerage  of  so  much  a barrel;  there  is 
great  competition  between  them  to  sell  sugar;  I suppose  there 
are  fifty  brokers  in  refined  sugar  here. 

By  Mr.  Warner: 

Q.  Don’t  your  factors  get  their  quotations  from  the  American 
Sugar  Refining  Company  and  accept  those  as  quotations?  A. 
Sometimes. 

Q.  When  was  the  Wholesale  Grocers’  Association  established? 
A.  It  has  been  an  association  for  many  years;  the  factors’  agree- 
ment went  into  effect  a year  ago  last  October;  but  they  have  had 
an  association  for  many  years  throughout  the  different  States. 


By  Mr.  Lesow : 

Q.  Did  they  use  factors’  agreements  prior  to  that  time?  A. 
No,  sir;  they  regulated  their  own  prices  and  profits  under  an 
agreement. 

Q.  When  did  you  issue  the  first  factors’  agreement?  A.  I think 
it  was  October  10,  1895;  I would  have  to  refer  to  a record  to  be 
sure  as  to  the  date. 

By  Mr.  Bedell: 

Q.  There  is  nothing  to  indicate  it;  it  simply  says  “1-8-9,  blank; 
nothing  to  indicate  the  year?  A.  I think  it  was  October,  1895. 

Q.  How  had  you  been  operating  prior  to  that  time?  A.  By 
selling  sugar  to  the  different  grocers  at  the  long  price,  less  3-16 
per  cent. 


No.  40.] 


345 


Q.  Yon  had  been  operating  substantially  in  the  same  way  but 
without  requiring  an  affidavit?  A.  We  didn’t  require  any  fac- 
tors' agreement;  we  sold  the  sugar  outright  at  a price,  less  d!s- 
count. 

By  Mr.  Lexow: 

Q.  Then,  according  to  your  statement,  about  October,  1895,  you 
changed  to  an  agreement  of  consignee  with  consignor?  A.  Yes, 
sir.  ■ ’ 

Q.  And  provided  for  the  making  of  this  affidavit?  A.  Yes,  sir; 
we  didn’t  at  first,  but  we  have  since  adopted  that  part;  I think 
some  six  months  afterward. 

Q.  Now,  why  did  you  adopt  these  affidavits?  A.  They  thought 
it  to  be  for  the  benefit  of  the  grocers  in  helping  to  maintain  the 
price;  it  was  as  a protection  to  each  other. 

By  Mr.  Warner: 

Q.  Why  should  not  a common  certificate  or  statement  be  suffi- 
cient without  an  affidavit?  A.  That  is  all  that  we  call  for  at  the 
time;  I suppose  because  some  of  the  grocers  are  apparently  afraid 
to  trust  one  another., 

Q.  You  don’t  regard  the  affidavit  necessary  in  every  case?  A. 

We  do. 

Q.  Why  wouldn’t  a common  statement  do?  A.  That  is  all  we 
required  for  several  months;  but  the  grocers  preferred  to  give 
that  affidavit  because  they  felt  safer. 

By  Mr.  Lexow : 

Q.  Do  you  have  access  to  those  affidavits?  A.  No,  sir. 

Q.  Who  has  access  to  the  papers  and  documents  showing  your 
agreement  with  factors  and  the  extent  to  which  they  are  living 
up  to  the  agreement?  A.  No  answer. 

Q.  isn’t  it  true  that  this  change  from  an  ordinary  agreement  to 
an  affidavit  was  made  because  there  was  competition  in  sugars, 
aDd  the  wholesale  grocers  throughout  the  United  States  wanted 


346 


[Senate, 


to  destroy  it?  A.  They  thought  there  were  some  grocers  who 
wouldn’t  have  any  scruples  about  making  out  a false  certificate, 
and  that  they  would  hesitate  before  making  an  affidavit. 

Q.  When  you  speak  about  the  delicate  scruples  of  brokers  you 
mean  they  were  exercising  their  right  to  compete  freely  in  the 
market?  A.  They  made  an  agreement  that  they  would  maintain 
the  price;  after  making  that  agreement  they  thought  they  would 
change  it  to  an  affidavit., 

By  Mr.  Warner: 

Q.  Isn’t  it  a fact  that  the  reason  why  you  require  this  affidavit 
is  because  you  want  to  keep  the  wholesale  grocers  from  selling 
imported  sugar?  A.  No,  sir;  there  is  nothing  in  it  about  foreign 
sugars;  some  of  them  do  do  it. 

John  E.  Searles,  recalled. 

Examined  by  Mr.  Lexow: 

Q.  You  stated  on  your  former  examination  that  the  production 
of  sugar  has  been  depressed  during  the  last  year;  how  long  was 
it  depressed?  A.  I don’t  remember  testifying  in  those  terms. 

Q.  Was  it  or  was  it  not?  A.  To  what  do  you  refer,  the  raw  or 
the  refined? 

Q.  Refined  sugars?  A.  There  was  no  particular  depression 
last  year  that  I am  aware  of;  I may  have  stated  that  at  certain 
seasons,  or  during  a certain  period  there  was  less  business  than 
at  others;  that  the  business  was  depressed;  that  occurs  at  inter- 
vals every  year. 

Q.  Was  it  more  marked  last  year  than  the  year  before?  A.  I 
think  not., 

Q.  Or  the  year  previous  to  that?  A.  The  year  previous  to  that 
there  was  a very  marked  depression,  growing  out  of  the  financial 
troubles. 

Q.  Times  were  fairly  bad  last  year?  A.  Yes,  sir;  it  had  its 
effect.  i 

Q.  And  yet  you  increased  the  margin  of  difference  between  the 


No.  40.] 


347 


value  of  the  raw  material  and  the  price  of  the  refined  product 
quite  a considerable  number  of  points  to  the  consumer?  A. 
There  was  a slight  increase. 

Q.  There  was  a steady  increase  during  the  last  three  years,  was 
there  not?  A.  There  was  an  increase  during  that  period. 

Q.  Is  it  still  increasing?  A.  On  the  contrary;  there  has  been  a 
decrease  during  this  year. 

Q.  To  what  extent?  A.  I should  judge  about  one-eighth  of  a 
cent  per  pound. 

Q.  That  would  make  the  margin  of  difference  between  the  raw 
material  and  the  refined  product  what,  Mr.  Searles?  A.  From 
three-quarters  to  seven-eighths  of  a cent  per  pound. 

Q.  How  much  does  it  cost  to  refine  sugar?  A.  That  depends 
altogether  upon  varying  conditions;  there  is  no  fixed  figure  of 
cost;  it  depends  upon  the  class  of  sugar  refined  and  the  quality 
of  the  product. 

Q.  I am  speaking  of  the  granulated  type?  A.  It  is  a type  of 
refined  sugar,  but  the  product,  or  the  raw  sugar  from  which  that 
granulated  is  made,  makes  all  the  difference  in  the  world  as  to 
the  cost  of  its  production,  whether  it  is  made  from  a high  grade 
of  raw  sugar  or  from  lower  grades. 

Q.  But  the  average;  what  is  the  cost  of  refining  per  pound? 
A.  From  a half  to  three-quarters  of  a cent  per  pound. 

Q.  Do  you  now  speak  of  your  own  experience  or  the  experi- 
ence of  others?  A.  I have  no  other  knowledge  than  our  own  ex- 
perience. 

Q.  When  you  say  your  own  experience,  you  mean  the  Ameri- 
can Sugar  Refining  Company?  A.  That  is  what  I mean,  the 
American  Sugar  Refining  Company. 

Q.  How  is  this  computed?  A.  That  is  the  result  of  several 
years  of  observation  of  the  cost  of  refining 

Q.  And  over  how  many  years  has  this  estimate  been  made? 
A.  Several  years. 

Q.  How  long  has  it  been  carried  back?  A.  Over  the  last  nine 
years. 

Q.  That  is  to  say,  ever  since  the  original  Trust?  A.  Yes,  sir. 


348 


[Senate, 


Q.  And  you  keep  a record  upon  which  you  have  estimated 
this  cost  of  the  refined  material?  A.  We  have  records  of  dif- 
ferent factors  which  enter  into  the  cost  of  refining;  it  varies  in 
every  house  because  of  varying  conditions  and  it  depends  on  the 
grades  of  sugar  they  make;  there  is  a difference  in  cost  in  differ- 
ent refineries. 

Q.  Now,  that  cost  is  estimated,  is  it  not,  between  the  opera- 
ting expenses  of  the  factory,  the  charges  of  the  office  and  the 
charges  of  distribution?  A.  Yes,  it  covers  those;  but  there  is 
an  average  item  of  wasteage  which  must  also  be  taken  into  ac- 
count. 

Q.  That  is  another  item  taken  into  that  computation?  A. 
Yes,  sir. 

Q.  Then  when  you  say  from  50  to  75,  you  have  taken  into  ac- 
count every  element  of  expense  and  cost  attending  the  refining 
of  sugar?  A.  With  the  exception  of  one  very  important  fac- 
tor; that  is  the  depreciation  of  the  plant,  for  which  allowance 
should  be  made  in  addition. 

Q.  Do  you  make  that  allowance?  A.  We  do;  that  is  the  way 
we  estimate;  it  is  not  included  in  these  figures;  of  course,  these 
figures  do  not  cover  depreciation  of  plant. 

Q.  In  any  of  the  estimates  of  values  given  against  which  the 
stock  was  issued,  there  has  been  no  charge  for  depreciation,  has 
there?  A.  As  an  offset,  we  have  expended  very  large  sums  of 
money  in  the  improvement  of  the  plant  which  stands  on  our 
books  as  an  offset,  which  would  properly,  perhaps,  be  charged  to 
depreciation;  one  offsets  the  other;  there  has  been  no  definite 
charge  to  depreciation  of  plant. 

Q.  The  American  Sugar  Refining  Company  is  able,  is  it  not, 
to  refine  and  produce  the  completed  product  cheaper  than  any 
other  similar  concern  in  the  United  States?  A.  I have  no 
knowledge  of  what  it  costs  other  concerns  iu  the  United  States; 
I can  only  state  our  own  experience. 

Q.  Have  you  no  knowledge  at  all?  A.  No,  sir;  none  what- 


ever. 


No.  40.] 


349 


Q.  Have  you  any  knowledge  of  the  cost  of  the  seventeen  con- 
solidated concerns  represented  by  the  American  Sugar  Refining 
Company?  A.  I have  a knowledge  of  everything  that  apper- 
tains to  the  American  Sugar  Refining  Company. 

Q.  And  that  includes  the  separate  businesses  of  the  seventeen 
consolidated  concerns?  A.  There  are  no  seventeen  concerns; 
there  is  but  one  concern. 

Q.  Originally?  A.  There  were  originally  fifteen  different  re- 
fineries. 

Q.  You  have  added  to  those  since?  A.  Yes,  sir. 

Q.  How  many?  A.  Five. 

Q.  Making  twenty  altogether?  A.  Yes,  sir;  going  back  to  the 
original  plants. 

Q.  Will  you  tell  us  whether  or  not  the  American  Sugar  Refin- 
ing Company  is  able  to  produce  the  product  at  less  cost  than  any 
other  refining  concern  in  the  United  States?  A.  I have  no  knowl- 
edge of  the  cost  of  other  refining  concerns;  therefore,  I cannot 
answer  your  question. 

Q.  Isn’t  it  a fact,  and  haven’t  you  so  testified,  that  the  consoli- 
dation of  these  fifteen  companies  was  for  the  purpose  of  economy 
in  production;  and  do  you  now  mean  to  say  notwithstanding  the 
consolidation  of  these  fifteen  original  companies  and  the  five 
since  acquired,  that  you  are  still  not  able  to  manufacture  the  pro- 
duct cheaper  than  the  smaller  concerns,  comparatively,  that  are 
competing  against  you?  A.  I do  repeat  what  I have  testified  to 
heretofore,  that  the  object  of  consolidation  was  economy  in  pro- 
duction; as  to  the  comparison  between  the  American  Sugar  Re- 
fining Company  and  other  companies,  I have  no  knowledge  by 
which  to  base  a statement  under  oath. 

Q.  If  you  are  not  able  to  refine  more  cheaply  than  other  con- 
cerns that  have  not  been  consolidated  but  are  independent,  then 
one  of  the  principal  objects  of  your  consolidation  has  proven  a 
failure;  is  that  true?  A.  I think  that  statement  is  a very  good 
one. 

Q.  That  is  correct;  that  unless  you  are  able  to  produce  the  pro- 
duct cheaper  than  smaller  concerns,  then  one  of  the  main  objects 


350 


[Senate, 


of  your  consolidation  has  proven  a failure;  is  that  right?  A.  I 
think  it  is  fair  to  assume  that  would  be  the  case. 

Q.  Do  you  know  Mr.  McCahan?  A.  I do  not. 

Q.  Have  you  ever  met  him;  you  know  whom  I mean?  A.  I 
may  have  met  the  gentleman;  I don’t  remember  positively;  I 
think  I may  have  done  so  some  time  since. 

By  Mr.  Warner: 

Q.  Was  the  profit  of  the  American  Sugar  Refining  Company 
greater  last  year  than  the  year  before?  A.  I think  not. 

Q.  Quite  a falling  off?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  I understood  you  to  say  that  you  acquired  twenty  separate 
refineries  since  the  organization  of  the  Trust?  A.  Yes,  sir. 

Q.  You  acquired  one  last  year,  didn’t  you?  A.  No,  sir. 

Q.  Didn’t  you  acquire  one  at  Camden,  N.  J.?  A.  The  Camden 
refinery  was  purchased  by  a Mr.  Hawley. 

Q.  And  turned  over  to  the  American  Sugar  Refining  Company? 
A.  No,  sir;  it  has  not  been  turned  over  to  that  company. 

Q.  You  have  a contract  for  that?  A.  I am  not  aware  of  such 
contract. 

Q.  Have  you  no  understanding  that  the  American  Refining 
Company  is  to  get  an  interest  in  that  refinery  at  Camden,  N.  J.? 
A.  At  the  present  time;  no,  sir. 

Q.  No  agreement?  A.  No,  sir;  to  that  effect. 

By  Mr.  Barry: 

Q.  Is  it  in  operation  now?  A.  It  is  not  a complete  refinery. 

Q.  It  is  not  in  operation  at  all?  A.  No,  sir. 

Q.  From  whom — who  did  you  say  purchased  it?  A.  Mr.  Haw- 
ley. 

Q.  Member  of  your  company?  A.  No,  sir. 

Q.  What  are  the  other  two  companies  that  you  have  purchased, 
the  last  two?  A.  There  are  five  that  I have  referred  to;  they  in- 
clude the  four  Philadelphia  refineries  and  the  Baltimore  refinery. 


No.  40.] 


351 


By  Mr.  Lexow: 

Q.  You  know  the  McCahan  refinery,  don’t  you?  A.  Yes,  sir. 

Q.  Do  you  know  its  output?  A.  No,  sir. 

Q.  Do  you  know  whether  its  output  is  3,000  barrels  per  day? 
A.  I should  think  not. 

Q.  2,500?  A.  I don’t  know  its  capacity. 

Q.  Less  than  3,000?  A.  I should  think  so. 

Q.  Haven’t  you  sufficient  general  knowledge  of  that  concern  to 
know  whether  it  exceeds  that?  A.  That  is  my  impression. 

Q.  Don’t  you  know?  A.  I don’t  know  what  its  capacity  is. 

Q.  Your  best  information  is  that  it  is  3,000  barrels  or  less?  A. 
I have  no  information  as  to  its  capacity. 

By  Mr.  Mazet: 

Q.  Do  you  know  its  production?  A.  I don’t  know. 

By  Mr.  Lexow : 

Q.  Have  you  no  figures?  A.  I think  that  is  approximately  cor- 
rect; but  I have  no  definite  knowledge  as  to  it. 

Q.  Is  there  any  condition  surrounding  the  McCahan  refinery 
that  would  cause  the  expense  of  refining  sugar  to  be  greater  or 
as  large  as  the  expense  of  the  American  Sugar  Refining  Com- 
pany? A.  I have  no  knowledge  whatever  of  their  facilities  for 
refining  or  as  to  the  cost  of  refining. 

Q.  Unless  the  cost  of  refining  to  you  is  smaller  than  the  cost  of 
refining  to  the  McCahan  concern  your  consolidation  has,  in  the 
direction  of  economy,  proven  a failure;  is  that  not  true?  A.  I 
should  hardly  be  prepared  to  say  that. 

Q.  Isn’t  it  true  substantially  that  your  concern  is  a type  of 
about  twenty  McCahan  factories  put  into  one  for  the  purpose  of 
economy,  among  other  things?  A.  Hardly  so  many  as  that. 

Q.  Didn’t  you  say  twenty  companies?  A.  Yes,  sir;  they  w'ere 
not  all  of  the  capacity  that  you  assume  for  that  factory. 

Q.  Say  fifteen?  A.  That  would  be  more  nearly  correct,  I 
should  judge. 


352 


[Senate, 


Q.  Now,  unless  the  consolidation  of  the  fifteen  concerns,  each 
as  large  as  the  McCahan  concern,  has  led  to  an  economy  in  pro- 
duction considerably  greater  than  the  cost  of  production  tt>  the 
McCahan  as  a single  concern,  your  consolidation  to  the  extent 
of  economy  must  be  a failure,  must  it  not?  A.  I should  expect 
that  there  would  be  some  advantage  to  the  larger  concern. 

Q.  Was  not  that  one  of  the  objects  of  consolidation,  economy 
of  production?  A.  Undoubtedly- 

Q.  Now,  let  me  read  to  you  the  testimony  of  Mr.  McCahan  be- 
fore the  Senate  Committee  in  Washington  in  answer  to  Mr. 
Payne. 

“You  stated  that  you  wouldn’t  say  as  to  the  cost  of  refining  in 
“your  factory  after  you  had  answered  my  question,  Mr.  Mc- 
“Cahan?  A.  I answered  that  it  was  56  cents  per  hundred;  there 
“is  26  cents  waste  to  come  out  of  that,  which  brings  down  the 
“cost  of  refining  to  30  cents,  I think;  when  I said  56  cents  I in- 
cluded waste.” 

Q.  Now,  if  Mr.  McCahan  can  manufacture  the  refined  product 
at  a cost  to  him  in  a factory,  with  a total  output  of  3,000  barrels 
per  day,  at  56  cents,  including  waste  of  26  cents,  is  it  possible 
that  it  takes  from  50  to  75  cents  for  production  in  your  factory, 
where  your  consolidation  has  brought  together  and  centralized  a 
production  of  30,000  barrels  a day?  A.  Mr.  McCahan  testified 
in  that  hearing  that  he  had  used  only  the  highest  grades  of  raw 
sugar;  and  the  cost  of  refining  to  Mr.  McCahan  would  be  the  mini- 
mum cost  to  anybody  in  the  sugar  refining  business;  the  differ- 
ence between  56  cents  and  50  cents  a pound  would  be  a profit. 

Q.  But  the  cost  of  raw  sugar  and  the  purchase  of  the  cheaper 
grade  would  offset  that?  A.  No,  sir;  it  has  nothing  to  do  with 
the  cost  of  refining  it. 

Q.  Do  you  wish,  then,  to  be  understood  that  you  cannot  man- 
ufacture refined  sugar  at  the  same  price,  notwithstanding  your 
centralization  of  factories,  as  can  Mr.  McCahan,  if  his  testimony 
before  the  Ways  and  Means  Committee  is  to  be  considered  true? 
A.  Undoubtedly,  under  the  same  conditions. 

Q.  And  cheaper?  A.  Possibly  so. 


\ 


No.  40.]  353 

Q.  Don’t  you  know  you  can?  A.  I don’t  know;  I don’t  know 
what  it  costs  him. 

Q.  Do  you  mean  to  say  that  you  don’t  know  as  a general  prop- 
osition that  you  can  manufacture  cheaper;  as  an  abstract  proposi- 
tion do  you  mean  to  say  that  you  do  not  know  that  you  can  manu- 
facture cheaper  than  the  McCahan  concern,  which  has  an  output 
of  less  than  3,000  barrels  per  day?  A.  Under  the  same  condi- 
tions we  could  undoubtedly  manufacture  as  cheaply  as  Mr.  Mc- 
Cahan and  possibly  somewhat  cheaper. 

Q.  Have  you  not  grouped  all  the  possible  conditions  in  the  su- 
gar trade  together  under  the  concentration  of  factories  situated 
in  different  localities  all  over  the  Eastern  States  and  surrounded 
Mr.  McCahan  himself  in  the  city  of  Philadelphia?  A.  We  have. 

Q.  Isn't  that  the  object  of  your  consolidation?  A.  Undoubt- 
edly, it  economizes  the  production. 

Q.  Now,  I ask  you,  as  an  abstract  proposition,  can’t  you  state 
whether  or  not  you  can,  and  do,  produce  the  refined  sugar  at  a 
cost  less  than  that  produced  by  Mr.  McCahan?  A.  We  do  our 
sugar  refining  on  a totally  different  basis  from  that  done  by  Mr. 
McCahan;  there  can  be  no  comparison  between  the  cost  of  re- 
fining by  him  and  the  American  Sugar  Refining  Company,  for 
the  reason  that  he  restricts  himself  to  the  refining  of  “ ’90  -cen- 
trifugal sugars,”  while  the  American  Sugar  Refining  Company 
in  its  refining,  uses  a diversity  of  sugar,  and  uses  various  grades; 
there  can  be  no  comparison  between  the  workings  of  the  two  as 
to  cost. 

Q.  That  is  the  only  answer  that  you  can  give?  A.  Yes,  sir. 

Q.  Is  there  any  other  gentleman  in  the  sugar  refining  trade 
whose  conditions  are  different  from  yours?  A.  Different  from 
ours? 

Q.  Yes.  sir;  in  the  same  way  that  the  McCahan  conditions  are 
different?  A.  1 think  there  is  no  one  else  in  the  sugar  refining 
business  that  works  the  same  grades  of  sugar  and  the  same  va- 
riety that  the  American  Sugar  Refining  Company  does. 

Q.  Then,  you  have  really  no  competitors  in  that  business  at 
all?  A.  We  have. 


23 


354  [Senate, 

Q.  The  conditions  surrounding  the  other  manufacturers  are 
entirely  different?  A.  That  is  not  true. 

Q.  How  do  you  bring  into  consistency  with  your  former  state- 
ment that  there  is  nobody  in  the  business  doing  the  same  kind  of 
business?  A.  My  former  statement  was  that  no  one  else  used 
the  same  variety  of  sugars  that  we  use;  therefore,  the  cost  of  re- 
fining as  between  those  houses  and  ours  would  not  be  a parallel 
case. 

Q.  Then  there  is  no  other  manufacturer  in  the  United  States 
surrounded  by  the  same  conditions  that  surround  the  American 
Sugar  Refining?  A.  No  other  that  has  absolutely  the  same  con- 
ditions. 

Q.  And  no  analogy  can  be  drawn  from  the  comparisons  be 
tween  other  houses  and  yours  as  to  the  cost  of  refining?  A.  No, 
sir. 

Q.  Is  the  resultant  product  of  yours  equal  in  purity  to  the  Mc- 
Cahan  product?  A.  It  is. 

Q.  The  same  product?  A.  It  is  the  finest  product  made  in  the 
world,  that  of  the  American  Sugar  Refining  Company. 

Q.  I have  no  doubt  about  that?  A.  That  is  the  fact. 

Q.  Mr.  McCahan  so  considers  his  own  product?  A.  I have  no 
knowledge  as  to  that,  except  your  statement. 

Q.  Does  Mr.  Mollenhauer  run  under  the  same  conditions  that 
you  do?  A.  No,  sir. 

Q.  Or  the  National?  A.  No,  sir. 

Q.  By  that  you  mean  they  cannot  be  compared  with  your  com- 
pany? A.  No,  sir. 

Q.  Then  you  are  sui  generis?  A.  I accept  your  knowledge  of 
the  law. 

Q.  Do  you  know  General  Sypher?  A.  I do. 

Q.  Is  he  an  authority  on  sugar?  A.  Not  the  slightest;  he  has 
no  knowledge  whatever  on  the  subject. 

Q.  He  has  investigated  the  subject?  A.  No,  sir. 

Q.  Do  you  know  of  the  statement  made  by  him  before  the 
Ways  and  Means  committee?  A.  I recollect  that  he  made  a 
statement;  I do  not  remember  what  it  was. 


No.  40.] 


355 


Q.  That  after  some  examination  into  the  subject  he  had  reached 

I 

the  conclusion  that  the  difference  between  the  cost  of  the  raw  and 
the  refined  product  did  not  exceed  twenty-five  cents?  A.  I 
should  think  very  likely  he  made  such  a statement;  but  he  has 
no  knowledge  upon  which  to  base  that  statement. 

Q.  You  challenge  the  correctness  of  that  statement?  A.  I do, 
most  assuredly. 

Q.  Did  you  run  your  factories  last  year  to  their  full  capacity? 

A.  No,  sir. 

Q.  At  no  time  during  the  year?  A.  No,  sir. 

Q.  How  many  factories  were  idle  during  last  year?  A.  I think 
four  or  five. 

Q.  Can  you  name  them?  A.  The  Greenpoint  refinery  was  idle; 
one  of  the  Louisiana  refineries  was  idle;  two  of  the  smaller  re- 
fineries. 

Q.  Which  ones?  A.  The  Continental  Refinery  in  Boston  and 
the  DeCastro  & Donner  Refinery. 

Q.  During  the  whole  of  last  year?  A.  The  Continental  Refin- 
ery in  Boston  was  run  for  a period  of  sixty  days,  perhaps. 

Q.  During  what  part  of  the  year?  A.  During  the  time  when 
the  consumpton  of  sugar  was  largest. 

Q.  These  factories  that  were  idle  are  in  addition  to  the  factor- 
ies that  were  closed  up  immediately  following  the  organization 
of  the  so-called  Trust?  A.  They  were  part  of  the  original  plant. 

Q.  How  many  active  refineries  of  the  19  or  20  refineries  that 
you  owned  on  the  first  day  of  January,  1896 — how  many  were  in 
operation  during  the  year  1896?  A.  Active  refineries? 

Q.  No;  of  the  20  refineries  that  you  purchased  by  transfer  of 
property  or  transfer  of  stock  to  the  American  Sugar  Refining 
Company;  how  many  of  these  20  properties  were  in  operation  on 
the  first  day  of  January,  1S96?  A.  I think  eleven  or  twelve — 
twelve,  I think. 

Q.  Twelve  were  operated  and  eight  were  closed?  A.  Yres,  sir. 

Q.  And  that  was  true  during  the  latter  part  of  the  year  1896? 
A.  The  twelve  refineries  were  only  in  operation  during  what  we 
call  our  busy  season. 


356 


[ Senate, 


Q.  How  many  of  these  twelve  that  were  active  on  the  first  day 
of  January,  1896,  were  closed  during  some  part  of  the  year  1896? 
A.  I misunderstood  your  question;  the  twelve  were  not  active 
on  the  first  day  of  January;  they  were  active  during  the  year 
1896;  the  first  day  of  January  in  every  year,  or  thereabouts,  is  the 
period  of  smallest  consumption,  when  our  consumption  as  a busi- 
ness is  restricted;  but  in  order  to  understand  this  you  ought  to 
know  that  the  consumption  of  sugar,  refined  sugar,  in  the  coun- 
try, is  at  this  season  of  the  year,  or  in  the  winter  time,  only  about 
50  per  cent,  of  the  summer  season. 

Q.  I asked  you  what  is  the  largest  number  of  factories  of  the 
twenty  that  you  own  that  operated  during  the  time  of  highest 
pressure;  the  largest  consumption  in  1896?  A.  I think  twelve. 

Q.  What  was  the  smallest  number  of  factories  operating  at  the 
time  of  lowest  consumption  during  1S96?  A.  Six. 

Q.  Then  the  situation  during  1896  was  this;  that  at  all  times 
during  the  year  eight  of  your  factories  were  closed,  and  during 
some  portion  of  the  year  fourteen?  A.  I stated  in  my  previous 
testimony  that  of  these  eight  a portion  of  them  had  been  merged 
into  other  plants;  so  that  they  are  not  properly  counted  as  idle 
factories;  for  instance,  the  North  River  Sugar  Company  property 
was  taken  by  the  city  for  a public  park  and  that  plant  was  de- 
stroyed; some  of  the  other  plants  were  consolidated;  two  of 
these  in  Boston  were  consolidated,  or  at  least  one  of  them  was 
consolidated  and  the  other  was  held  as  reserve  property;  some  of 
the  properties  have  not  been  operated  in  the  last  five  or  six  years, 
but  are  held  in  reserve  for  the  emergencies  of  the  business. 

Q.  So  far,  however,  as  the  properties  originally  acquired  are 
concerned,  that  wTas  the  situation  in  1896,  that  during  the  time 
of  least  consumption  fourteen  were  out  of  operation,  and  during 
the  time  of  highest  consumption  eight  were  out  of  operation?  A. 
I should  correct  that  figure  of  six  to  seven;  I remember  now. 

Q.  Thirteen?  A.  And  the  original  statement  seven  instead  of 
six. 

Q.  That  is  thirteen  and  eight?  A.  Yes,  sir. 

Q.  When  did  you  buy  the  Uuited  States  Sugar  Refining  Com- 


No.  40.] 


357 


paiiy  property,  the  Camden  property?  A.  We  have  not  pur- 
chased that  property. 

Q.  Don’t  you  hold  that  property?  A.  No,  sir. 

Q.  It  is  held  by  whom?  A.  By  a Mr.  Hawley. 

Q.  Has  it  not  been  bought  from  him?  A.  It  has  not  as  yet;  no, 

sir. 

Q.  What  did  you  mean  when  you  made  that  answer?  A.  I 
mean  that  it  is  contemplated  to  take  that  property. 

Q.  By  the  American  Sugar  Refining  Company?  A.  Yes,  sir. 

By  Mr.  Warner: 

Q.  Yv'hat  is  the  object  of  that  purchase?  A.  To  use  it  if  we 
can  find  use  for  it. 

Q.  To  stamp  out  competition?  A.  No,  sir. 

Q.  To  make  your  control  a little  more  complete  east  of  the  Mis- 
souri River?  A.  The  object  is  to  use  it  for  manufacturing  pur- 
poses if  we  can  make  any  money  out  of  it. 

By  Mr.  Mazet: 

Q.  You  have  more  now  than  you  are  using?  A.  That  is  true; 
but  this  is  said  to  be  very  advantageously  located. 

Q.  All  of  the  Philadelphia  refineries  are  not  in  operation?  A. 

No,  sir. 

Q.  Are  they  at  any  time  during  the  time  of  largest  consump- 
tion? A.  They  were  during  last  autumn. 

Q.  To  their  full  capacity?  A.  Not  to  their  full  capacity;  no, 

sir.  1 

By  Mr.  Lexow: 

Q.  Doesn’t  the  same  purpose  exist  in  connection  with  your 
company  purchasing  this  United  States  Sugar  Refining  Company 
as  there  existed  in  the  purchase  of  the  other  companies;  I mean 
contract  for  purchase?  A.  There  is  no  contract  existing  con- 
cerning it. 

Q.  An  tinderstanding?  A.  I might  say  there  is  an  understand- 
ing. 


358 


[Senate. 


Q.  Price  fixed?  A.  Yes,  sir. 

Q.  Ready  for  delivery?  A.  Not  as  yet. 

Q.  Awaiting  determination  of  incumbrance  before  delivery  is 
made?  A.  Awaiting  various  matters  of  detail. 

Q.  That  is  the  situation,  is  it  not?  A.  Yes,  sir. 

Q.  That  you  want  the  property  if  you  can  get  a good  title,  and 
that  is  what  you  are  waiting  for?  A.  Shouldn’t  want  to  take  it 
otherwise. 

Q.  If  the  title  can  be  made  good?  A.  That  is  the  only  thing 
we  are  waiting  for. 

Q.  And  an  agreement  from  Mr.  Hawley  not  to  put  up  another 
plant?  A.  There  is  no  agreement  provided  for. 

Q.  Isn't  that  the  understanding?  A.  No,  sir. 

Q.  When  did  you  buy  the  Baltimore  Refining  Company,  the  in- 
terest in  that  company?  A.  We  have  had  an  interest  in  that 
company  for  three  years  or  more. 

Q.  Didn’t  you  buy  it  sometime  in  the  year  189G,  a stock  inter- 
est, or  add  to  a stock  interest  held  by  you  in  that  company?  A. 
Yes,  sir. 

Q.  Thus  obtaining  control  of  the  Baltimore  Refining  Company? 
A.  Yre  had  that  before., 

Q.  You  added  to  your  purchase?  A.  We  did. 

Q.  Will  you  explain  how  it  is  that  with  a total  productive  ca- 
pacity idle  of  your  own  exceeding  the  total  producing  capacity  of 
all  the  so-called  competing  companies  against  you  in  the  United 
States,  you  still  find  it  necessary  to  add  to  your  purchase  of  sugar 
refining  properties?  A.  The  Baltimore  property  was  purchased 
because  it  was  thought  to  be  a good  investment  for  the  American 
Sugar  Refining  Company. 

Q.  Is  that  in  operation?  A.  It  is  not;  it  was  in  operation,  but 
it  was  destroyed  by  fire  after  the  property  was  purchased  by  the 
American  Sugar  Refining  Company;  it  was  remodelled;  it  com- 
menced operations,  but  it  was  burned  down  within  a very  short 
time  after  the  operation  had  commenced;  it  is  now  in  the  process 
of  rebuilding,  but  is  not  yet  completed. 

Q.  If  you  need  in  your  business  producing  capacity  the  United 


No.  40.] 


359 


States  Company  at  Camden  and  the  producing  capacity  of  the 
Baltimore  Refining  Company  of  Baltimore,  why  is  it  that  you 
leave  from  thirteen  to  eight  of  your  own  refining  companies  idle? 
A.  It  was  claimed  in  the  case  of  the  Baltimore  Refining  Company 
that  by  reason  of  special  railroad  facilities  we  should  be  able  to 
distribute  sugar  from  that  point  better  than  from  New  York  or 
Philadelphia,  and  especial  inducements  were  made  for  the  estab- 
lishment of  a sugar  plant  in  Baltimore  for  the  South  and  the 
Southwestern  business;  and  we  thought  it  was  advantageous  to 
try  that  experiment,  and  we  took  an  interest  in  the  property  and 
rebuilt  it. 

Q.  The  same  is  true  with  reference  to  the  Camden  property? 
A.  We  have  made  no  determination  concerning  that,  as  yet. 

Q.  You  had  arranged  to  purchase  and  you  wanted  to  make  the 
title  good?  A.  We  have  made  no  determination  of  the  use  of 
it;  that  has  not  yet  been  determined. 

Q.  Then,  please  explain,  if  you  have  not  determined  what 
use  you  are  going  to  make  of  the  property  that  you  are  about  to 
purchase,  with  a producing  capacity  of  your  own  already  idle, 
equal  to  the  total  producing  capacity  of  all  the  competitive  com- 
panies in  the  United  States,  what  in  the  world  prompted  you  in 
making  the  purchase  of  this  United  States  Company,  at  Cam- 
den? A.  It  may  be  desirable  for  us — it  may  be  necessary  for  us 
to  transfer  from  Brooklyn  a part  of  our  refining  capacity  to 
Camden  or  Philadelphia. 

Q.  For  what  reasons?  A.  The  East  river  bridge  people  are 
threatening  to  take  a very  important  block  of  our  property,  which 
will  limit  our  warehouse  facilities,  and  the  limit  of  these  facili- 
ties is  liable  to  limit  our  output,  and  we  may  find  it  advantage- 
ous to  use  those  facilities  here,  which  are  more  advantageous  in 
many  respects  than  in  Brooklyn. 

By  Mr.  Warner: 

Q.  You  will  purchase  that,  whether  it  is  necessary  or  not?  A. 
They  have  not  decided  whether  it  is  necessary,  and  we  purchase 


360 


[Senate, 

with  a view  of  utilizing  it  as  best  we  can  in  the  interests  of  the 
American  Sugar  Refining  Company. 

Q.  Whether  it  is  necessary  or  not?  A.  We  are  the  judges  as 
to  that. 

By  Mr.  Lexow: 

Q.  Answer  that  question  a little  more  positively;  why,  if  you 
don't  yourself  use  within  60  per  cent,  of  your  total  capacity  now, 
did  you  find  it  necessary  to  add  the  United  States  Refining  Com- 
pany to  your  business?  A.  For  the  reason,  as  previously  stated, 
that  we  may  be  able  to  utilize  that  property  in  the  interest  of  the 
company. 

Q.  You  have  the  Franklin  Company  now,  have  you  not?  A. 
Yes,  sir. 

Q.  That  is  closed?  A.  Temporarily;  it  runs  during  the  busy 
season. 

Q.  It  was  closed  during  the  month  of  last  September?  A.  Not 
at  all. 

Q.  Are  you  sure  about  that?  A.  It  did  not  close  until  about 
the  latter  part  of  October,  that  is  my  impression,  or  November, 
when  the  demand  slackened;  it  run  through  the  summer  season. 

Q.  Isn’t  it  a fact  that  of  the  four  refineries  in  Philadelphia, 
the  so-called  Spreckels  is  the  only  one  in  operation?  A.  The 
Spreckels  Refinery  was  consolidated  with  the  Delaware  Re- 
finery, making  the  two  into  one;  that  concern  is  running. 

Q.  That  is  the  only  concern  running?  A.  The  Franklin  Re- 
finery and  the  Knight  Company  are  the  only  ones  that  are  idle 
and  those  are  idle  by  reason  of  the  shortage  of  consumption. 

Q.  Notwithstanding  the  fact  that  in  the  city  of  Philadelphia 
you  found  it  necessary  to  consolidate  two  sub-companies  into 
one,  and  notwithstanding  the  fact  that  you  are  not  running  the 
other  two  companies,  you  deem  it  necessary  to  make  this  pur- 
chase of  the  additional  company,  the  United  States  Refining  Com- 
pany, of  Camden,  across  the  river?  A.  We  do  not  base  our 
business  upon  existing  conditions,  as  to  the  amount  of  sugar 
being  refined  to  the  maximum  consumption  required  during  the 


No.  40.] 


361 


rear;  we  must  be  prepared,  and  we  are  obliged  to  maintain  a 
large  plant  to  meet  tlie  expected  demand. 

Q.  But  you  have  answered  that  at  the  time  of  jour  extreme 
consumption  you  have- eight  factories  idle?  A.  Yes,  sir. 

Q.  That  at  the  time  of  the  least  consumption  you  have  thirteen 
idle  factories;  now,  I ask  you  why,  with  a capacity  idle  at  all 
times  equal  to  the  total  competitive  capacity  of  all  the  companies 
competing  against  you  in  the  United  States,  you  nevertheless 
find  it  necessary  not  only  to  buy  this  United  States  Company  at 
Camden,  but  to  buy  it  in  a State  where  you  now  have  three 
factories  closed?  A.  As  I have  previously  stated,  of  the  eight 
refineries  that  you  have  referred  to,  that  one  of  them  has  been 
taken  for  public  park  purposes,  that  others  have  been  disman- 
tled and  consolidated,  so  that  it  is  not  a correct  statement  that 
we  have  eight  refineries  idle. 

• Q.  How  many,  then;  I will  take  your  own  figures?  A.  We 
have  of  the  eight  you  have  referred  to;  the  North  River  Refinery 
was  entirely  abandoned;  the  Bay  State  Company  has  been  en- 
tirely dismantled  and  consolidated;  the  only  idle  refineries  are 
four;  those  are  held  as  reservation  refineries  for  special  locations. 

By  Mr.  Mazet: 

Q.  What  is  the  capacity  of  those  four  as  compared  with  the 
others  now  in  operation?  A.  Probably  30  or  40  per  cent. 

By  Mr.  Lexow: 

Q.  That  is  60  per  cent,  in  operation  and  40  not  in  operation? 
A.  30  to  40  per  cent,  of  those  not  in  operation;  out  of  the  total. 

Q.  You  state  that  30  to  40  per  cent,  of  the  total  number  of  fac- 
tories are  not  in  operation?  A.  What  I stated  was  that  about  30 
or  40  per  cent,  of  the  capacity  of  the  active  refineries  in  addition 
was  idle,  and  that  would  make  only  of  the  whole  about  20  per 
cent,  of  the  total  capacity. 

Q.  How  is  this  United  States  factory  to  be  acquired;  by  the 
issue  of  stock?  A.  There  is  no  provision  for  any  issue  of  stock 

for  it.  j 


362  [Senate, 

Q.  Issue  of  stock  certificates?  A.  There  has  been  no  deter- 
mination arrived  at  concerning  that. 

Q.  Is  it  a cash  transaction?  A.  It  may  be  so. 

Q.  Have  you  not  yet  determined  the  particular  way  in  which 
payments  shall  be  made  for  the  property?  A.  No,  sir;  not  the 
ultimate  payments. 

Q.  Are  you  building  any  refineries?  A.  We  are  not  with  the 
exception  of  the  completion  of  the  Baltimore  Refinery. 

Q.  How  is  it  that  the  acquisition  of  factories  by  you  has  been 
invariably  in  the  line  of  purchase  of  competing  concerns,  or  con- 
cerns that  threatened  competition?  I understand  that  the  United 
States  Company  is  no  yet  doing  business?  A.  That  has  not  been 
the  case;  it  was  not  in  Baltimore. 

Q.  Was  not  that  a competing  concern?  A.  The  concern  had 
practically  failed. 

Q.  It  had  competed  against  you?  A.  It  had  done  some  busi- 
ness; it  had  been  a competitor,  that  is  true. 

Q.  The  point  I want  to  get  at  is  this:  If  you  need  this  large 
capacity  how  is  it  that  we  don’t  find  you  building  factories,  but 
always  buying  competing  concerns?  A.  We  deem  that  the 
better  business  of  the  two. 

Q.  Incidentally  then  to  the  main  object  of  thepurchase  is  to  get 
rid  of  the  consumption  of  these  factories  which  are  run  by  others? 
A.  Of  course  that  is  simply  incidental;  it  would  be  incidental  un- 
doubtedly. 

By  Mr.  Warner: 

Q.  You  testified  the  other  day  that  the  capacity  of  the  refiner- 
ies owned  by  the  American  Sugar  Refining  Company  was  suffi- 
cient for  the  entire  consumption  of  the  United  States?  A.  I do. 

Q.  What  are  the  future  conditions  that  you  may  be  called  upon 
to  meet  that  you  referred  to  in  your  testimony?  A.  There  is  a 
steadily  increasing  consumption,  which  amounts  practically  to 
the  capacity  of  an  ordinary  refinery  every  year. 

Q.  You  wanted  to  acquire  a sufficient  number  of  refineries  with 
capacity  to  meet  the  entire  consumption?  A.  We  should  be  glad 
to  supply  the  entire  consumption. 


No.  40.] 


363 


By  Mr.  Mazet: 

Q.  You  have  that  capacity  now?  A.  For  the  present;  but  the 
consumption  is  increasing  from  year  to  year  by  about  one  re- 
finery. 

By  Mr.  Warner: 

Q.  In  view  of  the  fact  that  you  have  80  per  cent,  and  a number 
of  your  factories  closed?  A.  As  I stated  in  my  testimony  the 
other  day,  we  are  obliged  to  maintain  a reserve  capacity  in  re- 
fineries, and  we  do  not  feel  willing  to  risk  our  productive  capacity 
to  the  extent  which  we  would  be  crippled  if  an  accident  occurred 
to  one  of  our  refineries,  our  large  refineries;  we  have  to-day  fully 
equipped  refineries  that  can  be  started  at  24  hours  notice  in  case 
of  an  accident  to  an  existing  plant  in  operation. 

By  Mr.  Lexow: 

Q.  Have  you  since  the  organization  of  the  original  Trust  either 
through  the  medium  of  the  Trust  of  through  the  medium  of  the 
American  Sugar  Refining  Company  built  any  factory?  A.  We 
have  built  a number. 

Q.  I am  not  speaking  about  that;  have  you  added  to  your  ca- 
pacity by  building  any  new  factories?  A.  We  have  by  enlarg- 
ing, not  by  any  new  plants. 

Q.  Every  plant  acquired  by  you  has  been  a plant  then  com- 
peting in  the  market  against  you?  A.  That  is  correct,  I think. 

Q.  How  many  men  were  discharged  when  the  Knight  and  the 
Delaware  and  the  Franklin  factories  were  closed  down  in  Sep- 
tember? A.  I have  no  memorandum  as  to  the  number  of  men; 
the  Delaware  factory  never  was  shut  down ; that  is  a part  of  the 
Spreckels  plant  and  has  been  running  fully. 

Q.  It  was  closed  down  as  the  Delaware  factory?  A.  It  was 
merged  into  the  Spreckels  factory  and  its  business  transferred 
to  it. 

Q.  Do  you  mean  that  the  machinery  of  the  Delaware  factory 
was  transferred  to  the  Spreckels?  A.  So  far  as  it  could  be 
utilized. 


364 


[Senate, 


Q.  In  that  transfer,  how  much  of  the  capacity  of  the  Delaware 
factory  was  destroyed?  A.  None  of  it;  it  was  increased,  prac- 
tically; the  two  were  joined,  the  Delaware  and  the  Spreckels; 
there  was  only  a street  between  them  and  the  two  properties 
were  combined  and  enlarged,  so  that  the  capacity  is  greater;  the 
added  capacity  was  increased  so  that  the  capacity  of  the  Spreck- 
els capacity  is  increased  by  more  than  the  amount  of  the  Dela- 
ware capacity. 

Q.  How  many  men  are  employed  in  the  new  consolidated  fac- 
tory as  compared  with  the  number  of  men  employed  in  the  two 
factories  acting  independently?  A.  I haven’t  the  exact  figures; 
there  are  certainly  as  many  men. 

Q.  Don’t  you  know  that  by  closing  down  these  factories  in 
September  and  October  of  last  year  that  upwards  of  1,000  men 
were  thrown  out  of  employment  that  have  not  been  re-employed? 
A.  Do  you  mean  out  of  the  Franklin  Refinery? 

Q.  As  the  result  of  the  closing  down  and  consolidation,  or  use 
any  finesse  of  expression  that  you  please,  in  the  Philadelphia  con- 
cerns? A.  There  is  no  finesse  about  it;  the  fact  is  that  there  is 
only  market  for  the  product  of  one  factory,  and  this  factory  is 
closed  until  there  is  an  increase  in  the  demand;  I don’t  know 
how  many  men  were  thrown  out  of  employment;  I don't  think 
there  were  1,000,  for  the  reason  that  many  of  the  men  were  taken 
from  the  Franklin  Refinery  and  placed  in  the  Spreckels  Refinery, 
that  being  run  to  its  full  capacity. 

Q.  Isn’t  it  a fact  that  men  were  discharged  who  had  been  in 
the  employ  of  the  Franklin  concern  for  a great  many  years  with- 
out notice  of  any  kind,  except  the  sudden  discharge  of  the  men 
and  the  closing  down  of  the  factory?  A.  I don’t  think  that  is 
correct;  it  has  always  been  the  custom  to  give  some  notice. 

Q.  Was  the  factory  ever  closed  down  before  when  so  many 
men  were  thrown  out  of  employment  as  were  last  year?  A.  I 
don't  know;  I have  no  definite  control  of  the  manufacturing  de- 
partment and  no  knowledge  as  to  details  as  to  the  method  in 
which  the  factory  was  closed. 

Q.  Has  not  the  method  adopted  in  the  closing  of  the  factories 


No.  40.] 


365 


been  the  result  of  a determination  to  close  the  factories  down 
permanently;  that  factory?  A.  No,  sir;  that  has  not  been  deter- 
mined at  all,  to  close  the  factory;  I presume  the  factory  will  be 
reopened. 

Q.  Those  men  who  had  been  in  the  constant  employ  of  the 
company  for  years  were  discharged  last  year  for  the  first  time? 
A.  I know  nothing  about  that;  I have  no  knowledge  on  that  sub- 
ject. 

Q.  Who  uould  know?  A.  The  officers  of  the  company. 

Q.  Have  they  independent  officers?  A.  They  have. 

Q.  Iiut  they  operate  through  the  board  of  directors  of  the 
American  Sugar  Refining  Company?  A.  They  have  their  own 
board  of  directors. 

Q.  Rut  they  take  orders  from  the  American  Sugar  Refining 
Company?  A.  They  do. 

Q.  You  control  the  stock?  A.  We  do. 

Q.  And  hold  it  as  assets  in  your  treasury?  A.  We  do. 

Q.  Are  the  directors  of  the  Franklin  the  directors  of  the  Amer- 
ican Sugar  Refining  Company?  A.  Not  all  of  them. 

Q.  A majority?  A.  Yes,  sir. 

Q.  Then,  so  far  as  the  Franklin  Company  is  concerned,  its 
closing  down  has  been  at  the  dictation  of  the  American  Sugar 
Refining  Company?  A ft  has. 

Q.  You  are  in  a position,  are  you  not,  as  between  New 
York  State,  New  Jersey,  Maryland,  Pennsylvania,  with  the 
capacity  that  you  have,  to  discharge  all  the  men  in  one  State  and 
open  up  to  your  full  capacity  in  another  State,  or  vice  versa, 
whether  in  the  State  of  New  York  or  New  Jersey,  or  in  any  of 
the  States  in  which  you  have  factories?  A.  But,  understand 
that  we  could  close  factories  without  curtailing  the  production. 

Q.  Your  excess  of  productive  capacity  is  such  that  you  are  able 
to.  at  any  one  time,  to  close  all  the  factories  that  you  have  in  one 
State,  discharge  all  the  labor  you  have  in  one  State,  and  still 
have  productive  capacity  enough  in  every  other  State  to  meet 
the  demand?  A.  That  is  not  correct. 

Q.  What  State  is  there  in  which  your  producing  capacity  is  so 


366 


[Senate, 


large  that  you  could  not  meet  the  demand?  A.  The  State  of  New 
York. 

Q.  What  factories?  A.  Brooklyn  factories. 

Q.  How  many?  A.  Two. 

Q.  What  capacity?  A.  Capacity  of  about  20,000  barrels  per 
day. 

Q.  How  do  you  estimate  as  between  the  two?  A.  As  between 
the  two;  what  do  you  mean? 

Q.  As  between  the  two  factories,  Havemeyer  & Elder?  A.  They 
are  doubled  and  worked  as  one  property;  the  Havemeyer  & Elder 
and  the  Brooklyn  Refining  Company. 

Q.  They  are  two  distinct  properties?  A.  Yes,  sir. 

Q.  They  have  a distinct  capacity?  A.  Yes,  sir. 

Q.  Have  you  ever  estimated  before  this  answer  of  yours  the 
capacity  of  these  two  concerns  to  exceed  10,000  barrels  per  day? 
A.  Oh,  yes. 

Q.  Where?  A.  I never  made  any  public  statement  concerning 
it  that  I am  aware  of.  -> 

Q.  I asked  you  before  on  your  examination  what  the  capacity 
was?  You  said  that  you  didn't  know;  have  you  refreshed  your 
recollection?  A.  I have  not. 

Q.  Do  you  say  that  the  capacity  is  now  20,000  barrels?  A.  Ap- 
proximately; that  is  the  impression  that  I have  in  reference  to  it; 
I do  not  know  as  to  positive  figures. 

Q.  Are  you  able  to  ascertain  the  productive  capacity  of  these 
two?  A.  I could  do  so. 

Q.  I wish  that  you  would? 

Q.  How  much  money  does  the  American  Sugar  Refining  Com- 
pany pay  annually  to  keep  its  idle  factories  in  idleness?  A.  I 
don’t  know  what  you  mean  by  that  question. 

Q.  How  much  money  does  it  cost  the  American. Sugar  Refining 
Company  yearly  to  support  and  maintain,  including  property 
charges  and  interest  upon  the  investment,  these  factories  that 
have  never  been  worked?  A.  I have  no  figures  from  which  to 
answer  your  question. 


No.  40.] 


367 


Q.  Can  you  get  the  figures?  A.  I presume  I can  make  an 
estimate. 

Q.  ! wish  that  you  would. 

Q.  Are  there  any  salaries  paid  to  those  interested  in  these  idle 
factories  under  an  agreement  that  those  properties  should  remain 
idle?  A.  No,  sir. 

Q.  Any  compensation  paid  to  the  owners,  the  original  owners 
of  these  properties,  with  the  understanding  that  the  properties 
shall  remain  idle?  A.  There  are  no  owners  except  the  American 
Sugar  Refining  Company;  there  are  no  other  officers. 

Q.  No  other  organization  maintained?  A.  No,  sir;  than  these. 

Q.  No  payment  on  account  of  idle  factories  to  anybody?  A. 
No,  sir. 

Q.  The  factories  that  are  in  operation  have  to  bear  the  burden 
of  the  extra  charge  and  the  expense  of  maintenance  of  the  idle 
factories?  A.  The  expense  account  of  the  company  must  provide 
for  the  care  of  the  properties  not  in  use. 

Q.  That  is  a definite  charge  against  the  earnings  of  the  com- 
pany? A.  It  enters  into  its  expense  account. 

Q.  Do  you  know  how  much?  A.  I don't  know. 

Q.  Mr.  Havemeyer  stated  on  the  stand  that  an  enterprise  deal- 
ing in  staple  products,  the  raw  material  of  which  is  liable  to  de- 
pressed production,  should  not  be  judged  on  the  basis  of  a single 
year's  production;  do  you  accede  to  that;  is  that  true  of  sugar,  as 
it  was  stated  to  be  of  coffee?  A.  I have  no  knowledge  of  the 
coffee  business;  it  is  true  of  the  sugar  business. 

Q.  It  is  conceded  that  you  buy  80  per  cent,  of  the  raw  material? 
A.  I think  we  do. 

Q.  Does  the  profit  in  the  purchase  of  that  raw  material  after  it 
advances  go  into  the  treasury  of  the  American  Sugar  Refining 
Company  and  the  earnings  of  the  company?  A.  Certainly. 

Q.  And  become  part  of  the  dividend  that  is  paid  to  stockhold- 
ers? A.  It  is  a part  of  the  earnings  of  the  company,  and  the  div- 
idends are  paid  from  the  earnings, 

Q.  That  becomes  part  of  the  property  of  the  company;  are  you 
sure  about  that?  A.  Undoubtedly. 


368 


[Senate, 


Q.  And  the  American  Sugar  Refining  Company  buys  a large 
amount  of  raw  material  in  bulk?  A.  What  do  you  mean  by  “in 
bulk”? 

Q.  I mean  in  large  quantities  and  keeping  it  on  storage  A.  It 
buys  large  quantities  of  sugar  necessarily. 

Q.  How  much  does  it  keep  on  hand  on  the  average?  A.  That 
depends  altogether  upon  the  markets. 

Q.  What  is  the  average?  A.  It  varies  from  one  to  three  hun- 
dred thousand  tons. 

Q.  That  is  from  one  to  four  months’  supply?  A.  No,  sir. 

Q.  From  one  to  three  months’  supply?  A.  From  one  to  three 
months;  about  that. 

Q.  With  other  words  there  is  a margin  of  speculation  in  the 
purchase  of  raw  material  covering  a period  of  from  one  to  three 
months;  and  the  company  is  practically  speculating  upon  the 
value  of  the  raw  material  during  that  time?  A.  The  company 
is  obliged  to  carry  a large  amount  of  sugar;  we  have  to  buy,  for 
instance,  six  and  three  months  in  advance  in  order  to  have  the 
sugar  here  at  a given  time;  we  cannot  buy  sugar  in  this  market; 
we  buy  it  all  over  the  world. 

Q.  You  buy  it  from  these  brokers?  A.  We  buy  it  all  over  the 
world;  we  buy  some  from  themv 

Q.  You  buy  directly  from  Europe?  A.  Yes;  it  is  impossible 
for  us  to  provide  our  wants  in  sugar  without  having  large 
amounts  coming  from  distant  countries  during  periods  of  months. 

Q.  Do  you  keep  or  make  any  statement  showing  the  profits 
that  you  derive  from  refining  on  the  one  hand  and  the  profits 
chargeable  to  the  purchase  of  raw  material  on  the  other?  A.  It 
goes  in  a lump  sum  into  our  earnings  account. 

Q.  Does  it  show  specifically  upon  the  books?  A.  It  does. 

Q.  So  that  it  is  determined  from  your  books  what,  if  any, 
profits  or  losses  were  made  by  the  purchase  of  raw  material,  and 
what  the  profits  are  on  the  manufacturing  or  refining  of  sugar 
separately?  A.  Yes;  the  books  show  that. 

Q.  Can  those  figures  be  provided?  A.  They  might  be. 


No.  40.] 


369 


Q.  Will  they  be?  A.  That  would  be  a matter  I should  have  to 
submit  to  others., 

Q.  How  many  stockholders  were  there  in  the  Trust  when  or- 
ganized as  the  original  Trust?  A.  I don’t  remember. 

Q.  Have  you  any  way  in  which  you  can  ascertain?  A.  No,  sir. 

Q.  I believe  that  was  one  of  the  questions  that  I put  to  you  at 
the  last  hearing,  and  with  reference  to  which  I asked  the  informa- 
tion; have  you  no  method  of  ascertaining?  A.  I have  none. 

Q.  You  were  the  Secretary  and  Treasurer  of  the  original  Trust? 
A.  I was. 

Q.  Can  you  not  state  from  recollection  the  number  of  stock- 
holders or  certificate  holders  in  the  original  Trust  after  the  con- 
solidation of  the  fifteen  companies?  A.  I stated  as  my  best  rec- 
ollection that  it  would  probably  be  limited  to  about  100. 

Q.  Was  it  more  than  fifty?  A.  My  recollection  is  that  it  was 
in  the  neighborhood  of  not  to  exceed  100;  that  is  the  only  recollec- 
tion that  I have  in  the  matter. 

Q.  Are  you  willing  to  swear  that  it  ever  exceeded  sixty?  A.  I 
have  no  definite  knowledge  on  which  to  swear  at  all ; I could  only 
give  you. 

Q.  Assuming  one  hundred  was  the  number,  then  each  corpora- 
tion contained  an  average  of  seven  stockholders?  A.  That  is 
proper;  that  would  be  pretty  nearly  the  average. 

Q.  And  that  was  practically  the  average  number  of  stockhold- 
ers? A.  I couldn’t  say  as  to  that;  there  were  some  partnerships 
where  two  or  three  people  were  interested  in  the  largest  proper- 
ties. 

Q.  Like  Havemeyer  & Elder?  A.  Yes,  sir;  and  some  other  cor- 
porations were  owned  by  a few  individuals;  but  I have  no  definite 
knowledge. 

Q.  What  is  the  largest  stockholding  that  you  can  remember  in 
any  one  of  these  companies?  A.  I have  no  recollection. 

Q.  Assuming  it  was  ten?  A.  I could  not  attempt  to  say  defin- 
itely. 

Q.  How  many  stockholders  in  the  American  Sugar  Refining 
Company  of  New  Jersey  when  organized?  A.  I don’t  recollect, 


24 


370  [Senate, 

but  I think — I don’t  recollect;  I should  say  three  or  four  thou- 
sand. 

Q.  Wth  other  words,  between  November,  1887,  and  March  or 
April,  1891 — 

Mr.  Searles  interrupting:  January,  1891. 

Mr.  Lexow:  January,  1891,  there  had  been  floated  upon  the 
market  the  certificates  of  the  so-called  Sugar  Trust,  so  that  the 
ownership  had  been  divided  between  three  and  four  thousand 
people,  instead  of  the  original  one  hundred  holders,  or  there- 
abouts? A.  I think  approximately  that  is  true;  but  I am  not  at 
all  certain  as  to  the  figures. 

Q.  Then  you  organized  the  Sugar  Refining  Company  in  New 
Jersey,  started  you  say  with  a stockholding  of  about  three  thou- 
sand share  holders?  A.  From  three  to  four  thousand,  I should 
think. 

Q.  And  from  that  time  until  now  there  have  been  floated  an  ad- 
ditional amount  of  stock,  or  the  same  stock,  so  the  distributive 
holders  amount  to  how  many  stockholders?  A.  I stated  the 
other,  I think;  that  the  dividend  checks  in  January  were  over 
nine  thousand. 

Q.  Or  near  ten  thousand?  A.  No,  sir. 

Q.  It  is  between  nine  and  ten?  A.  Over  nine  thousand, 

Q.  Who  sold  them  that  stock?  A.  It  was  bought  on  the  Stock 
Exchange. 

Q.  From  holders  of  these  original  certificates?  A.  The  shares 
were  traded  in  on  the  Stock  Exchange  and  divided  among  and 
distributed  according  to  the  pleasure  of  the  holders. 

Q.  Explain  to  me  why  it  was  that  when  corporations  were  cap- 
italzied  for  an  aggregate  of  less  than  $7,000,000,  the  people  own- 
ing those  corporations  amounted  in  the  aggregate  to  one  hundred 
or  less,  while  after  they  had  recapitalized  so  that  the  $7,000,000 
of  the  original  capital  had  been  increased  to  $50,000,000  of  Sugar 
Trust  certificates,  the  distributive  ownership  was  increased  by 
sale  to  the  public  to  the  extent  of  three  thousand  owners  of  the 
property — why  was  not  the  public  permitted  to  share  in  some  of 
the  benefits  of  the  Sugar  Refining  Company  prior  to  the  time 


No.  40.] 


371 


when  the  stock  was  so  largely  increased  in  nominal  value?  A. 
The  ownership  was  then  not  accessible  to  the  public;  the  public 
had  no  means  of  interesting  itself  in  the  private  property  of  gen- 
tlemen who  were  in  that  business;  when  the  Sugar  Refineries 
Company  was  organized  the  public  saw  fit  to  invest  in  these  cer- 
tificates and  they  were  accessible,  as  they  never  had  been  before. 

Q.  But.  Mr.  Searles,  why  is  it  that  those  original  hundred  own- 
ing the  stock  for  which  Trust  certificates  seven  times  in  amount 
wese  issued,  were  willing  to  dispose  of  properties  that  pay  an 
average  of  9 per  cent,  upon  seven  times  the  original  face  of  the 
investment?  A.  I have  no  explanation  different  from  my  previ- 
ous testimony,  that  the  original  capital  stock  of  these  companies 
had  nothing  whatever  to  do  with  either  the  value  of  the  property 
or  its  earning  or  dividend  capacity;  therefore  there  is  no  signifi- 
cance in  the  seven  times. 

Q.  It  is  mathematical?  A.  It  is;  that  is  all  there  is  to  it. 

Q.  There  is  this  much:  That  while  the  shares  held  remained 
at  about  f 7,000, 000,  one  hundred  people  kept  the  stock;  when  the 
shareholding  was  increased  to  the  face  of  $50,000,000  represent- 
ing the  same  property,  the  stock  was  divided  among  the  people; 
that  is  a fact?  A.  In  the  first  instance  it  was  not  accessible  to 
the  people;  in  the  second  it  was. 

Q.  Why  did  the  original  holders  of  the  stock  prefer  to  give  up 
an  investment  paying  on  the  common  stock  12  per  cent,  on 
seven  times  its  original  face  with  an  extra  dividend  of  10  per 
cent,  in  1894,  and  permit  the  public  to  share  in  these  profits  when 
the  return  on  the  other  investments  open  for  the  public  is  les* 
than  5 or  6 per  cent.?  A.  Was  it  out  of  a philanthropic  desiwe 
to  have  the  public  get  rich?  A.  Tou  will  have  to  ask  the  people 
that  sold  the  stock. 

Q.  Those  people  who  sold  the  stock  were  the  original  investors 
in  the  Sugar  Companies,  including  yourself  and  Mr.  Havemeyer 
and  his  friends:  is  that  not  true?  A.  The  original  holders  were 
the  persons  who  first  sold  the  stock. 

Q.  They  have  been  keeping  on  giving  it  to  the  public  the  ad- 
vantage of  this  great  dividend  paying  property  and  disposing  of 


372 


[Senate, 


the  stock  to  the  public  at  large  from  that  time  until  now,  as 
evidenced  by  the  constantly  increasing  numbers  of  stockholders 
of  the  company;  is  that  true?  A.  Undoubtedly  it  is  true. 

Q.  And  they  are  doing  it  to-day?  A.  I have  not  heard  to-day. 

Q.  I mean  by  that  at  the  present  time?  A.  There  are  trans- 
fers of  stock  being  made  every  day  in  the  year  almost. 

Q.  And  the  managers,  those  who  manage  the  concerns  of  this 
company,  are  themselves  dealing  out  this  stock  to  the  public, 
notwithstanding  its  dividends  of  12  per  cent,  on  more  than  you 
can  receive  on  any  other  investment?  A.  I know  nothing  about 
the  private  affairs  of  the  managers  of  these  other  concerns  other 
than  my  own. 

Mr.  Lexow:  We  will  take  an  adjournment  until  2:30  o’clock. 
On  the  reconvening  of  the  committee  we  would  ask  you  to  pro- 
duce the  books,  papers  and  documents  which  have  been  inquired 
for  before. 


AFTERNOON  SESSION.  NEW  YORK,  N.  Y.,  MONDAY, 
FEBRUARY  15,  1897. 

John  E.  Searles  recalled. 

Examined  by  Mr.  Lexow: 

Q.  Does  the  American  Sugar  Refining  Company  sell  to  retail- 
ers? A.  Jt  does  not. 

Q.  Has  it  ever  made  a sale  to  retailers?  A.  To  some  large 
retailers. 

Q.  Has  it  ever,  since  the  establishment  of  what  is  called  the 
Y quality  plan”  described  by  Mr.  Post  this  morning,  sold  to  re- 
tailers? A.  It  has.  , 

O.  In  lots  of  100  barrels  or  more?  A.  Yes,  sir. 

Q.  Do  you  remember  any  instances?  A.  Oh,  yes;  several. 

Q.  When?  A.  We  are  doing  it  every  week;  have  been  doing 
at  ever  since  that  plan  was  inaugurated. 

Q.  To  what  is  known  as  a retailer?  A.  Yes,  sir. 

Q.  Not  a factor?  A.  To  retailers  who  are  strictly  retailers. 


No.  40.] 


373 


Q.  Not  wholesale  grocers?  A.  Not  wholesale  grocers  at  alL 

Q.  Is  that  a solitary  transaction?  A.  There  are  only  a few 
such;  it  is  only  to  large  retailers  who  have  a very  large  con- 
sumption of  sugar;  we  do  not  ordinarily  care  to  sell  to  retailers. 

Q.  Isn’t  it  a fact  that  you  have  an  arrangement  with  the 
Wholesale  Grocers’  Association  which  debars  you  from  selling 
to  retailers?  A.  We  have  no  arrangements  with  any  wholesale 
grocers’  association  in  this  country  of  any  description. 

Q.  You  make  equality,  the  plan  so  called,  a part  of  the  feature 
of  your  business  in  the  sale  of  your  product?  A.  We  accept 
rates  of  freight  prepared  by  them  as  fixing  a basis  for  sugar  de- 
liveries at  certain  points;  in  order  to  equalize  the  market. 

Q.  Have  yon  any  agreement  with  individual  grocers,  as  distin- 
guished from  the  association?  A.  We  have. 

Q.  You  have?  A.  We  have. 

Q.  Of  the  same  general  character?  A.  We  have  a form  of 
agreement;  I think  you  have  what  we  call  a factor  agreement. 

Q.  Yes.  A.  That  agreement  exists  with  a large  proportion  of 
the  wholesale  grocers  of  this  country  east  of  the  Missouri  River. 

Q.  And  these  agreements  with  factors  are  the  basis  of  the  dis- 
tribution of  your  product?  A.  In  the  main;  yes,  sir. 

Q.  You  recognize  as  part  of  the  system,  do  you  not,  the  “equal- 
ity plan”  established  by  the  Wholesale  Grocers’  Association? 
A.  We  recognize  only  so  much  of  it  as  relates  to  rates  of  freight 
from  the  refining  points  to  given  points  in  certain  territory. 

Q.  Does  that  apply  to  the  State  of  New  York?  A.  It  does. 

Q.  As  well  as  to  the  other  States  in  the  Union?  A.  To  all 
States. 

Q.  And  when  you  speak  here  in  the  agreement  that  you  make 
with  your  factors  “as  per  equality  rate  book”  you  mean  that 
equality  rate  book  which  goes  out  from  the  Wholesale  Grocers’ 
Association?  A.  We  refer  in  that  document  to  rates  of  freight 
fixed  by  the  equality  rate  book,  and  that  refers  to  the  rate  books 
published  by  the  associations.. 

Q.  I will  read  from  your  contract,  “None  of  the  sugar  shall  be 
“sold  or  disposed  of  by  you,  either  directly  or  indirectly  for  less 


374 


[Senate, 


“than  our  daily  quotations,  with  freight  added  from  refining  point 
“to  the  point  of  sale,  as  per  equality  rate  book,  nor  on  more  lib- 
eral terms  as  to  credit  or  cash  discount.”  Now,  that  is  right, 
isn’t  it?  A.  Yes;  that  is  correct. 

Q.  You  wish  to  be  understood  that  these  words  “as  per  equal- 
ity rate  book”  refer  exclusively  to  freight  from  point  of  refining 
to  point  of  sale?  A.  Precisely;  that  is  so  expressed  in  the  docu- 
ment. 

Q.  Well,  that  is  your  interpretation  of  this  document?  A.  It  is. 

Q.  Will  you  look  at  this  and  see  whether  this  is  the  New  York, 
equality  freight  rate  plan  that  is  spoken  of  in  that  document? 
(Showing  witness  small  book).  A.  It  seems  to  be;  I have  no 
knowledge  concerning  that  book  whatever. 

Q.  Well,  look  at  the  book;  have  you  any  doubt  that  that  is  the 
authorized  and  authentic  rate  book?  A.  I have  no  reason  to 
question  it;  I presume  it  is. 

Q.  Do  you  mean  to  be  understood  that  the  American  Sugar 
Refining  Company,  selling  80  per  cent,  of  the  product  used  in  the 
United  States,  permits  an  equality  rate  book,  which  fixes  the 
freight  from  the  point  of  refining  to  the  point  of  sale,  and  con- 
tains other  important  directions  to  traveling  agents  and  factors 
to  be  used  without  reference  to  you,  without  consultation  with 
you,  and  that  you  are  not  even  aware  of  the  contents  of  the  book? 
A.  I do  not  claim  any  such  statement  as  that;  what  I do  claim  is 
that  the  only  thing  in  our  contract  which  refers  to  the  equality 
rate  book  refers  to  the  use  of  the  rates  of  freight,  which  have 
been  examined  by  the  American  Sugar  Refining  Company  and 
have  been  adopted  by  them., 

Q.  I will  call  your  attention  to  the  13th  provision  in  this  equal- 
ity rate  book,  and  then  ask  you  whether  or  not  that  13th  pro- 
vision has  met  with  the  acquiescence  of  the  American  Sugar  Re- 
fining Company:  “Factors  may,  if  they  choose,  sell  to  one  an- 
other at  refiners  prices  and  terms,  providing  purchasing  factors 
“maintain  full  list  prices.”  A.  What  is  the  question? 

Question  repeated.  A.  That  provision  has  met  with  the  acqui- 
escence of  the  American  Sugar  Refining  Company;  that  is  to 
say,  it  has  never  been  objected  to. 


No.  40.] 


'375 


Q.  It  has  been  more  than  passively  received;  it  has  been  ac- 
tively acquiesced  in,  has  it  not?  A.  I remember  that  factors 
have  inquired  of  us  whether  they  were  at  liberty  to  sell  to  one 
another  in  the  manner  prescribed  in  that  section,  and  we  have 
granted  them  that  permission  whenever  applied  to. 

Q.  Provided  they  maintain  the  rate,  as  per  list  price?  A. 
Precisely. 

Q.  The  12th  provision,  and  I ask  you  the  same  question  with 
reference  to  that:  “All  refined  sugars  must  be  credited  and  sold 
on  the  basis  of  New  York  card  price,”  that  means  your  card 
price,  doesn’t  it?  A.  I presume  so. 

Q.  “For  corresponding  grades,  except  in  that  portion  of  the 
country  tributary  to  and  rated  upon  New  Orleans,  which  shall 
use  the  card  price  of  the  American  Sugar  Refining  Company 
of  New  Orleans”;  has  that  met,  before  its  adoption,  with  the  ac- 
quiescence of  the  American  Sugar  Refining  Company?  A.  I do 
not  remember  that  that  question  was  ever  raised;  it  may  have 
been  with  our  sales  department;  the  question  may  have  been 
asked  as  to  whether  that  would  be  objected  to. 

Q.  That  means,  Mr.  Searles,  does  it  not,  that  under  the  equality 
plan  which  you  say  here  is  to  be  considered  as  adopted  by  you 
onh*  with  reference  to  freights,  your  price  list  in  New  York  for 
the  eastern  States  and  your  price  list  in  New  Orleans  for  that 
part  of  the  country,  is  to  be  considered  the  price  list  at  which 
sugar  should  be  sold?  A.  At  which  our  sugars  shall  be  sold; 
certainly. 

Q.  At  which  all  sugar  shall  be  sold?  A.  No,  sir;  we  do  not 
attempt  to  dictate  to  anybody,  but  about  our  own  sugar. 

Q.  Mr.  Searles,  I ask  you  now,  with  reference  to  the  equality 
plan,  which  forms  not  only  the  part  of  your  factor  agreement, 
but  under  the  testimony  of  Mr.  Post  to-day,  a part  of  the  agree- 
ment  of  all  the  sugar  refineries  of  the  country,  and  I call  your  at- 
tention to  the  12th  clause,  which  says:  “All  refined  sugar  must 
be  credited  and  sold  on  the  basis  of  your  New  York  quotations 
here  and  on  the  basis  of  your  NewT  Orleans  quotations 
in  the  West”;  I then  ask  you  does  that  refer  only  to  the  American 


376 


[Senate, 


Sugar  Refining  Company’s  sugars,  or  does  that  include  all  refined 
sugars,  according  to  the  phraseology  of  this  article?  A.  Those 
articles,  Mr.  Chairman,  are  prepared  by  the  Wholesale  Grocers’ 
Association;  they  are  not  prepared  by  the  American  Sugar  Re- 
fining Company;  the  American  Sugar  Refining  Company’s  con- 
tract with  those  factors  has  no  relations  whatever  to  anyone 
else’s  sugars;  we  hold  no  factor  responsible  for  selling  Mr.  Mol- 
lenh'Hier’s  sugars  at  our  prices;  we  have  nothing  to  do  with  it, 
'whatever;  we  simply  hold  them  to  the  selling  of  sugars  they  re- 
ceive from  us  to  the  conditions  provided  in  our  factor  contract. 

Q.  Now,  this  equality  plan  being  based  upon  the  price  that 
you  fix  your  sugar  at  here  for  the  East,  and  New  Orleans  for  the 
West,  is  the  price  which  all  factors  operating  from  and  through 
the  association  of  wholesale  grocers  fix  all  their  competing 
sugars,  isn’t  it?  A.  Not  at  all. 

Q.  How  can  you  explain  it,  excepting  in  that  way?  A.  Why, 
in  this  way;  if  we  sell  sugar  to-day  at  4 and  1-4  cents,  the  man 
who  buys  our  sugar  is  held  to  that  as  the  basis  of  sale;  he  may 
buy  Mollenhauer’s  sugar  at  4 and  1-8  cents  and  sell  at  the  basis 
of  4 and  1-4;  it  has  nothing  whatever  to  with  our  contract. 

Q.  Your  contract  makes  this  equality  plan  part — this  equality 
plan  requires  that  all  sugars,  whether  yours,  Mollenhauer’s,  the 
National,  or  any  other  refined  sugars  in  the  United  States  shall 
be  sold  at  the  prices  fixed  by  you  here  in  the  East  and  at  the  prices 
fixed  by  you  in  the  West;  now  do  you  mean  to  say  that  that  does 
not  govern  so  far  as  all  factors  are  concerned  throughout  the 
United  States,  absolutely  the  price  of  sugar,  as  fixed  by  you?  A. 
I do  most  assuredly;  it  does  not  govern  anything  of  that  kind; 
our  contract  governs  only  the  invoice  of  sugar  to  which  that  con- 
tract refers,  and  that  is  the  invoice  of  the  American  Sugar  Re- 
fining Company;  but  it  has  nothing  to  do  whatever  with  any 
other  sugar. 

Q.  Mr.  Post  has  sworn  this  morning  that  this  equality  plan  is 
made  the  basis  of  all  sales  of  sugar  by  the  two  companies  repre- 
sented by  him  and  by  all  other  sugar  refining  companies  in  the 
United  States;  now,  if  that  is  true,  this  equality  plan  requires 


No.  40.] 


'377 


that  the  price  shall  be  fixed  of  all  sugars  according  to  the  prices 
fixed  bv  you  here  in  the  East  and  the  prices  fixed  by  you 
in  New  Orleans  for  the  West,  how  can  you  claim  that 
you  do  not  absolutely  fix,  under  the  equality  plan,  the  price  of 
sugar  for  the  whole  United  States?  A.  I simply  reiterate  what 
I have  said,  that  the  contract  which  we  have  with  the  factor  goes 
no  further  than  to  provide  for  the  terms  under  each  specific  in- 
voice of  ours  is  sold — and  that  in  so  far  as  it  relates  to  the  equal- 
ity rate  book  it  only  refers  to  rates  of  freight. 

Q.  How  can  it  be,  Mr.  Searles,  when  you  say  that  these  pro- 
visions governing  the  factors’  cases  under  this  equality  plan, 
have  met  with  your  concurrence  and  acquiescence?  A.  I have 
stated  to  you  that  the  section  read  to  me,  one  of  them,  was  con- 
sidered by  the  American  Sugar  Refining  Company,  and  assented 
to,  but  I disclaim  all  responsibility  whatever  for  those  rules  form- 
ulated by  the  Wholesale  Grocers’  Association. 

Q.  Do  you  mean  to  say  that  you  did  not  know  until  this  time 
and  have  not  either  passively  or  actively  acquiesced  in  this  12th 
provision  of  the  Wholesale  Grocers’  Association  equality  plan? 
A.  I mean  to  say  that  none  of  those  rules  are  a condition  under 
which  the  American  Sugar  Refining  Company's  sugars  are  sold. 

Q.  I understand  the  distinction  you  draw;  but  the  effect  of  it, 
is  it  not,  inasmuch  as  the  prices  are  fixed  under  this  equality  plan 
at  the  prices  you  make  here  and  in  the  West,  the  other  competing 
refineries  acquiescing  and  making  this  equality  plan  part  of  their 
system  of  sales — the  effect  is  that  you  fix  the  price  of  sugar  for 
every  refinery  in  the  United  States?  A.  In  so  far  as  the  other 
refineries  adopt  our  prices  the  same  rates  would  doubtless  ob- 
tain; but  they  are  under  no  obligation  to  adopt  our  prices. 

Q.  The  Wholesale  Grocers’  Association  by  reason  of  these  rules 
adopted  by  them  constrain  and  compel  every  refiner  in  the  United 
States  ostensibly  competing  with  you  to  adopt  the  same  prices 
that  you  fix,  is  that  not  true?  A.  I am  not  aware  that  there  is 
any  such  compulsion. 

Q.  Does  it  not  proceed  from  the  literal  interpretation  of  this 
12th  and  13th  articles  of  the  equality  plan?  A.  Not  at  all. 


378 


[Senate, 


Q.  I will  call  your  attention  to  the  first  provision  of  what  is 
headed  “Sugar  Factors’  Code  of  Rules.”  In  other  words,  here  is 
an  association,  if  you  are  to  be  understood  literally,  which  pre- 
sume to  make  for  agents  employed  by  you,  under  separate  agree- 
ments from  you,  presume  to  make  a code  of  rules  that  shall  gov- 
ern your  employees;  do  you  wish  to  be  so  understood,  Mr. 
Searles?  A.  That  is  not  the  fact. 

Q.  What  is  it,  then?  A.  The  fact  is  that  under  this  factor 
agreement  which  we  made  with  the  wholesale  grocers,  they  found 
if  necessary,  for  their  own  purposes,  for  the  instruction  of  their 
salesmen,  to  formulate  similar  rules,  which  should  explain  the 
working  of  this  plan;  the  wholesale  grocers  of  this  State  held  a 
convention  and  prepared  these  rules  for  the  government  of  their 
salesmen,  in  order  that  there  might  be  no  conflict  among  them- 
selves, and  these  are  rules  formulated  by  them  and  published 
by  them  for  the  instruction  of  their  employees. 

Q.  When  you  speak  of  no  conflict  between  themselves,  do  you 
mean  no  competition  between  themselves?  A.  No,  sir;  I mean  no 
conflict  as  to  the  interpretation  of  what  was  intended  under  the 
factor  agreement;  they  came  together  to  see  what  they  would 
agree  among  themselves,  that  would  do  under  this  agree- 
ment; and  they  formulated  these  rules. 

Q.  Then,  it  is  your  agents  throughout  the  country,  operating 
together  and  forming  an  association,  that  have  formulated  these 
rules  and  regulations  for  the  distribution  and  sale  of  your  pro- 
duct? A.  It  is  the  wholesale  grocers  of  the  State  which  has 
done  that. 

Q.  You  say  that  those  are  the  factors  who  have  agreements 
with  you  for  the  sale  of  your  product? — A.  They  are — 

Q.  (Continuing)  and  therefore,  there  is  under  you  an  associa- 
tion formed  of  your  own  employees  as  agents,  forming  rules  and 
regulations  for  the  conduct  of  the  business  of  distributing  and 
selling  your  product;  is  that  right?  A.  It  is  true  that  they  have 
formulated  these  rules  for  the  government  of  their  own  em- 
ployees in  the  distribution  of  our  product. 

Q.  And  this  is  the  logical  outcome  of  the  factor  agreement 


No.  40.] 


379 


that  you  make;  that  is  to  say,  the  step  that  they  take  to  prevent 
conflicting  interpretations  of  the  duties  and  obligations  that  they 
are  under  to  you?  A.  It  seems  to  be  logical. 

Q.  Is  that  right?  A.  It  so  seems  to  be. 

Q.  Now,  adding  to  that  the  fact  that  these  same  factors  are 
also  factors  for  the  competing  companies,  and  these  rules  and 
regulations  are  adopted  not  only  with  respect  to  yours,  but  also 
with  respect  to  every  other  refining  company  in  the  United 
States,  is  not  the  conclusion  irresistible  that  by  the  adoption  of 
the  factor  contract  system,  coupled  with  these  rules,  competition 
has  been  absolutely  destroyed  as  soon  as  the  product  leaves  your 
hands?  A.  Only  in  so  far  as  the  other  refiners  may  see  fit  to 
adopt  our  prices. 

Q.  In  as  much  as  they  in  their  factor  contracts  adopt  the  equal- 
ity plan,  do  they  not  adopt  your  prices  absolutely  as  a system? 
A.  Not  at  all. 

Q.  How  can  it  be  otherwise?  A.  As  I have  already  explained; 
the  difference  in  the  price  makes  the  difference  in  the  value  of 
sugar  with  the  equality  plan;  the  variation  in  the  price  at  the 
refining  point  changes  the  price  at  the  point  of  delivery,  and  the 
factor  is  only  obligated  to  carry  out  his  agreement  as  it  relates 
to  his  purchase  at  whatever  qirice  it  may  be  made. 

Q.  Do  you  mean  to  say  that  in  addition  to  this  equality  plan 
there  are  other  equality  plans  issued  with  rules  and  regulations 
referring  to  the  Mollenhauer  concern  or  the  National  Sugar  Re- 
fining Company?  A.  I know  of  no  other  equality  book,  but  I — 

Q.  That  is  enough — A.  Well — 

Q.  Now,  in  as  much  as  this  equality  book  fixes  as  the  basis  of 
the  price  of  sugar  the  quotations  made  and  fixed  by  you,  and  this 
equality  plan  forms  part  of  the  system  of  your  competing  com- 
panies, how  can  you  say  that  there  is  any  competition  when  you 
send,  or  any  of  your  competing  companies  send,  their  product'  to 
the  factors?  A.  You  simply  do  not  state  the  matter  correctly 
when  you  say  that  it  fixes  the  price;  it  fixes  only  the  rate  of 
freight  to  be  added  to  the  price. 

Q.  I will  read  again  the  12th  provision  of  these  articles  and 


380 


[Senate, 


regulations:  “All  refined  sugars.”  Do  you  mean  to  say  that 
when  they  use  the  words  “all  refined  sugars,”  and  this  equality 
plan  is  part  of  the  system  of  the  competing  companies,  that  that 
word,  or  those  words,  “all  refined  sugars,”  do  not  include  all  the 
sugars  made  by  refiners?  A.  I understand  it  to  mean  all  sugars 
purchased  under  the  factor  contracts,  the  price  of  which  is  fixed 
by  contracts., 

Q.  Whether  that  sugar  be  made  by  you  or  the  Mollenhauer  or 
by  the  National?  A.  And  whatever  be  the  price. 

Q.  You  admit  that?  A.  Undoubtedly. 

Q.  Now  it  says:  “All  refined  sugars  must  be  credited  and  sold 
“on  the  basis  of  refiners’  New  York  card  price  for  corresponding 
“grade;  and  in  that  portion  of  the  country  tributary  to  and  rated 
“upon  New  Orleans  shall  use  the  price  card  of  the  American  Su- 
“gar  Refining  Company,  New  Orleans.”  Now,  do  you  mean  to 
say  that  that  rule  and  regulation  adopted  as  a duty  and  obliga- 
tion on  the  part  of  all  factors  operating  under  the  equality  plan 
does  not  give  you  the  absolute  fixing  of  the  price  of  sugar  for 
every  refinery  acting  upon  the  factors’  plan?  A.  I do. 

Q.  You  dispute  that?  A.  Undoubtedly. 

Q.  How?  A.  It  explains  it  in  the  text  you  there  read;  it  is 
fixed  by  the  refiners’  card  price  in  New  York;  now  if  there  are 
two  refiners’  card  prices  it  refers  to  the  prices  of  those  refiners. 

Q.  But  it  says — A.  In  New  Orleans — 

Q.  The  American  Sugar  Refining  Company — A.  The  New 
Orleans  for  that^section,  because  that  is  the  only  refinery  in  New 
Orleans  which  makes  a quotation  for  sugar. 

Q.  Who  fixes  the  card  rates  for  New  York?  A.  We  fix  our 
own,  and  the  Mollenhauer  fix  theirs,  the  National  fix  theirs;  one 
does  not  necessarily  control  the  other. 

Q.  Are  three  card  prices  sent  out?  A.  The  Mollenhauer  and 
National  put  their  own  prices  on  sugar  from  day  to  day  and  we 
put  ours. 

Q.  Are  three  card  prices  sent  out  to  the  factors?  A.  There 
are  no  prices  sent  out. 

Q.  How  do  the  factors  get  the  daily  quotations?  A.  Through 
brokers  and  through  the  public  press. 


No.  40.] 


381 


Q.  Are  those  quotations  the  same?  A.  They  vary. 

Q.  When  have  you  known  them  to  vary?  A.  Frequently;  it 
depends  altogether  upon  the  condition  of  the  market. 

Q.  Do  you  mean  to  say  that  the  factor  selling  the  same  grade 
of  sugar  under  agreement  with  you,  with  the  Mollenhauer  and 
with  the  National  discriminate  when  they  make  the  sale  between 
those  three  producers?  A.  Undoubtedly. 

Q.  Is  not  this  equality  plan  for  the  specific  purpose  of  not  per- 
mitting them  to  discriminate?  A.  It  is  simply  for  the  purpose 
of  insuring  a price  at  a point  remote  from  New  York  by  adding  a 
certain  amount  of  freight  to  the  New  York  price,  whatever  that 
may  be., 

By  Mr.  McCarren: 

Q.  Do  I understand  you  to  say  that  you  regard  all  factors  as 
your  employees?  A.  They  are  not  our  employees  at  all;  They  are 
simply  our  consignees. 

By  Mr.  Lexow: 

Q.  The  retailers  that  you  sell  to  are  obliged  also  to  sign  a fac- 
tors’ agreement?  A.  I presume  they  have  done  so. 

Q.  Are  they  allowed  the  3-16  per  cent,  and  the  discount  of  one 
and  one  per  cent.?  A.  In  some  cases  I think  they  are. 

Q.  Do  you  talk  now  as  a matter  of  information  or  absolute 
knowledge?  A.  That  is  my  impression  on  the  subject;  I think 
they  have  the  same  terms — the  large  buyers  I refer  to  who  buy  in 
100  barrel  lots. 

Q.  Now  the  fact  is  that  this  factors’  agreement  of  yours  in  con- 
nection with  the  rules  and  regulations  adopted  by  the  Wholesale 
Grocers’  Association  and  referred  to  in  your  factors’  agreement, 
places  every  refining  company  on  an  absolutely  equality,  and  is 
so  intended;  isn't  that  true?  A.  No,  sir;  only  as  to  terms  of  sale, 
not  as  to  prices. 

Q.  As  to  freights?  A.  As  to  freights;  yes. 

Q.  As  to  discounts?  A.  The  discounts,  I think,  are  the  same  to 
all  the  refiners. 


382  [Senate, 

Q.  As  to  allowances?  A.  Allowances — there  is  no  rule  what- 
ever. 

Q.  Isn’t  there  an  allowance  of  five  cents  a barrel  under  certain 
conditions?  A.  There  is  a brokerage;  we  pay  brokers  five  cents 
a barrel  under  certain  conditions. 

Q.  Yes;  as  to  rates  of  discount  and  times  of  credit?  A.  That 
is  uniform  whether  to  factors  or  any  one  else. 

Q.  The  value  of  the  sugar  refinery  is  fixed,  is  it  not,  within  rea- 
sonable limitations  by  its  capacity  in  the  way  of  output?  A.  Not 
altogether  by  its  capacity. 

Q.  Isn’t  it  true  that  within  reasonable  limitations  you  fix  the 
value  of  a refinery  by  its  possible  output  in  barrels  of  sugar  per 
day?  A.  There  are  many  other  things  which  would  enter  into 
the  estimate  of  its  value. 

Q.  Such  as  more  valuable  real  estate?  A.  Yes;  location  and 
facilities. 

Q.  That  is  it;  but  as  a general  thing  the  value  of  a refinery  is 
calculable  on  the  basis  of  its  output,  its  capacity  for  the  output 
of  sugar?  A.  Its  capacity  for  the  output  coupled  with  facilities 
for  an  economical  manufacture — 

Q.  Is  the  basis?  A.  Yes,  sir. 

Q.  Mr.  Post  stated  here  this  morning  that  the  National  Sugar 
Refining  Company  had  been  built  with  an  output  of  2,500  barrels 
daily  for  between  $750,000  and  $1,000,000;  would  you  say  that 
was  a reasonable  figure  to  place  upon  that  refinery?  A.  I have 
no  knowledge  as  to  the  value  of  the  refinery,  or  as  to  its  perfec- 
tion for  the  purposes  of  sugar  refining. 

Q.  How  long  has  it  been  built?  A.  Some  two  or  three  years,  I 
think. 

Q.  Is  it  not  supplied  with  the  best  machinery?  A.  I have  no 
knowledge  as  to  its  machinery. 

Q.  From  the  quality  and  nature  of  its  product  would  you  not 
say  that  it  was  well  equipped?  A.  For  the  manufacture  of  cer- 
tain sugars,  doubtless. 

Q.  For  granulated  sugar?  A.  Yes,  sir. 

Q.  It  runs  that  principally?  A.  I presume  so. 


No.  40.] 


383 


Q.  That  is  your  principal  manufacture,  too,  isn’t  it?  A.  It  is 
only  a part  of  our  business;  we  manufacture  every  grade  and  vari- 
ety of  sugars. 

Q.  But  the  granulated  sugar  is  the  major  part?  A.  That  is 
the  larger  element  in  the  trade. 

Q.  Would  you  hold  that  to  be  a fair  ratio  for  the  estimate  of 
value,  the  ratio  between  a capacity  of  2,500  barrels  a day  and  an 
expense  of  between  $750,000  and  .$1,000,000?  A.  Well,  I should 
hardly  be  able  to  compute  that;  I do  not  think  in  the  first  instance 
that  their  capacity  is  quite  as  great  as  2,500  barrels;  I am  sur- 
prised to  hear  that  statement. 

Q.  2,000  barrels — A.  About  perhaps  2,000  barrels;  yes,  sir  — 

Q.  That  was  a mistake — I meant  to  say  2,000  barrels — A.  (Con- 
tinuing)— a refinery  can  be  built  to  make  2,000  barrels  of  sugar 
at  half  the  cost  of  another  refinery  to  make  2,000  barrels  of  sugar; 

it  depends  upon  the  facilities  for  working  various  grades  of 

\ 

sugar;  a refinery  making  high  grade  sugars,  and  working  high 
grade  sugars,  may  be  built  for  much  less  than  a refinery  which  is 
equipped  for  all  kinds  of  sugar. 

By  Mr.  Mazet: 

Q.  Isn’t  it  customary  to  build  a refinery  for  the  purpose  of  man- 
ufacturing a particular  grade  of  sugar;  don’t  you  have  that  in 
view  when  you  put  the  machinery  in  with  a view  to  economy  of 
manufacture?  A.  Some;  the  smaller  refiners,  yes;  but  we  can’t 
do  it  that  way,  we  have  to  equip  ourselves  to  melt  all  grades  of 
sugar  coming  from  all  portions  of  the  world. 

Q.  Then  in  that  respect  your  plant  is  not  so  economical  as  the 
others?  * A.  It  requires  a very  much  more  extensive  plant. 

By  Mr.  Lexow: 

Q.  Are  you  able  to  furnish  the  committee  to-day  with  the  fig- 
ures showing  the  original  investment?  A.  The  original  invest- 
ment ? 

Q.  Yes;  the  original  cost  of  the  properties  that  went  into  the 
Sugar  Trust?  A.  I have  no  figures  which  show  the  original  cost; 
I have  the  original  capitalization,  if  that  is  what  you  refer  to. 


384 


[Senate, 


Q.  You  mean  the  capitalization  of  $7, 000, 000?  A.  Yes,  sir. 

Q.  Have  you  got  the  items  of  that  capitalization?  A.  I have. 
(Witness  hands  paper  to  chairman.) 

Q.  It  foots  up  $6,590,000?  A.  Yes,  sir. 

Q.  And  would  you  be  kind  enough  to  read  these  hieroglyphics 
for  me?  A.  The  hieroglyphics  are  typewritten,  but  they  are  ab- 
breviations: 


The  Havemeyer  & Elder  Sugar  Refining  Company. . $500,000 

The  Dick  & Meyer  Company 200,000 

The  De  Castro  & Donner  Sugar  Refining  Co  . 350,000 

The  Holler  & Sierck  Company 210,000 

The  Oxnard  Brothers  Company 100,000 

The  F.  O.  Matthiessen  & Wiechers  Sugar  Refining  Co.  400,000 

The  Brooklyn  Sugar  Refining  Company 300,000 

The  Havemeyer  Sugar  Refining  Company 1,000,000 

The  Forest  City  Sugar  Refining  Company 300,000 

The  Boston  Sugar  Refining  Company 650,000 

The  Standard  Sugar  Refining  Company 1,000,000 

The  Bay  State  Sugar  Refining  Company 225,000 

The  St.  Louis  Sugar  Refining  Company 755,000 

The  Louisiana  Sugar  Refining  Company 450,000 

The  Planters’  Sugar  Refining  Company 250,000 


Making  a total  of $6,590,000 


Q.  That  was  the  capitalization,  was  it,  at  the  time  of  the  exe- 
cution and  delivery  of  the  original  Sugar  Trust  agreement  form- 
ing the  syndicate?  A.  I think  it  w7as. 

Q.  Now7,  what  was  the  volume  of  certificates  of  the  Trust  is- 
sued separately  for  each  one  of  those  properties?  A.  Those  fig- 
ures I have  not  been  able  to  obtain. 

Q.  How  is  that?  A.  Well,  I have  no  record  of  them  by  which 
I can  give  you  those  figures. 

Q.  Who  issued  the  stock?  A.  The  stock  was  issued  by  the  Su- 
gar Refining  Company. 


No.  40.] 


385 


Q.  Wliat  position  did  you  occupy  in  that  company?  A.  I was 
secretary  and  treasurer. 

Q.  Charged  with  the  certificate  book  of  the  company?  A. 
Generally  so;  that  is,  I was  in  charge  of  the  transfer  department, 
which  was  one  of  my  departments. 

Q;  In  other  words,  that  department,  the  receipt  of  certificates 
to  be  transferred  and  the  certificates  transferred  was  peculiarly 
within  your  province?  A.  It  was. 

Q.  Where  is  that  book?  A.  I have  no  knowledge  of  what  has 
become  of  those  books. 

Q.  When  did  you  last  see  it?  A.  In  1890 — at  the  time  the  new 
company  was  organized. 

Q.  1891?  A.  1891. 

Q.  Where  did  you  last  see  it?  A.  I saw  it — well,  I did  not  see 
the  book  so  recently  as  that,  but  all  the  books  were  in  my  control 
up  to  that  time,  when  the  company  went  into  the  hands  of  a re- 
ceiver. 

Q.  You  mean  it  went  into  the  hands  of  a receiver  just  prior  to 
the  organization  of  the  Yew  Jersey  Sugar  Refining  Company? 

A.  In  1890. 

Q.  That  was  just  prior  to  the  organization—  A.  Some  months 
prior. 

Q.  And  it  was  the  result  of  that  receivership  that  gave  birth 
to  the  New  Jersey  Company?  A.  It  was. 

Q.  What  did  you  do  with  it  when  you  last  saw  it?  A.  I have 
no  knowledge  of  what  became  of  the  books  of  the  old  company 
after  the  new  company  was  organized;  those  books  were  put 
away  somewhere  and  I have  no  knowledge  as  to  where  they  were 
put. 

Q.  Did  you  issue  the  certificates  of  stock  of  the  New  Jersey 
Company?  A.  I did. 

Q.  In  your  capacity  as  secretary  and  treasurer  of  the  New  Jer- 
sey Company?  A.  I did. 

Q.  So  that  you  hold  to  the  New  Jersey  Company  precisely  the 
same  legal  relation  and  are  charged  with  the  same  duties  and 
the  custody  ot  the  same  books  that  you  held  to  the  original  Sugar 
Trust?  A.  I do. 


25 


386 


[Senate, 


Q.  Now,  is  your  recollection  positive  that  you  did  not  see  that 
certificate  book  at  the  time  of  the  organization  of  the  New  Jersey 
Company?  A.  I did  not;  there  were — 

Q.  You  did  not  see  them?  A.  There  had  been  a very  large 
number  of  certificate  books  used  between  that  original  book  in 
1887  and  1891,  several  thousand  certificates  had  been  issued,  and 
the  original  book  had  been  lost  sight  of  from  the  first  year;  but  I 
have  seen  no  books  of  the  Sugar  Refining  Company’s  certificate 
books  since  the  organization  of  the  new  company. 

By  Mr.  Mazet: 

Q.  You  keep  the  same  stock  ledgers,  don’t  you?  A.  Oh,  no; 
everything  was  opened  new  entirely. 

Q.  Independent  of  the  old  organization,  from  1887  to  1891?  A. 
There  were  several  series  of  them,  transfers  were  so  many. 

By  Mr.  Warner: 

Q.  Where  are  those  books?  A.  I have  no  knowledge  as  to 
where  they  are  . 

Q.  No  idea  at  all?  A.  None  whatever. 

Q.  Would  they  not  be  at  your  office  in  Jersey  City?  A.  I have 
no  knowledge  as  to  where  they  are;  I have  never  seen  them  nor 
heard  of  them  since  the  new  company  was  organized. 

By  Mr.  Mazet: 

Q.  Where  were  they  when  you  last  saw  them?  A.  They  were, 
when  I last  saw  them,  in  the  office  of  the  Sugar  Refining  Com- 
pany. 

Q.  Under  your  control?  A.  Yes,  sir. 

Q.  Were  they  removed  with  your  knowledge?  A.  No,  sir;  I 
never  gave  any  order  concerning  them;  I never  knew  what  did 
become  of  them. 

Q.  Did  you  know  that  they  were  removed?  A.  I abandoned 
all  the  old  books  and  started  fresh  with  a new  set  of  books 
and  new  certificate  books,  and  what  became  of  the  old  I have 
no  knowledge. 


No.  40.] 


387 


Bt  Mr.  Lexow: 

Q.  Mr.  Searles,  were  the  original  Sugar  Trust  certificates  all 
surrendered  and  new  certificates  issued  prior  to  the  first  day  of 
January,  1891?  A.  The  original  certificates— 

Q.  Were  all  the  original  certificates  retransferred  prior  to 
January  the  first,  1891?  A.  The  certificate  holders  of  the  old 
Sugar  Refining  Company  had  deposited  their  certificates  with 
the  Central  Trust  Company  under  the  control  of  a reorganization 
committee  and  they  had  been  surrendered  and  cancelled;  the 
Central  Trust  Company  held  the  sugar  certificates — 

Q.  Who  cancelled  them?  A.  They  were  cancelled  in  the  trans- 
fer office  of  the  Sugar  Refining  Company. 

Q.  Isn't  it  one  of  your  duties  as  treasurer  and  secretary  of  the 
company  to  see  that  no  certificate  is  issued  except  by  compari- 
son with  your  stock  certificate  book?  A.  It  is  the  duty;  it  is  my 
duty  as  an  officer,  and  for  that  purpose  I have  a corps  of  clerks, 
employees,  whose  business  i't  is  to  attend  to  that. 

Q.  So  that  upon  the  transfer  of  all  these  certificates  in  1891 
and  their  cancellation,  you  were  in  control?  A.  Not  personally. 

By  Mr.  Mazet: 

Q.  Who  signed  the  certificates?  A.  I did. 

By  Mr.  Lexow: 

Q.  Do  you  mean  to  say  that  you  issued  any  of  the  certificates 
f the  new  company  to  stockholders  who  had  surrendered  and 
cancelled  certificates  of  the  old  Trust  until  you  had  established 
the  fact  that  the  surrendered  certificates  and  cancelled  certifi- 
cates were  valid  and  subsisting  certificates  of  the  Sugar  Trust? 
A.  Oh,  no;  not  at  all. 

Q.  I thought  you  had  established  that  practice?  A.  That  is 
the  transfer  office;  that  which  is  under  my  direction. 

Q.  Now,  in  doing  that  you  had  recourse  to  the  certificate  books 
of  the  old  Trust,  did  you  not?  A.  To  the  last  certificate  books 
of  that  Trust;  the  last  of  the  series;  the  original  books  had  been 
lost  sight  of  previously. 


388 


[Senate, 


Q.  And  to  the  first  book  provided  one  or  more  of  the  first  is- 
sued certificates  had  not  been  transferred  upon  the  books?  A. 
Yes. 

Q.  Do  you  know  whether  that  fact  obtained?  A.  I do  not. 

Q.  You  don’t  remember  now  whether  or  not  any  of  the  old  first 
issued  certificates  of  the  Sugar  Trust  were  outstanding  at  the 
time  of  the  cancellation  of  all  Sugar  Trust  certificates  and  the  de- 
livery of  the  stock  of  the  Yew  Jersey  Company?  A.  I do  not  re- 
member as  to  those  original  certificates. 

Q.  Well,  then,  you  must  have  had  the  old  first  certificate  hook 
of  the  Sugar  Trust  before  you  to  establish  that  fact  at  that  time? 
A.  I had  no  books  before  me  personally,  as  I have  explained;  I 
have  in  my  transfer  office  a corps  of  six  or  seven  clerks  who  have 
the  entire  charge  of  the  transfer  department,  under  the  charge 
of  a chief,  and  those  people  have  the  charge  of  the  detail ; I never 
see  the  certificate  books  myself. 

Q.  Then  the  certificates  that  were  surrendered  and  cancelled 
formed  the  basis,  did  they  not,  for  the  receipt  of  certificates  of 
stock  of  a like  amount  in  the  New  Jersey  Company?  A.  They 
did  and  they  did  not;  the  original  certificates  were  deposited 
with  the  Central  Trust  Company;  they  were  by  them  cancelled, 
and  a single  certificate,  or  two  certificates,  were  issued  to  the 
Central  Trust  Company,  and  when  the  exchange  was  made  from 
the  old  Sugar  Refining  Company  to  the  American  Sugar  Refining 
Company  a single,  or  two  certificates,  were  issued  to  the  Central 
Trust  Company  in  exchange  for  the  certificates  which  they  held; 
those  certificates  were  subsequently  divided  and  distributed  in 
accordance  with  lists  furnished  by  the  Central  Trust  Company 
and  by  the  owners  in  interest;  without  regard  to  the  old  certifi- 
cates. 

Q.  Who  could  have  taken  that  certificate  book  from  your  pos- 
session? A.  I do  not  know  who  would  have  had,  or  who  could 
have  taken  it. 

Q.  Are  you  positive  in  your  recollection  that  you  haven’t  seen 
it  from  the  time  of  the  transfer  of  those  certificates  until  now? 
A.  I am. 


No.  40.] 


389 


Q.  What  makes  you  so  positive  in  recollection  of  tliat  par- 
ticular fact?  A.  The  fact  tliat  I have  seen  none  of  the  hooks 
pertaining  to  the  old  Trust  and  its  certificate  book  since  the  or- 
ganization of  the  new  company,  when  everything  was  started 
afresh. 

Q.  Were  they  destroyed?  A.  They  were  cancelled;  I do  not 
know  whether  they  were  destroyed. 

By  Mr.  Warner: 

Q.  Have  you  made  any  efforts  to  find  the  books?  A.  I do  not 
know  where  to  look  for  them. 

By  Mr.  Lexow: 

Q.  Have  you  between  the  year  1891  and  now  had  any  occasion 

to  look  for  that  certificate  book?  A.  No,  sir;  there  never  has 

been  an  occasion  to  look  for  it. 

\ 

Q.  Is  that  book  the  only  record  that  contains  the  mathematics 
of  the  distribution  of  those  original  Sugar  Trust  certificates 
among  the  various  companies  composing  the  Trust?  A.  I know 
of  no  other. 

Q.  That  information  you  say  is  locked  up  in  that  one  book? 
A.  Yes,  sir;  that  and  the  Trust  deed. 

Q.  And  the  book  showing  an  increase  of  capital,  nominal  in- 
crease of  capital,  of  $43, 000, 000  and  odd  dollars  from  a capital  of 
$6,000,000  and  odd  dollars,  is  not  in  existence,  as  far  as  you  know? 
A.  Not  to  my  knowledge. 

Q.  Wasn't  there  any  memoranda  made  of  an  appraisement  in 
any  book  of  the  company?  A.  Never;  as  to  the  plant  for  which 
the  certificates  were  issued;  appraisement  was  made  of  the  per- 
sonal property,  but  no  appraisement  of  the  plant,  which  was  the 
basis  of  the  certificates. 

Q.  Do  you  mean  to  be  understood,  Mr.  Searles,  as  saying  that 
here  was  an  issue  of  $50,000,000  worth  of  certificates  to  fifteen 
different  companies  without  anything  showing  the  basis  of  that 
issue  to  the  various  companies,  excepting  the  mere  certificate 


390 


[Senate, 


■book  stub?  A.  There  was  originally  the  basis  of  the  whole 
transaction  the  Trust  deed,  which  specified  the  interest  of  each 
of  the  stockholders  of  each  of  these  companies,  but  with  the  ex- 
ception of  that  deed  and  the  certificate  book  there  would  be  no 
record  to  my  knowledge. 

Q.  Where  is  that  deed?  A.  That  deed  I have  no  knowledge 
of,  as  I testified  last  week. 

Q.  Did  you  lose  sight  of  that  deed  also,  about  the  same  time 
the  certificate  book  was  lost  sight  of?  A.  My  last  recollection 
of  the  deed  was  in  connection,  I think,  with  the  North  River 
suit,  when  it  was  placed  in  the  hands  of  counsel  for  use  in  court, 
and  I have  never  heard  of  it  since. 

Q.  The  copy  of  the  deed  contained  in  the  appeal  book  contained 
no  designation  of  the  relative  amounts  of  stock  apportioned  to 
each  company;  do  you  know  why  that  omission  was  made?  A.  I 
think  I remember  that  when  the  presentation  of  the  deed  was 
asked  for  that  the  court  ruled  that  the  matter  of  division  was 
a matter  entitled  to  privacy,  that  the  amount  of  certificates  was 
a matter  which  interested  only  the  parties  in  interest,  and  at.  the 
request  of  the  counsel  in  the  case  it  was  expunged. 

Q.  And  that  is  the  reason  why  it  is  not  contained  in  the  record? 
A.  That  is  my  recollection  of  it. 

Q.  Have  you  no  personal  recollection,  Mr.  Searles,  being  the 
one  who  signed  the  certificates  and  delivered  them  to  the  various 
holders,  have  you  no  personal  recollection  of  the  respective 
amounts  that  went  to  each  company?  A.  I have  not;  it  is  a long 
time  ago. 

Q.  Or  of  the  basis  of  ratio  upon  which  the  division  was  made? 
A.  No,  sir. 

Q.  Was  there  any  ratio  between  the  companies?  A.  None 
■whatever.  , 

Q.  No  established  ratio  for  the  issuance?  A.  None  whatever. 

Q.  Where,  then,  did  you  get  your  information  from  upon  which 
you  issued  those  certificates?  A.  From  the  trust  deed. 

Q.  From  the  deed  itself?  A.  From  the  deed  itself. 

Q.  Were  you  the  depository  or  custodian  of  that  deed?  A.  I 
was  for  a time  until  it  was  produced  in  court. 


No.  40.] 


391 


Q.  And  you  didn’t  receive  it  again?  A.  I never  received  it 

again. 

Q.  Do  you  know  in  whose  custody  it  last  was?  A.  I do  not;  I 
think  it  was  placed  in  the  custody  of  the  counsel  of  the  company 
for  use  in  the  North  River  case;  that  is  my  recollection  of  it. 

Q.  Do  you  mean  Mr.  Parsons?  A.  Mr.  Parsons. 

Mr.  Lexow:  Have  you  that  deed,  Mr.  Parsons? 

Mr.  Parsons:  I have  not^ 

By  Mr.  Lexow: 

Q.  Was  there  any  other  record  or  book  of  the  company  in 
which,  or  stock  ledger  in  which  these  respective  holdings  as  they 
first  appeared  was  noted?  • 

Mr.  Parsons:  May  I change  my  answer?  I have  not  as  I rec- 
ollect; I have  no  knowledge  at  the  present  time;  I have  made  no 
examination  of  my  papers  in  my  office  to  ascertain. 

Mr.  Searles:  I know  of  no  other  record  than  that  connected 
\ 

with  the  stock  itself  and  the  deed. 

By  Mr.  Lexow  :i 

Q.  Don’t  you  have  a stock  ledger?  A.  Stock  ledger;  that  was 
a part  of  the  transfer  that  appeared  in  that  connection? 

Q.  That  was  separate  from  the  certificate  book?  A.  From  the 
certificate  book,  certainly. 

Q.  What  has  become  of  that  book?  A.  They  went  with  all 
the  certificate  books  at  the  time  of  the  organization  of  the  new 
company. 

Q.  And  was  surrendered  to  the  new  company?  A.  No,  I think 

not. 

Q.  Who  had  it  in  control  then?  A.  It  was  originally  in  the 
control  of  my  transfer  department,  as  was  the  certificate  book. 

Q.  And  your  transfer  department  was  simply  from  a transfer 
department  of  the  Trust  to  a transfer  department  of  the  New  Jer- 
sey Company?  A.  That  is  correct. 


392 


[Senate, 


Q.  Now,  can’t  you  explain  to  this  committee  how  it  is  that 
books  of  that  importance  can  disappear  from  an  office  such  as 
yours  without  any  explanation?  A.  When  the  new  company 
was  organized  and  the  old  certificates  had  been  received  and  can- 
celled there  was  no  further  use  for  them  whatever,  and  they  were 
entitled  to  be  destroyed;  there  was  no  necessity  for  preserving 
them,  as  they  had  all  been  turned  in  and  cancelled  with  the  Cen- 
tral Trust  Company. 

Q.  Have  you  any  recollection  as  to  whether  they  were  de- 
stroyed or  not?  A.  I have  not. 

Q.  Have  you  searched  for  them?  'A.  I have  not. 

Q.  You  have  not?  A.  I have  not;  I have  no  knowledge  as  to 
where  to  look  for  them. 

Q.  Well,  you  know  where  your  own  transfer  office  is?  A.  Ido; 
they  are  not  there  that  I know. 

Q.  Have  you  searched  in  any  other  part  of  the  company’s  prem- 
ises or  property  where  they  would  be  likely  to  be?  A.  They 
should  be,  if  they  are  in  existence,  in  the  transfer  department; 
they  are  not  there. 

Q.  Does  that  apply  to  all  the  books,  accounts  and  records  of 
what  was  known  as  the  old  Sugar  Trust?  A.  That  is  true;  it  is 
true  of  them  all. 

Q.  Also  of  the  minutes  of  the  meetings  of  the  directors?  A. 
Of  the  old  Trust;  yes,  sir. 

Q.  Yes;  so  that  you  wish  to  be  understood  as  stating  that  you 
have  not  in  your  possession,  or  under  your  control,  and  do  not 
know  the  whereabouts  of  any  paper,  document,  paper,  book,  of 
the  old  Sugar  Trust?  A.  I have  none  of  those  papers. 

Q.  Have  they  disappeared  accidentally,  or  on  purpose?  A.  I 
do  not  know  of  any  purpose  in  their  disappearance,  Mr.  Chair- 
man, except  that  they  were  absolutely  of  no  use. 

Q.  Don’t  you  think  it  is  rather  remarkable  that  books  bearing 
upon  such  important  transactions  should  all  disappear?  A.  No; 
I think  not,  under  the  circumstances;  after  this  length  of  time. 

Q.  Six  years?  A.  Six  years. 

Q.  Have  you  the  books  showing  sales  of  the  old  Sugar  Trust? 


No.  40.] 


393 


A.  Those  books  may  be  in  connection  with  the  various  refineries 
— I do  not  know  that  they  are — do  not  know  that  they  are  or  not; 
I have  not  seen  them. 

Q.  General  account  books?  A.  I have  never  seen  them. 

Q.  Where  did  these  experts  in  figures  get  their  figures  from  as 
to  production,  and  as  to  the  cost  of  refining,  or  the  margin  of  dif- 
ference between  raw  material  and  manufactured  product  for  nine 
years  before  the  organization  of  the  Sugar  Trust?  A.  From  their 
own  files;  from  their  own  publications. 

Q.  Not  from  your  books?  A.  Not  at  all. 

Q.  Taken  originally  from  your  books?  A.  Not  all;  those  are 
original  compilations  of  Willet  & Gray,  made  on  the  basis  of 
their  market  reports  from  week  to  week. 

Q.  But  then  the  difference  between  the  refined  product  and  the 
raw  material  must  have  been  by  examination  of  your  own  records? 
A.  Not  at  all. 

Q.  Do  you  certify  to  them  the  amount  of  your  product?  A. 
Never;  we  never  give  them  any  figures. 

Q.  How  can  they  make  that  compilation  then  without  having  a 
basis  of  figures  from  your  company  which  makes  80  percent,  of  the 
product?  A.  If  you  will  read  their  circular  you  will  find  that 
they  estimate  the  meltings  of  the  refineries  based  on  the  arrivals 
of  sugar;  they  take  the  importations  and  check  up  against  that 
the  sales  of  refined  sugar,  but  their  figures  are  all  based  on  impor- 
tations and  sales  in  the  open  market. 

By  Mr.  McCarren: 

Q.  I see,  Mr.  Searles,  in  the  estimate  of  these  fifteen  different 
refining  plants  that  the  Havemeyer  & Elder  refining  plant  is  fixed 
at  the  value  of  $500,000;  I understand  you  to  say  that  that  valua- 
tion was  made  in  1891?  A.  No,  sir;  that  was  made  in  1887. 

Q.  18S7?  A.  Yes,  sir;  before  the  organization  of  the  original 
Trust,  the  Sugar  Refining  Company. 

Q.  What  did  the  Havemeyer  & Elder  plant  consist  of  at  that 
time?  A.  Of  all  the  property  of  Havemeyer  & Elder;  the  refining 
property  iu  Williamsburg. 


394 


[Senate, 


Q.  And  of  wliat  is  known  as  the  large  sugar  house  in  the  South 
Fourth  street?  A.  I have  explained,  Senator,  at  the  previous 
hearing,  that  those  capitalizations  do  not  refer  whatever  to  the 
value  of  the  property;  that  they  were  made  of  necessity  in  order 
to  organize  the  original  Sugar  Refining  Company  which  required 
that  all  properties  be  put  in  the  form  of  corporations;  at  that 
time  Havemeyer  & Elder  property  was  owned  by  the  firm  of 
Havemeyer  & Elder;  they  put  it  in  a corporation  with  a nominal 
capital  of  $500,000  for  the  purposes  of  the  transfer,  but  it  had  no 
reference  whatever  to  the  value  of  the  property  which  was  in- 
volved. 

Q.  I understand  its  value  to  be  merely  nominal?  A.  Its  value 
is  merely  nominal;  that  is  the  case  with  several  other  corpora- 
tions mentioned  there;  those  figures  do  not  represent  values  at 

all. 


By  Mr.  Lexow: 

Q.  Mr.  Searles,  you  say  that  capital  was  merely  nominal ; three 
of  those  companies  were  organized  simultaneously  with  the  form- 
ation of  the  so-called  Sugar  Trust,  were  they  not?  A.  Two  of 
them,  as  I stated  the  other  day,  that  I thought  the  Oxnard  Bro- 
thers Company  was  also,  but  my  impression  is  that  that  had  been 
previously  organized. 

Q.  That  was  a very  small  concern,  was  it  not?  A.  A very 
small  concern. 

Q.  With  what  output?  A.  Oh,  a few  hundred  barrels. 

Q.  And  with  a capital  stock  of  $100,000?  A.  Yes. 

Q.  Now  the  other  two  concerns  were  organized  with  a capital 
stock  of  $700,000?  A.  Yes,  sir. 

Q.  Simultaneously  with  the  formation  of  the  Sugar  Trust?  A. 
A.  Yes,  sir. 

Q.  There  was  no  increase  of  value;  there  was  no  increment 
added  to  the  value  of  the  properties  represented  by  that  capitali- 
zation between  the  date  of  the  organization  of  these  companies 
and  the  formation  of  the  Sugar  Trust,  was  there?  A.  No,  sir. 

Q.  They  remained  absolutely  the  same?  A.  I think  so. 


* - IA  ST  A TE  LIBR/Ui_ 

No.  40.]  395 

Q.  And  vet  for  those  $700,000  of  capital  stock  then  credited 
yon  issued  about  $14,000,000  par  of  the  certificates  of  the  Sugar 
Trust?  A.  More  or  less. 

Q.  About  that?  A.  I think  that  is  approximately  the  figure. 

Q.  Why  were  these  companies  if  they  represented  a value  of 
$14,000,000  not  organized  with  a capital  of  $14,000,000  instead  of 
$700,000?  A.  Well,  it  was  deemed  desirable  that  they  should 
have  a small  capitalization. 

Q.  Why;  what  was  the  purpose?  A.  No  other  purpose  than  a 
matter  of  convenience;  it  was  entirely  unnecessary  to  make  the 
capital  larger. 

Q.  Have  you  any  books  here,  Mr.  Searles,  in  conformity  with 
the  promise  that  was  made  in  the  prior  hearing?  A.  I did  not 
understand  that  I made  any  promise,  Mr.  Chairman,  to  produce 
any  books. 

Q.  You  said  that  certain  books  of  the  company  to  which  we 

referred  were  in  your  keeping,  subject  to  the  control  of  the  board 

of  directors?  A.  I think  that  referred  to  one  book — the  minute 

\ 

book  of  the  American  Sugar  Refining  Company. 

Q.  Yes;  have  you  brought  that  book?  A.  I have  not;  no,  sir. 

Q.  So  as  not  to  embarrass  you,  we  wanted  simply  to  look  at  the 
minutes  of  the  company,  showing  its  transactions  in  the  purchase 
of  companies  whose  stocks  were  acquired  by  the  American  Sugar 
Refining  Company;  we  have  no  desire  to  see  any  part  of  your 
business  operations,  but  simply  for  the  purpose  of  fixing  the 
questions  involved  in  capitalization;  now  are  you  prepared  to 
give  the  committee  access  to  those  minutes?  A.  I submitted  to 
such  of  my  directors  as  I could  reach  the  request  of  the  commit- 
tee for  the  production  of  the  minute  book  itself  and  was  unable 
to  get  their  permission  to  produce  the  book  in  court;  if  what  you 
desire  is  figures  relating  to  these  properties  merely  that  would 
be  another  question  which  I should  be  willing  to  present  to  them, 
but  so  far  as  the  minute  book  is  concerned,  they  declined  to  allow 
me  to  present  it., 

Q.  Will  you  state  who  the  directors  were  who  declined  to  per- 
mit the  books  to  be  produced  here?  A.  I was  only  able  to  reach 


396  [Senate, 

a part  of  our  directors,  the  Messrs.  Havemeyer  and  Mr.  Dick; 
they  were  the  only  persons  present  during  last  week. 

Q.  When  do  you  hold  meetings  of  the  Board  of  Directors?  A. 
A.  Monthly;  on  the  third  Wednesday  of  the  month;  that  would 
be  this  week. 

Q.  This  next  Wednesday?  A.  Yes,  sir. 

Mr.  Lexow:  The  stenographer  is  requested  to  make  a note  of 
the  fact  that  the  committee  called  upon  the  witness,  who  had 
previously  waived  any  requirement  as  to  the  service  of  a subpoe- 
na duces  tecum  of  the  irregularity  of  the  notice  and  request  to 
produce  the  minute  book  of  the  New  Jersey  Company,  showing 
the  transactions  in  the  purchase  of  other  companies  whose  stock 
was  acquired  by  the  American  Sugar  Refining  Company  of  New 
Jersey,  and  that  the  witness  declines  so  to  do. 


By  Mr.  Lexow  t 

Q.  Do  you  put  your  declination,  Mr.  Searles,  upon  any  other 
ground  than  that  you  are  acting  as  the  custodian  of  those  books 
under  directions  of  the  Board  of  Trustees,  who  refuse  to  give  you 
the  power  to  produce?  A.  That  is  my  reason. 

Q.  That  is  your  only  reason?  A.  They  are  not  within  my  con- 
trol otherwise,  except  with  the  consent  of  the  directors. 

Q.  That  is  your  only  reason?  A.  It  is. 

Q.  Where  are  those  books?  A.  At  the  principal  office  of  the 
company,  I presume. 

Q.  117  Wall  street,  in  the  city  of  New  York?  A.  No,  sir;  I 
think  in  Jersey  City. 


By  Mr.  Warner: 

Q.  Don’t  you  know?  A.  I think  it  is  in  Jersey  City. 

Q.  Don’t  you  know  where  the  minute  book  of  the  company  is? 
A.  I answer,  I think  it  is  in  Jersey  City. 

Q.  I ask  you  if  you  don’t  know?  A.  That  is  my  judgment  in 
reference  to  it. 


No.  40.] 


397 


By  Mr.  Mazetr 

Q.  Where  do  you  have  your  meetings  of  the  Board  of  Direc- 
tors; do  you  have  them  at  117  Wall  street?  A.  Sometimes. 

Q.  How  often?  A.  Monthly. 

Q.  In  Wall  street?  A.  In  Wall  street. 

Q.  And  yet  the  minute  book  is  in  New  Jersey?  A.  Sometimes 
in  New  Jersey  and  sometimes  in  Wall  Street;  it  is  brought  to 
Wall  Street  for  the  purpose  of  business  when  required. 

Q.  It  is  customary  to  bring  it  there  and  read  the  minutes  ol 
previous  meetings  of  the  board?  A.  Unless  they  are  dispensed 
with  by  consent  of  the  board  of  directors. 


By  Mr.  Warner: 

Q.  As  I understand  the  testimony  of  Mr.  Havemeyer  the  other 
day,  he  testified  that  they  held  meetings  here  weekly  in  the  city; 
now,  was  that  the  meeting  of  the  board  of  directors?  A.  No, 
sir;  that  is  not  the  meeting  pf  the  board  of  directors;  there  are 
meetings  of  the  executive  committee  weekly,  but  the  meetings 
of  the  board  of  directors  are  monthly. 


By  Mr.  Lexow: 

Q.  Do  you  use  those  minute  books  in  the  meetings  of  the  ex- 
ecutive committee?  A.  No,  sir. 

Q.  Mr.  Havemeyer  testified  that  the  only  meeting  that  was 
held  by  the  company  in  the  State  of  New  Jersey  was  its  annual 
meeting;  that  the  directors’  meetings  were  all  held,  with  the  ex- 
ception of  the  annual  meeting,  in  the  State  of  New  York,  at  your 
office  No.  117  Wall  street;  was  he  in  error  when  he  made  that 
statement?  A.  They  are  usually  held  there;  there  are  some 
meetings  held  in  New  Jersey. 

Q.  Was  Mr.  Havemeyer’s  statement  true  that  only  one  meeting 
per  year  is  held  in  the  State  of  New  Jersey?  A.  I think  that  is 
ordinarily  the  case;  most  of  the  meetings  are  held  at  117  Wall 
street 


398 


[Senate, 


Q.  And  the  minute  book  is  in  use  at  117  Wall  street  at  its  di- 
rectors’ meetings?  A.  Usually  so;  not  always. 

Q.  Isn’t  it  always  used?  A.  Not  always;  no,  sir. 


By  Mr.  Warner : 

Q.  How  long  since  has  that  book  been  in  New  Jersey?  A.  It 
was  in  New  Jersey  at  the  January  meeting. 

Q.  And  been  there  since  then?  A.  It  has  been  there  since 
then;  the  February  meeting  has  not  yet  been  held. 

By  Mr.  Mazet: 

Q.  Where  are  the  minutes  usually  written?  A.  The  minutes 
are  usually  written  in  Wall  street. 

Q.  In  the  book,  in  the  minute  book?  A.  In  the  minute  book, 
certainly. 

Q.  And  then  it  is  taken  over  to  Jersey  City?  A.  When  it  is 
required  there. 

Q.  If  you  have  the  meetings  of  the  board  in  New  York,  you 
don’t  require  them  in  New  Jersey?  A.  We  have  the  minute 
book  here  at  such  times,  usually. 

Q.  Isn’t  it  the  fact  that  the  minute  book  is  here  at  all  times 
except  when  you  require  it  in  New  Jersey?  A.  It  is  usually 
here;  not  always. 

Q.  Is  it  in  New  York  now?  A.  I could  not  say  as  to  that. 

Q.  Have  you  any  knowledge  at  all — A.  I have  not  seen  the 
book  recently. 

Q.  When  did  you  last  see  it?  A.  At  the  January  meeting. 

Q.  In  Jersey  City?  A.  Yes. 

Q.  In  whose  custody  is  that  book?  A.  It  is  in  my  custody; 
that  is,  nomihally  in  my  custody;  it  is  in  the  custody  of  the  clerk 
who  has  the  writing  of  it  up. 

By  Mr.  Warner: 

Q.  Is  it  not  a fact  that  you  have  lately  taken  it  to  Jersey  City 
within  the  last  two  weeks?  A.  No,  sir. 


No.  40.] 


399 


Q.  Or  three  weeks?  A.  Well,  that  would  go  back  to  January. 

Q.  Is  it  not  a fact  that  you  have  taken  the  book,  or  transmitted 
that  book  to  Jersey  City  for  the  purpose  of  avoiding  the  process 
of  the  law  to  compel  you  to  bring  that  into  court?  A.  No,  sir. 

By  Mr.  Hazet: 

Q.  Where  are  the  transfers  of  stock  made?  A.  Made  in  New 
York  and  in  Jersey  City;  the  law  requires  that  we  shall  make 
them  in  Jersey  City,  but  for  convenience  certificates  are  made  at 
odd  times  in  New  York. 

Q.  And  necessarily  the  stock  book  and  stock  ledger  are  in  New 
York?  A.  They  are  used  here,  and  they  are  at  the  same  time  at 
times  in  Jersey  City. 

Q.  Are  they  in  New  York  now?  A.  The  transfer  books,  yes;  I 
think  to-day  they  are. 

By  Mr.  Lexow: 

Q.  Is  there  any  other  book,  Mr.  Searles,  in  the  possession  of 

\ 

the  company  that  contains  a record  of  its  transactions  in  the 
purchase  of  properties  acquired  for  which  certificates  of  the  com- 
pany have  been  issued?  A.  Those  records  would  be  in  the  min- 
ute book  of  the  company  of  the  directors. 

Q.  Is  there  no  other  book?  A.  I think  no  other. 

Q.  Have  you  minutes  of  the  meetings  of  the  Executive  Com- 
mittee? A.  We  have  minutes  of  its  meetings  usually. 

Q.  Do  those  contents  not  refer  to  the  acquisition  of  properties? 
A.  No,  sir;  those  are  the  actions  of  the  directors. 

By  Mr.  Mazet^ 

Q.  Is  there  only  one  copy  of  the  minute  book?  A.  That  is  all. 

Q.  You  don’t  keep  a duplicate  at  each  office?  A.  No,  sir. 

By  Mr.  Lexow: 

Q.  Can  you  remember,  or  do  you  now  remember,  the  trans- 
actions with  reference  to  those  various  refineries  that  were  pur- 


400  [Senate, 

chased  subsequent  to  the  incorporation  of  the  New  Jersey  Com- 
pany not  contained  in  the  original  Trust?  A.  I do  not. 

Q.  Of  the  amounts  of  stock  issued  for  them?  A.  No,  sir. 

Q.  Or  the  basis  of  the  computation  of  value?  A.  I do  not. 

Q.  Is  all  that  contained  in  this  minute  book?  A.  The  fact  of 
the  amounts  authorized  would  be  contained  there;  nothing  more. 

Q.  You  distributed  $23,000,000  of  sugar  certificates  after  the 
incorporation  of  the  New  Jersey  Company;  do  you  mean  to  be 
understood  as  saying  that  the  only  record  showing  any  basis  for 
the  issuance  of  those  certificates  to  that  enormous  amount  is  con- 
tained only  in  the  minute  book  of  the  directors?  A.  The  action 
of  the  Board  of  Directors  would  be  the  only  basis  of  that  delivery. 

Q.  Were  there  no  preliminary  agreements  in  writing?  A.  My 
impression  is  that  there  were,  in  one  or  two  instances. 

Q.  Where  are  they?  A.  I don’t  know;  I think  those 
agreements  when  executed  were  destroyed;  I have  no  recollection 
of  them;  I think  they  were  only  preliminary  agreements,  and  when 
they  were  once  executed  they  were  destroyed. 

Q.  Is  that  true  of  all  the  transactions  surrounding  thepurchase 
of  properties  and  the  distribution  of  this  stock,  that  as  soon  as 
the  transaction  is  over,  the  agreements  and  memoranda  relating 
thereto  are  destroyed?  A.  No,  sir. 

Q.  What  transaction  is  there  that  is  of  record,  so  that  it  may 
be  ascertained  by  this  committee?  A.  Well,  there  was  in  exist- 
ence the  Trust  deed  for  some  time. 

Q.  I am  speaking  of  subsequent  to  that?  A.  Oh,  recently — oh, 
there  are  no  other  transactions  that  I know  of  except  those  which 
are  matter  of  record. 

Q.  A matter  of  record  where?  A.  In  the  minute  book  of  the 
company,  where  the  authorization  is  given. 

Q.  There  is  nothing  in  existence  beyond  the  naked  authoriza- 
tion of  the  board  of  directors  to  issue  a certain  amount  of  capital 
stock  of  the  company  in  payment  for  these  acquired  properties? 
A.  I think  that  is  all. 

Q.  Any  appraisements?  A.  None. 

Q.  Were  committees  appointed  to  appraise  the  values  of  the 


Ho.  40.] 


401 


properties  purchased?  A.  I have  no  recollection  of  any  such 
committees. 

Q.  Or  was  it  one  man  who  conducted  the  operations  to  a con- 
clusion? A.  I think  the  operations  were  conducted  through  dif- 
ferent parties. 

Q.  And  you  mean  to  be  understood  as  stating  that  this  $23,- 
000,000  of  additional  stock  was  issued  without  any  appraisement 
of  the  yalue  of  the  property  purchased?  A.  There  was  no  for- 
mal appraisement  of  the  properties. 

Q.  Was  that  stock  also  issued  upon  the  basis  of  computing 
what  you  term  the  ultimate  earning  capacity  of  the  property? 
A.  It  was  based  on  the  earning  capacity  of  the  property  in  each 
case. 

Q.  That  is  to  say,  you  took  as  a basis  for  stock  transfer  and 
payment  what  was  figured  out  as  the  ultimate  earning  capacity 
of  the  property  undertaken?  A.  I think  in  the  case  of  the  Phil- 
adelphia properties  it  was  taken  on  the  actual  capacity  at  the 
time;  they  were  working  properties,  the  capacity  of  which  was 
known.  v 

Q.  How  could  you  issue  stock  upon  or  in  payment  for  proper- 
ties which  were  closed  down  just  as  soon  as  they  were  made  part 
of  the  company?  A.  They  were  not  closed  down. 

Q.  A number  were,  were  they  not?  A.  Of  the  Philadelphia 
properties? 

Q.  Yes?  A.  Ho,  sir. 

Q.  What  in  this  new  and  recent  deal  are  you  estimating  to  be 
the  earning  capacity  of  the  United  States  Refining  Company, 
which  has  not  yet  commenced  business?  A.  We  haye  not  deter- 
mined yet  what  its  earning  capacity  will  be. 

Q.  How  can  you  determine  it?  A.  We  have  certain  infor- 
mation concerning  the  capacity  of  the  house;  but  if  we  run  it  as 
a refinery,  we  shall  make  some  considerable  changes  in  it  in  or- 
der to  adapt  it  to  the  purposes  of  the  business  and  to  do  it  to  the 
best  advantage. 

Q.  You  have  issued  stock  for  a large  number  of  companies  that 
as  soon  as  they  were  successively  undertaken,  were  closed;  how 


26 


402 


[Senate, 


did  you  compute  the  earning  capacity  of  those  properties  as  a sub- 
ject for  the  basis  of  stock  issue?  A.  We  took  into  account  the 
value  of  the  property  as  transferring  it  to  other  properties. 

Q.  It  had  no  earning  capacity,  had  it?  A.  It  had  earning  ca- 
pacity in  each  case,  but  we  transferred  the  property  from  one  to 
another  and  increased  its  earning  capacity  by  making  the 
transfer. 

Q.  If  it  was  closed  as  soon  as  acquired,  how  is  it  possible  that 
it  should  have  earning  capacity?  A.  The  houses  that  were  closed 
as  soon  as  they  were  acquired  were  closed  by  reason  of  the  fact 
that  they  were  received  at  a time  of  year  when  the  demand  for 
sugar  was  diminished,  the  houses  that  worked  with  the  greatest 
economy  were  kept  running,  and  those  which  worked  to  a disad- 
vantage were  first  closed. 

Q.  A large  number  have  remained  closed  from  that  time,  the 
time  of  their  acquisition?  A.  Some  have. 

Q.  Now  I would  like  to  know  how  you  compute  the  earning  ca- 
pacity of  those  you  immediately  closed  upon  taking  them  into  the 
Trust  and  which  have  remained  closed  ever  since?  A.  As  I have 
previously  stated,  we  have  transferred  the  earning  capacity  of 
those  refineries  to  other  properties  where  the  same  amount  of 
sugar  could  be  more  economically  produced. 

Q.  Having  therefore  based  your  stock  issue  upon  the  earning 
capacity  in  the  conduct  of  your  business,  do  you  regard  that  as 
the  standard  for  charge,  to  wit,  a dividend  upon  the  assumed 
earning  capacity  of  the  aggregate  of  the  properties  whether  ac- 
tive or  inactive?  A.  Yes,  sir. 

By  Mr.  McCarren: 

Q.  Mr.  Searles,  are  you  familiar  with  the  testimony  given  by 
Mr.  Bergin  before  this  committee,  or  that  part  of  it  in  which  he 
spoke  about  a number  of  employees  being  discharged  after  the 
forming  of  the  Sugar  Trust,  I believe  in  which  he  said  there  were 
some  600  or  700  men  discharged,  is  that  true?  A.  I have  read 
the  testimony;  he  testified  that  there  were  5,000  or  6,000  dis- 
charged. 


No.  40.] 


403 


\ 


Q.  Is  that  true?  A.  Not  at  all. 

Q.  Do  you  know  whether  there  are  more  men  now  employed  in 
the  Sugar  Refining  business  in  the  State  of  New  York  than  there 
were  before  the  formation  of  the  Trust?  A.  I think  there^are 
more  men  employed  in  the  State  of  New  York  in  the  sugar  refin- 
ing business  than  there  was,  or  during  the  present  organization 
than  there  were  prior  to  the  Trust. 

Q.  Well,  where  are  your  refineries  located  now  in  this  State? 
A.  In  Brooklyn. 

Q.  Suppose  you  contemplated  an  extension  of  your  plant,  would 
you  consider  Brooklyn  more  advantageous  for  that  purpose  than 
any  other  point?  A.  I do  not  think  we  should  for  any  further  ex- 
tension. 

Q.  Why?  A.  Well,  there  are  other  places  which  offer  greater 
attractions  than  Brooklyn  for  sugar  refining  business  at  the  pres- 
ent time;  we  can  do  better  in  Philadelphia,  and  in  Camden  than 
we  could  do  in  Brooklyn;  Mr.  Spreekles,  when  he  built  his  sugar 
refining  company,  was  very  strongly  urged  to  come  to  Brooklyn; 
he  went  to  Philadelphia,  and  there  they  gave  him  exemption  from 
taxes  and  free  water,  and  several  other  exemptions  and  privi- 
leges in  the  way  of  railroad  approaches,  and  entirely  free  from 
all  charge,  as  an  inducement. 

Q.  Well,  then,  I understand  you  to  say,  substantially,  that  you 
do  not  regard  the  inducements  in  this  State  for  the  manufactur- 
ing business  as  great  as  they  are  in  other  States?  A.  I do  not; 
under  ordinary  conditions  they  might  be,  but  under  existing  con- 
ditions I do  not  think  they  are. 

Q.  Do  you  know*  Mr.  Lawson  N.  Fuller  who  testified  before  this 
committee  last  Saturday?  A.  I do. 

Q.  How  recently  have  you  known  him  to  be  engaged  in  the 
sugar  refining  business?  A.  I think  Mr.  Fuller  went  out  of  the 
sugar  refining  business  24  or  25  years  ago. 

Q.  Would  you  consider  his  experience  24  or  25  years  ago  such 
as  to  qualify  him  as  an  expert  concerning  the  sugar  business  of 
to-day?  A.  Not  by  any  means;  the  business  has  been  revolu- 
tionized since  his  day  entirely. 


404 


[Senate, 


Q.  Mr.  Fuller  testified  that  the  people  do  not  get  the  benefit  of 
the  reduction  in  the  price  of  raw  sugar;  is  that  true?  A.  That 
is  disproven  entirely  by  the  statistics  themselves;  they  show  that 
the  people  have  gotten  it. 

Q.  What  is  the  price  of  granulated  sugar  to-day?  A.  I think 
four  and  a quarter  cents. 

Q.  What  part  of  that  price  is  paid  to  the  United  States  Gov- 
ernment in  the  form  of  duty?  A.  About  one  cent  a pound  or  a 
litttle  morg., 

Q.  Suppose  there  was  no-  duty  on  raw  sugar  what  would  the 
price  of  granulated  sugar  be?  A.  If  there  were  no  duty  to-day 
granulated  sugar  would  be  sold  at  somewhere  about  three  and  a 
quarter  cents  a pound., 

Q.  Three  and  a quarter  cents?  A.  Yes,  sir. 

Q.  Can  you  give  an  approximate  idea  of  the  amount  of  sugar 
manufactured  by  the  so-called  Sugar  Trust  and  the  American 
Sugar  Refining  Company  since  consolidation?  A.  I think  that 
the  Sugar  Refining  Company  and  the  American  Sugar  Refining 
Company  together  have  distributed  fifteen  hundred  million  dol- 
lars worth  of  sugar  the  last  nine  years. 

Q.  Fifteen  hundred  million?  A.  Yes. 

Q.  In  reading  over  Mr.  Havemeyer’s  testimony  I see  that  he 
gives  some  figures  to  the  committee  to  show  the  margin  between 
the  cost  of  raw  sugar  and  the  price  of  refined  sugar;  now,  what 
does  that  margin  represent?  A.  That  margin  represents  first 
the  importation  of  the  sugar  from  every  country  in  the  world; 
second,  the  refining,  the  cost  of  refining,  the  loss  in  waste  be- 
tween the  raw  and  the  refined  product,  and  the  cost  of  distribut- 
ing the  sugar,  refined  sugar,  in  barrels  or  in  packages,  and  the 
profit  to  the  refiner;  it  is  all  embraced  in  those  figures,  that  mar- 
gin. 

Q.  What  market  controls  the  price  of  the  raw  sugar?  A.  Of  raw 
sugar;  well,  it  is  more  nearly  controlled  by  the  London  market 
than  any  other  market;  there  is  a speculative  sugar  market  in 
London  which  really  controls  the  price  of  raw  sugars  all  over  the 
world;  the  London  quotations  fix  the  values  in  our  market  prac- 
tically., 


No.  40.] 


40a 


Q.  Is  the  American  Sugar  Eefining  Company  a large  purchaser 
from  European  markets?  A.  We  buy  very  largely  iu  Europe; 
we  have  been  obliged  to,  especially  since  the  shortage  of  the 
Cuban  crop;  the  Cuban  crop  two  years  ago  was  2,000,000  tons; 
this  last  year  it  was  only  about  250,000  tons;  we  have  gone  to 
make  up  that  difference  of  three-quarters  of  a million  tons;  we 
have  been  obliged  to  go  to  the  markets  of  the  world,  and  we  have 
imported  from  the  European  market  in  beet  sugars  perhaps  300,- 
000  tons  of  that  deficit. 

Q.  Mr.  Searles,  don’t  you  believe  that  the  increase  in  the  num- 
ber of  large  corporations  and  the  aggregation  of  capital  therein 
has  a tendency  to  work  to  the  disadvantage  of  the  workingman? 
A.  No,  sir;  on  the  contrary;  I think  that  there  is  an  entirely  mis- 
taken idea  concerning  that;  you  can't  have  the  employment  of 
labor  without  capital,  and  all  the  efforts  that  are  made  to  de- 
preciate capital  are  against  the  interests  cf  labor;  I think  every 
movement  that  is  made  to  destroy  confidence  in  capital  is  work- 
ing diametrically  against  the  interests  of  the  laboring  man  and 
the  working  people;  there  have  been  in  this  State  hundreds  of 
millions  of  dollars  worth  of  business  that  have  been  driven  away 
by  the  fact  that  capital  is  considered  unsafe  here. 

Q.  Well,  what  kind  of  legislation  in  your  opinion  would  be 
necessary  to  a greater  amount  of  employment,  and  to  a larger 
benefit  to  the  people  of  the  State?  A.  Well,  I think,  sir,  if  we 
had  less  legislation  we  would  be  a great  deal  better  off;  I think 
that  if  you  will  make  laws  that  will  invite  capital  to  the  State 
of  New  York  you  will  increase  very  largely  its  manufacturing 
industries  and  the  the  employment  of  labor;  but  I think  that  so 
long  as  investigations  like  this  are  fomented,  which  make  capital 
unsafe  and  uncertain,  capital  is  put  on  a defensive  position,  as 
though  parties  employing  capital  were  guilty  of  some  crime 
against  the  working  people;  I believe  that  while  that  is  the  case 
you  will  not  be  able  to  increase  the  industries  of  this  State. 

Q.  Well,  don’t  you  believe  that  by  encouraging  the  combina- 
tions of  capital  that  the  consumer  is  very  largely  placed  at  the 
mercy  of  the  manufacturer?  A.  No,  sir;  no,  sir;  there  is  a law 


406 


[Senate, 


higher  than  the  Legislature  of  the  State  of  New  York  that  regu- 
lates all  those  things;  there  is  a law  of  supply  and  demand,  and 
no  trust  has  ever  been  organized  and  no  corporation  has  ever 
been  big  enough  to  violate  that  law;  there  are  hundreds  of  mil- 
lions of  dollars  of  capital  here  to-day  in  the  city  of  New  York 
which  is  ready  to  be  put  into  any  enterprise  that  shows  large 
profits,  and  no  corporation  can  make  an  excessive  profit  without 
inviting  competition  which  in  the  end  will  destroy  it;  the  con- 
sumer is  amply  protected  by  the  legitimate  laws  of  supply  and 
demand. 

By  Mr.  Lexow : 

Q.  Did  you  not  answer  on  your  first  examination,  Mr.  Searles, 
that  you  conceded  that  one  of  the  reasons  for  the  lack  of  faith 
and  for  the  present  situation  was  overcapitalization  of  enter- 
prises? A.  No,  sir;  I do  not  think  I testified  to  that;  I think  you 
asked  me  whether  the  capital,  the  undercapitalization  of  these 
companies  was  not  a violation  of  the  law,  and  an  evasion  of  the 
law  of  the  State,  and  I stated  that  I did  not  think  it  was. 

Q.  Or  to  the  question  in  the  alternative  at  the  time,  whether 
it  was  not  equally  true  that  an  overcapitalization  which  did  not 
represent  the  fair  market  value  of  the  property  capitalized  was 
an  evasion  of  the  law,  and  to  it  very  largely  was  attributa- 
ble the  present  situation?  A.  I think  I did  testify  that  over- 
capitalization  was  criticisable. 

Q.  Now,  you  have  stated  that  the  consumer  has  had  the  full 
benefit  of  the  fall  in  raw  material;  you  make  that  statement,  do 
you  not,  upon  the  comparison  of  nine  years  before  the  Trust  with 
nine  years’  operations  after  the  Trust?  A.  Yes,  sir. 

Q.  When  you  take  the  figures  of  five  years  before  the  Trust 
compared  with  five  years  after  the  Trust,  does  the  same  state- 
ment hold  true?  A.  If  you  take  the  first  five  years  before  the 
Trust  and  the  first  five  years  after  the  Trust  it  does,  only  to  an 
increased  extent. 

Q.  Do  you  dispute,  Mr.  Searles,  that  the  difference  between  the 
value  of  the  raw  material  and  the  value  of  the  refined  product 


No.  40.] 


407 


for  the  first  five  years  before  the  Trust  was  853-1000  of  a cent? 
A.  I haven’t  the  figures,  so  I can’t — 

Q.  (Continuing)  Per  pound?  A.  I haven’t  the  figures  at  all. 

Q.  You  have  stated  that  the  consumer  got  the  full  benefit  of 
the  fall  of  the  raw  material?  A.  Yes,  sir. 

Q.  Don’t  you  know  that  the  difference  in  the  price  between  the 
raw  material  and  the  manufactured  product  in  the  five  years  be- 
fore the  Trust  was  S53-1000  of  one  cent  per  pound?  A.  I have 
not  the  figures  before  me;  what  I referred  to  a moment  ago  was 
this:  that  if  you  will  take  the  first  five  years  of  the  nine  before 
the  Trust  and  compare  it  with  the  first  five  years  of  the  nine  after 
the  Trust  you  will  find  that  the  saving  to  the  consumer  was  about 
thirty-seven  cents  a hundred. 

Q.  I am  just  doing  that,  and  I am  showing  the  reverse  of  it. 
A.  Well,  you  can’t  show  it  in  figures. 

Q.  I am  taking  from  the  years  1883  to  1887  inclusive.  A. 
That  is  the  last  five  years  prior  to  the  Trust  instead  of  the  first 

five. 

Q.  Oh,  the  first  five;  now  I am  speaking  of  the  five  years  inline- 

\ 

diately  preceding  the  formation  of  the  Trust,  and  is  the  statement 
that  you  made  to  Senator  McCarren  that  the  consumer  got  the 
benefit  even  of  the  fall  in  the  raw  material  as  compared  with  the 
first  five  years  after  the  formation  of  the  Trust  true?  A.  The 
comparison  of  the  last  five  years  prior  to  the  Trust  and  the  first 
five  years  after  the  Trust  is  not  a fair  comparison,  for  the  reason 
that  the  last  five  years  prior  to  the  Trust  were  years  of  disaster, 
during  which  the  sugar  refineries  were  ruinously  hurt  and  some 
of  them  driven  out  of  the  business  entirely. 

Q.  I am  not  asking  now  whether  it  is  a fair  comparison,  but  I 
am  making  that  comparison  of  the  first  five  years  immediately 
previous  to  the  Trust  and  the  first  five  years  immediately  after 
the  Trust,  and  ask  you  whether  during  those  ten  years  the  con- 
sumer— comparing  the  five  first  with  the  five  second — the  con- 
sumer got  even  the  benefit  of  the  reduction  in  the  price  of  the  raw 
material?  A.  I think  that  the  consumer  got  a great  deal  more 
than  that  difference. 


408 


[Senate, 


Q.  Then,  I will  ask  you  whether  the  difference  in  those  first 
five  years  between  the  price  of  the  raw  material  and  the  price  of 
the  manufactured  product  was  not  853-1000  of  a cent  per  pound? 
A.  I haven’t  the  figures  and  therefore  cannot  answer. 

Q.  Do  you  dispute  those  figures?  A.  I don’t  know  anything 
about  it;  I haven’t  the  figures. 

Q.  I will  ask  you  whether  the  difference  or  limit  between  the 
raw  material  and  the  manufactured  product  for  the  five  years  im- 
mediately after  the  Trust  was  not  one  cent  and  10-1000  of  a cent 
per  pound?  A.  I haven’t  the  figures. 

Q.  These  are  the  figures  taken  from  Willet  & Gray’s;  do  you 
dispute  their  accuracy?  A.  If  your  statement  is  correct  as  to 
the  figures  the  figures  are  correct. 

Q.  You  don't  know  what  the  figures  were  during  those  years? 
A.  I haven’t  the  aggregate  of  those  five  years;  no,  sir. 

Q.  Well  you  then  kindly  furnish  to  this  committee  to-morrow 
morning  your  figures  based  upon  Willet  & Gray’s  statistics  for 
those  ten  years,  and  make  also  a comparison  between  the  five 
years  immediately  preceding  the  Trust,  with  the  whole  of  the 
nine  years  subsequent  to  the  Trust,  for  the  purpose  of  stating 
under  oath  whether  the  consumer  has  had  even  the  benefit  of  the 
fall  in  the  raw  material  that  has  occurred  during  that  time;  will 
you  kindly  do  so?  A.  I will  make  these  figures  for  you,  if  you 
wish^ 

Q.  We  would  ask  you  also  to  on  Wednesday  at  the  meeting  of 
the  Board  of  Directors  to  call  their  attention  to  the  request  of 
this  committee  with  reference  to  the  books,  so  that  we  then  can 
know  officially  from  the  board  whether  they  will  furnish  them? 
A.  You  want  the  books,  or  do  you  want  those  figures  which  you 
asked  for  from  the  books,  which  you  previously  stated  was  all 
you  wished  to  know? 

Q.  Provided  the  statement  will  cover  everything  in  connection 
with  those  transactions  that  are  contained  in  the  minutes. 

By  Mr.  Mazet:  , 

Q.  How  much  has  the  consumption  of  sugar  increased  within 
the  United  States  in  the  last  ten  years?  A.  Well,  I think — 


No.  40.] 


40a 

Q.  Percentage?  A.  I should  think  about  40  per  cent. 

Q.  Well,  that  accounts  largely  for  the  additional  number  of 
men  employed  in  the  manufacture,  does  it  not?  A.  Not  in  this 
State,  for  the  reason  that  refineries  have  ben  multiplied  in  other 
States  very  considerably  which  has  met  that  additional  demand. 

Q.  What  proportion  of  the  output  of  the  American  Sugar  Re- 
fining Company  is  manufactured  in  the  State  of  New  York?  A. 
Oh.  I thnk  somewhere  between  one-third  and  a half. 

Q.  Do  you  know  how  many  men  are  employed  by  the  American 
Sugar  Refining  Company?  A.  I don’t  know  at  present. 

Q.  Approximately?  A.  Well,  you  mean  directly  or  in  the  col- 
lateral industries  as  well  as  in  the  refining  of  sugar? 

Q.  Yes;  I don’t  mean  only  the  men  employed  in  the  factory,  but 
on  the  dock  and  in  barreling  it,  etc.?  A.  Well,  I don’t  know  as 
to  what  they  would  be. 

Q.  Can’t  you  approximate  the  figures?  A.  Well,  probably — 6,- 

000  or  7,000 — 

Q.  (Interrupting)  Can  you  furnish  this  committee  with  the 
number  of  men  employed  and  the  wages  paid?  A.  I will  try  to 
get  that  information  from  the  parties  who  have  charge  of  it;  that 
is  not  in  my  province. 

Q.  Mr.  Theodore  Havemeyer  will  furnish  that , will  he  not?  A. 

1 think  that  he  would  be  the  party  to  furnish  that. 

Q.  You  have  that  in  your  books  in  Wall  street,  have  you  not? 
A.  We  do  not  have  as  to  the  number  of  men  employed;  those  de- 
tails they  belong  to  the  manufacturing  department. 

Q.  Will  you  kindly  endeavor  to  obtain  that  information?  A.  I 
will  make  that  request. 

By  Mr.  Warner: 

Q.  Mr.  Searles,  you  understand — A.  (Interrupting)  If  it  is  pro- 
posed to  place  before  the  community  through  this  committee  the 
secrets  of  its  business  and  all  its  affairs— 

Q.  That  is  one  of  the  advantage  which  a foreign  corporation 
has  in  this  State  over  a domestic  corporation  of  the  State,  is  it 
not — A.  (Continuing)  I think  that  any  such  proposition  as  that 


410 


[Senate, 


is  not  in  the  interests  of  the  State  or  anybody  else;  if  a man  feels 
that  his  books  are  not  safe,  and  he  is  going  to  have  them  spread 
before  his  competitors,  I do  not  think  anybody  would  want  to  do 
business  in  this  State. 


By  Mr.  Lexow:  I j 

Q.  You  understand  that  there  is  no  such  object  on  the  part  of 
this  committee. 

Mr.  Searles:  When  the  committee  get  so  that  it  comes  into  a 
man’s  private  affairs  and  asks  for  all  the  details  of  his  business 
and  displays  them  to  the  public — I do  not  think — that  is  hardly 
a fair  proposition. 


“B.  H.  Howell,  Son  & Co., 
Ho.  109  Wall  street, 
Hew  York. 

Messrs 


Hew  York 189 


Dear  Sirs: 

We  herein  enclose  an  invoice,  from  which  you  are  entitled  to 
the  usual  deductions  of  one  per  cent,  trade  discount  on  one  hun- 
dred barrel  lots,  and  one  per  cent,  for  cash  if  paid  within  seven 
days. 

We  will  be  pleased,  upon  receipt  of  your  written  request,  to  ap- 
point you  one  of  our  agents,  in  which  case  we  will  consign  sugar 
to  you  for  sale  upon  the  terms  mentioned  below,  the  title  however 
to  remain  in  us  subject  to  your  advances  and  necessary  expenses 
incurred  by  you. 

You  are  to  advance  to  us  within  thirty  days  the  amount  of  the 
invoice  less  one  per  cent,  trade  discount  on  one  hundred  barrel 
lots,  an  additional  one  per  cent,  if  payment  is  made  within  seven 
days,  this  advance  to  be  without  recourse  to  or  reclamation  upon 
us,  and  to  be  due  in  any  event. 


No.  40.] 


411 


When  you  sell  the  sugar  it  is  to  be  billed  in  your  name,  al- 
though in  fact  as  agent  for  us,  and  you  shall  at  your  own  cost,  and 
without  reclamation  upon  us,  pay  all  expenses,  and  assume  all 
risks  of  the  property,  and  of  payment.  No  expenses  are  to  be 
incurred  for  our  account. 

The  sugar  shall  not  be  sold  or  disposed  of  by  you,  either  direct- 
ly or  indirectly  for  less  than  the  daily  quotations  with  freight 
added  from  refining  point  of  sale  (as  per  quality  rate  book)  nor 
on  more  liberal  terms  as  to  credit  or  cash  discounts. 

If  these  conditions  are  observed  by  you,  we  will  upon  a cer- 
tificate to  that  effect,  pay  you  a commission  of  three-sixteenths  of 
a cent  per  pound,  and  in  addition  thereto  you  shall  retain  the 
profit,  if  any,  over  the  advance  made  as  above  provided.  If  you 
fail  to  comply  with  any  of  the  conditions  we  will  decline  to  pay 
the  commission. 

Payments  will  be  made  for  each  month’s  commissions  at  the 
expiration  of  three  months  thereafter. 

Upon  written  notice  from  either  party  this  agency  will  be  dis- 
continued. 

v Yours  very  truly, 

B.  H.  Howell,  Son  & Co.” 

Marked  “Exhibit  A,  Feb.  5.” 

Fourth  Edition,  New  York  Equality  Freight  Bates,  Effective 
August  17,  1896/ — Sugar  Factors’  Code  of  Buies.  Marked  Ex- 
hibit A,  February  15. 

Form  as  follows:! 

— 189 

Messrs.  B.  H.  Howell,  Son  & Co.,  109  Wall  street,  New  York  City, 

Gentlemen:  We  have  received  your  letter  enclosing  invoice 
for  sugar. 

We  wish  to  act  as  one  of  your  agents  and  to  receive  consign- 
ments of  sugar  from  you  upon  the  terms  mentioned  in  your  letter, 
and  we  agree  to  conform  to  the  conditions  as  therein  stated  on 
all  such  consignments. 

Yours  truly. 

Marked  Exhibit  B,  February  15. 


412 


[Senate, 


Form  as  follows:. 

State  of ss: 

County  of 

, being  duly  sworn,  declares  that  in  claiming 

a commission  of  three-sixteenths  of  a cent  per  pound  (less  one  per 
cent.)  where  trade  discount  has  been  allowed  on  all  sugar  con- 
signed to by  B.  H.  Howell,  Son  & Co.,  from 

September  1,  1896,  to  October  1,  1896,  that  all  conditions  as 
agreed  to  when  requesting  such  consignments,  have  been  and 
will  be  faithfully  carried  out,  and  that  none  of  the  sugar  has 
either  directly  or  indirectly  been  or  will  be  sold  or  disposed  of 
upon  any  other  terms. 

Sworn  to  before  me  this  — day  of , in  the  year  189-. 

Marked  Exhibit  C,  February  15. 

Mr.  Lexow:  I understand  there  is  no  such  proposition  on  the 
part  of  the  committee. 

Mr.  Warner:  I simply  asked  what  there  was  in  these  books 
that  you  did  not  want  to  show  to  the  committee;  that  was  all. 

Q.  I understood,  I think,  Mr.  Havemeyer  testified  yesterday 
that  your  corporation  made  no  annual  report  to  the  Comptroller? 
A.  We  make  uo  report  to  the  Comptroller  here  of  our  business; 
no,  sir. 

Q.  That  is  another  advantage  the  corporation  seems  to  enjoy 
over  domestic  corporations,  isn’t  it?  A.  I do  not  know  what  the 
laws  on  domestic  corporations  are,  whether  they  would  require  it 
or  not,  a report  as  to  its  business. 

Q.  Does  your  company  refuse  to  sell  to  any  retailers  who  are 
able  and  willing  to  buy  a hundred  barrels?  A.  As  a rule  we  do 
not  sell  retailers;  we  prefer  to  do  our  business  with  wholesalers; 
our  business  is  of  that  magnitude  that  it  would  he  impossible  for 
us  to  attempt  to  distribute  it  through  the  retailers. 

Q.  Isn’t  it  a fact  that  you  have  refused  to  sell  to  any  retailer 
who  was  able  and  desirous  of  taking  the  sugar  in  hundred  barrel 
lots?  A.  We  would  sell  to  any  retailer  for  cash  who  buys  a hun- 
dred barrels  at  our  regular  price.. 


No.  40.] 


413 


Q.  Have  you  never  refused  to  do  so?  A.  I do  not — well,  that 
would  go  to  the  sales  department;  I do  not  have  charge  of  the 
detail  of  the  business  of  sales. 

Q.  What  is  the  object  of  this  factors’  agreement?  A.  I will 
tell  you  what  is  the  object  of  the  factors’  agreement;  the  whole- 
sale grocers  have  for  years  made  a leading  article  of  sugar,  and 
they  have  sold  it  absolutely  without  profit  and  without  paying 
anything  to  cover  the  absolute  cost  of  doing  that  business;  uoav, 
the  wholesale  grocers  reported  this;  they  said,  “Sugar  constitutes 
“about  40  per  cent,  of  our  sales;  while  that  is  the  case  if  we  are 
“forced  to  sell  sugar  without  getting  back  the  actual  cost  of  dis- 
tributing that  sugar,  simply  a loss,  which  leaves  our  whole  busi- 
ness very  unsatisfactory”;  and  the  wholesale  grocers  urged  very 
strongly  that  some  arrangement  be  made  by  which  they  should 
receive  the  commission  as  our  factors,  which  wrnuld  be  equal  to 
the  expense  of  doing  the  business;  now,  I took  personally  a great 
deal  of  interest  in  the  matter  of  the  wholesale  grocers  beyond 
my  evidence  to  show  that  it  cost  them  on  the  average  5 per  cent, 
to  do  their  business;  5 per  cent  on  4 1-4  cents  a pound  is  21  cents 
a hundred  pounds;  they  wmnted  an  agreement  under  which  they 
should  get  a quarter  of  a cent  a pound  for  distributing  that  sugar, 
which  would  be  the  cost  of  distribution,  and  leave  them  a frac- 
tion of  profit;  and  it  finally  resulted  in  our  agreeing  that  we 
would  pay  them  a commission  of  3-16  a cent  a pound  for  distrib- 
uting our  product  to  the  retailer;  I had  a very  careful  computa- 
tion made  and  found  that  we  could  not  distribute  our  product 
ourselves  to  the  retail  trade,  taking  into  account  the  character  of 
the  trade,  of  the  difficulties  of  consumers,  the  losses,  etc.,  at  cost 
to  us  less  than  3-16  cents  a pound;  we  therefore  agreed  that  we 
wrnuld  pay  the  wholesale  grocers,  or  rather  the  factors,  that  com- 
mission of  3-16,  they  to  take  all  the  risks  and  distribute  our  prod- 
uct; now,  that  3-16  cents  a pound  simply  covered  the  expense  of 
distribution,  and  they  get  out  whole,  according  to  their  own  tes- 
timony, for  the  sugar  they  handle,  and  it  leaves  them  a profit  on 
the  rest  of  their  business;  this  thing  was  not  instigated  by  the  re- 
finer, but  it  was  urged  by  the  wholesale  grocers  as  a matter  of 


414 


[Senate. 


life  and  death;  in  fact,  it  came  to  the  point  that  they  said  they 
could  not  handle  sugar  any  longer  unless  an  agreement  could  be 
made  by  which  they  could  cover  the  cost  of  retailing. 

Q.  As  the  secretary  of  the  company,  you  took  sufficient  inter- 
est in  the  matter  to  organize  the  wholesale  grocers  of  Chicago, 
didn’t  you?  A.  No,  sir;  I went  by  request  to  the  wholesale  gro- 
cers of  Chicago;  I went  to  confer  with  them,  to  hear  what  they 
had  got  to  say  in  reference  to  various  plans  that  were  proposed; 
I suppose  there  were  twenty  different  propositions, and  this  plan 
finally  resulted,  after  very  many  conferences. 

Q.  Well,  of  course,  it  had  the  result  of  stifling  competition  be- 
tween the  grocers?  A.  It  is  hardly  fair  to  say  that. 

Q.  Well,  it  does,  does  it  not?  A.  No,  it  does  not  result  in 
that,  anything  more  than  this. 

Q.  There  is  no  competition  between  the  people  that  go  into 
that  agreement  with  you?  A.  There  is  no  competition  over  their 
commission;  that  is  all;  the  price— the  operation  of  it  is  this — 

Q.  But  your  company  took  such  an  interest  in  this  matter  of 
agreement  that  you  compelled  these  men  to  make  thatthey  would 
not  sell  less  than  your  quotation  price?  A.  Why,  we  took  this 
interest  in  it,  that  if  they  agree  to  do  a thing,  we  want  to  know 
if  they  have  done  it. 

Q.  And  it  is  for  your  interest  to  do  it?  A.  It  is  for  our  interest 
to  do  it;  the  thing  had  come  to  a pass  that  the  wholesalers  were 
suffering  in  credit;  we  did  not  know  who  was  safe;  we  can’t  af- 
ford to  sell  these  people  if  they  lose  money;  we,  as  a matter  of 
self-protection  in  the  matter  of  credits,  more  than  anything  else, 
we  were  interested  in  it. 

Q.  The  people  don’t  get  any  particular  benefit  out  of  this,  I 
take  it?  A.  Undoubtedly,  they  have;  they  have  had  a uniform 
sugar,  and  lower  price  in  sugar  than  they  would  have  had  with- 
out it. 

Q.  How  do  you  make  that  out?  A.  For  these  reasons:  the 
prices  of  sugar  were — ordinarily,  the  retail  dealers  paid  all  kinds 
of  prices  for  sugar;  now,  every  retail  dealer  takes  our  card  price 
and  he  says,  “This  is  the  price  at  which  I want  to  buy  my  sugar”; 


No.  40.] 


415 


and  goes  to  bis  wholesaler  with  it  and  demands  that  he  get  his 
sugar  at  that  price;  I believe  that  the  sugar  is  placed  to  the  con- 
sumer to-day  as  cheap  as  it  ever  will  be — 

Q.  Isn’t  it  a fact  that  people  who  have  done  business  with  you 
under  these  factors’  agreements,  having  violated  the  agreement 
in  some  respect,  for  selling  foreign  sugars,  have  been  put  off  en- 
tirely by  the  company?  A.  Olg  no,  sir;  we  cut  off  some  people 
on  account  of  their  credit  not  being  good;  we  cut  off  people  be- 
cause they  have  violated  their  agreement — we  will  do  that. 

By  Mr.  Lexow:  i, 

Q.  Violated  this  factors’  agreement?  A.  Violated  this  fac- 
tor’s agreement — a man  who  agrees  to  do  it,  and  doesn’t  live  up 
to  it,  we  don’t  want  to  trust  that  man ; you  had  a Mr.  Dugan  tes- 
tify, I saw  by  the  paper;  I inquired  in  the  office;  I find  we  have 
never  refused  Dugan  to  sell  him  sugar  except  in  1894  on  the  ground 
that  we  questioned  his  credit;  I find  that  he  had  a factor’s  agree- 
ment with  the  Franklin  Sugar  Refining  Company  in  Philadel- 
phia; that  he  hasn’t  paid  for  his  sugar  and  that  he  is  owing  for 
it  yet;  that  they  have  given  him  an  extension  and  his  notes,  but 
that  the  notes  are  still  unpaid. 

Q.  You  haven’t  paid  him  any  rebate — offered  to,  rather?  A. 
They  have  credited  his  rebate  against  the  invoice. 

Q.  Have  you  offered  to  do  that?  A.  Why,  undoubtedly,  he 
has  been  credited  it.  ' 

Q.  Do  you  know  that  to  be  a fact?  A.  Certainly;  I am  so  in- 
formed from  Philadelphia. 

Q.  How  can  you  testify,  Mr.  Searles,  that  any  system  that  sub- 
stantially creates  a monopoly  by  factors,  giving  them  rebates  at 
the  rate  of  3-16  per  cent,  per  pound,  when  the  purchasing  public 
eannot  receive  those  rebates  unless  they  sign  the  factors’  agree- 
ments? A.  The  purchasing  public  that  do  not  perform  the  ser- 
vice are  not  entitled  to  the  factor’s  agreement;  the  men  who  per- 
forms the  service  for  us,  of  distributing  our  sugar,  we  pay  him 
the  commission. 

Q.  The  service  that  he  performs  under  the  terms  of  the  agree- 


416 


[Senate, 


ment  is  to  have  maintained  the  prices  fixed  by  you?  A.  We  make 
our  price;  yes;  we  insist  that  he  shall  not  sell  them  at  less. 

Q.  The  mere  consideration  moving  between  you  and  the  factor 
is  that  the  factor  shall  maintain  the  price?  A.  He  shall  maintain 
our  price. 

Q.  And  for  that  you  give  him  3-16  of  a cent  rebate,  if  he  by  affi- 
davit shows  that  he  has  lived  up  to  the  terms  of  the  rebate?  A. 
That  is  rather — 

Q.  Nov/,  how  can  you  justify  that  as  not  being  in  restraint  of 
trade  when  you  refuse  to  give  like  conditions  to  the  public  at 
large,  even  if  they  are  willing  to  pay  the  price  that  you  set  on 
your  article?  A.  We  do  not  restrict. 

Q.  But  unless  they  will  take  a factor’s  agreement  from  you 
and  make  affidavit  that  they  have  lived  up  to  it,  they  cannot  get 
the  sugar  at  the  same  price?  A.  They  can  by  keeping  the  agree- 
ment. 

Q.  I say,  unless  they  sign  that  agreement  and  unless  they  make 
that  affidavit  which  constitutes  them  factor,  even  though  they  are 
willing  to  assent  to  every  other  condition  imposed  by  you,  you 
won't  give  them  the  rebate  that  will  enable  them  to  live?  A. 
That  is  the  only  condition  that  we  impose. 

Q.  That  is  true?  A.  By  reason  of  the  factor  agreement. 

Q.  That  is  true,  isn’t  it;  now,  how  can  you  justify  that  as  some- 
thing which  is  not  in  restraint  of  trade?  A.  Well,  it  is  not  in  re- 
straint of  trade,  in  the  sense  that  we  pay  a man  to  perform  for  us 
a certain  service;  we  pay  him  for  the  distribution  of  our  product 
a commission  which  is  equal  to  the  cost  of  that  distribution. 

Q.  I understand  that  the  agreement  is  so  worded,  but  when 
you  come  down  to  the  real  English  of  that  agreement  it  is  prac- 
tically and  substantially  a sale  to  the  factor,  who  must  pay  you 
the  amount  of  the  invoice  within  thirty  days?  A.  It  is  not  a sale; 
it  is  purely  a consignment;  it  is  recovered — in  cases  where  parties 
have  failed  to  pay  we  recovered  these  sugars;  they  are  our  sugars. 

Q.  But  assuming  the  case  where  they  have  paid?  A.  Yes. 

Q.  Then,  the  factor’s  agreement  will  still  be  operative,  al- 
though the  sale  itself  has  been  consummated,  and  the  factor  may 


No.  40.] 


417 


uot  hare  sold  the  product  that  he  bought  of  you  and  which  he 
paid  for?  A.  We  receive  from  him  this  money  for  the  amount  of 
his  invoice  under  conditions  that  he  sells  those  sugars  in  accord- 
ance with  his  agreement  and  only  under  those  conditions. 

Q.  Isn’t  it  really  a sale?  A.  Not  at  all;  it  is  not  completed  un- 
til he  has  sold  the  sugar. 

Q.  Isn't  it  completed  when  he  pays  you  the  invoice?  A.  Not 

at  all. 

Q.  Then,  although  he  has  paid  you  the  whole  lien  that  you 
would  have  upon  articles  in  the  hands  of  the  factor,  he  still  re- 
mains factor  under  that  agreement,  in  order  to  compel  him  to 
maintain  the  price,  as  a condition  precedent  to  receiving  his  re- 
bate? A.  He  has  not  completed  his  agreement. 

Q.  That  is  the  theory  of  it,  isn’t  it?  A.  He  has  not  completed 
his  agreement  until  he  disposes  of  the  article  in  accordance  with 
his  contract. 

Q.  Even  though  he  has  paid  you  the  full  price  of  the  sugar?  A. 
Even  though  he  has  paid  the  amount  of  his  invoice. 

By  Mr.  Mazet: 

Q.  We  will  assume  this  condition ; here  are  two  men  in  Chicago, 
one  of  whom,  who  is  your  factor,  the  other  is  not;  each  wants  to 
buy  from  you  500  barrels  of  sugar;  now,  the  man  who  buys  from 
you  and  who  is  not  your  factor  does  not  get  the  3-10  of  one  per 
cent.,  does  he?  A.  He  does  not. 

Q.  In  other  words,  his  sugar  costs  him  that  much  more?  A. 
Yes. 

Q.  Which  pays  the  freight  from  here  there,  in  addition  to  what 
he  pays  for  the  sugar  to  you?  A.  Yes,  under  terms  and  obliga- 
tion; the  other  does  not;  one  is  free  to  do  what  he  likes  with  his 
sugar,  the  other  is  under  contract. 

By  Mr.  Lexow: 

Q.  You  reserve  at  all  times  the  right  to  accept  a factor’s  agree- 
ment or  reject  it,  do  you  not?  A.  We  do. 

27 


418 


[Senate, 


By  Mr.  McCarren: 

Q.  Have  you  ever,  at  any  time,  Mr.  Searles,  refused  to  enter  into 
an  agreement  with  a factor  without  any  other  reason  than  sus- 
picion of  his  financial  condition?  A.  We  will  not  allow — take 
any  factor  where  we  do  not  believe  that  he  is  financially  respon- 
sible; we  have  some  factors  that  we  give  the  benefit  of  the  fac- 
tors’ agreement  that  they  pay  the  cash  on  the  deliverey  of  the 
sugar;  whom  we  will  not  credit  we  will  still  give  the  benefit  of 
the  factor  agreement. 

Q.  Is  there  any  other  reason  why  you  would  refuse  to  accept 
a factor  than  the  one  I have  stated?  A.  No,  sir. 

Q.  Have  you  ever  refused?  A.  I do  not  know  of  any  case. 

By  Mr.  Lexow: 

Q.  Have  you  refused  to  sell  to  retailers,  even  in  lots  of  100  bar- 
rels unless  they  executed  a factor’s  agreement?  A.  I do  not 
know  that  we  have  ever  refused  to  sell  in  lots  of  100  barrels  to 
any  one. 

Q.  Have  you  or  the  agents  of  your  company  refused  to  sell  to 
factors  who  have  been  found  to  be  dealing  in  imported  sugars? 
A.  Giving  that  as  a reason? 

Q.  No,  not  necessarily?  A.  By  reason  of  their  selling  im- 
ported sugars? 

Q.  Yes?  A.  No,  sir. 

Q.  Never  in  the  State  of  Illinois?  A.  I do  not  know  of  any 
such  instance. 

Q.  In  the  city  of  Chicago?  A.  I have  no  knowledge  of  any 
such  instance. 

Q.  You  would  know  it  if  it  were  true?  A.  I think  I should. 

Q.  Do  you  follow  that  part  of  the  company’s  affairs?  A.  I 
did  for  some  time;  I do  not  in  detail  now. 

Q.  This  entire  factors’  agreement,  which  has  the  effect  of  con- 
solidating the  business  throughout  the  whole  country,  is  a ma- 
chinery which  has  been  put  in  operation  within  the  last  two 
years,  is  it  not?  A.  The  present  form  of  factors’  agreement? 

Q.  Within — the  appointment — A.  Certainly — 


No.  40.] 


419 


Q.  Of  agencies,  the  form  of  agreement,  the  affidavit  and  the 
o-eneral  system?  A.  It  is  all  within  the  last  two  years;  yes,  sir. 

By  Mr.  McCarren : 

Q.  Do  I understand  you  to  say,  during  your  examination,  that 
the  idea  of  the  factors’  agreement  originated,  in  the  first  in- 
stance, with  the  wholesale  grocers?  A.  Yes,  sir;  it  is  really  for 
their  benefit,  the  whole  system;  it  protects  them  against  each 
other. 

By  Mr.  Warner: 

Q.  Do  you  know  whether  the  factors  sell  any  imported  sugars? 
A.  Some  of  them  do. 

Q.  Your  factors?  A.  I think  some  of  them  do;  I don’t  know 
in  detail  as  to  those  matters. 

Q.  Are  they  allowed  to  sell  imported  sugars?  A.  I don’t  know 
of  anything  to  the  contrary. 

By  Mr.  Lexow : 

Q.  Will  you  produce  those  figures  to  morrow  morning?  A. 
To-morrow — or  Wednesday— did  you  say? 

Q.  I should  prefer  to  have  this  matter  complete  before  going 
into  another — and  it  won’t  take  more  than  a few  minutes  to  have 
those  figures — comparison  between  the  first  five  years  preceding 
the  organization?  A.  The  last  five  years  and  the  first  five  years 
preceding? 

Q.  Yes;  and  the  last  nine  years  as  well;  the  first  computation 
will  be  five  years  before  the  organization  of  the  Sugar  Trust  and 
the  last  nine  years  after?  A.  That  is  not  a fair  showing. 

The  committee  thereupon  adjourned  till  to-morrow  morning  at 
ten  o’clock.  . i j 


420 


[Senate, 


SIXTH  PUBLIC  HEARING.  COMMON  COUNCIL  CHAM- 
BER, NEW  YORK  CITY,  FEB.  16,  1897,  10:30  A.  M. 

Chairman  Lexow:  A quorum  being  present  the  committee  will 
please  come  to  order. 

Chairman  Lexow:  Mr.  Searles  will  you  please  take  the  stand. 

John  E.  Searles,  recalled, 

Examined  by  Mr.  Lexow: 

Q.  Have  you  gone  over  the  figures,  Mr.  Searles?  A.  Yes,  sir. 

Q.  With  what  result?  A.  I find  the  average  margin  during 
the  last  five  years  preceding  the  Trust  to  have  been  .8534. 

Q.  Or  .853?  A.  Yes,  or  .853. 

Q.  And  the  margin  after?  A.  During  the  next  five  years  the 
margin  was  1.096. 

Q.  And  Mr.  Fuller  stated  it  was  1.111;  there  is  only  a very 
trifle  of  a fractional  difference,  then,  between  your  figures  and 
the  figures  of  Mr.  Fuller;  so  that  substantially  upon  these  two 
points  Mr.  Fuller’s  testimony  was  correct?  A.  It  was. 

Q.  Namely,  that  there  was  an  increased  margin  of  difference 
between  the  raw  material  and  the  manufactured  product  five 
years  after  the  formation  of  the  Trust  to  five  years  before  the 
formation  of  the  Trust  of  .157  of  a cent  per  pound?  A.  It  would 
amount  to  that,  I should  think. 

Q.  Now,  compare  the  five  years  prior  to  the  formation  of  the 
trust,  which  was  .853  of  a cent  per  pound  with  the  nine  years 
subsequent  to  the  formation  of  the  trust;  what  was  the  differ- 
ence between  the  value  of  the  raw  material  and  the  manufac- 
tured product  during  the  nine  years?  A.  It  would  be  .128. 

Q.  That  is  to  say  the  cost,  or  rather  the  difference  between 
the  value  of  the  raw  material  and  the  value  or  cost  of  the  refined 
product  exceeded  in  the  nine  years  after  the  formation  of  the 
Trust  the  difference  for  the  five  years  before  the  formation  of 
the  Trust  by  .128  of  a cent  per  pound?  A.  Yes,  comparing  the 
nine  years  with  the  five  years  immediately  preceding  the  Trust. 


No.  40.] 


421 


Q.  During  that  period  of  time  the  raw  material  had  decreased 
in  price  under  the  first  comparison  to  what  extent?  A.  I have 
not  the  figures  as  to  the  raw  material;  I think  I have  them  in 
my  pocket  (witness  examines  paper);  the  raw  material  varied 
during  the  first  nilie  years  from  7-£  cents  to  5§  cents;  and  be- 
tween 1SS7 — 

Mr.  Lexow  (interrupting) : What  was  the  average  value  of  the 
raw  material  for  five  years  preceding  the  formation  of  the 
Trust?  A.  I shall  have  to  compute  that. 

Q.  Was  the  average  5.91S  of  a cent  per  pound?  A.  I have  not 
computed;  I should  think  likely  it  might  be. 

Q.  In  your  judgment  would  that  be  correct?  A.  I should  think 
it  were  more  than  that  during  the  first  nine  years. 

Q.  Do  your  figures  show  for  the  five  years  from  1883  to  1887, 
inclusive,  an  average  per  pound  of  5.918  of  a cent?  A.  I assume 
that  is  correct. 

Q.  And  an  average  of  cost  for  the  finished  product  of  6.772  of 
a cent?  A.  If  that  makes  the  difference? 

Q.  Leaving  exactly  .853  per  cent,  per  pound?  A.  If  it  makes 
that  difference  it  would  be  right. 

Q.  Take  the  five  years  subsequent  to  the  Trust,  do  you  find 
that  the  average  price  of  the  raw  material  was  4.961  of  a cent 
per  pound?  A.  I should  think  it  might  be. 

Q.  And  the  cost  of  the  refined  article,  or  the  difference  be- 
tween the  raw  material  and  the  refined  article — no,  the  cost  of 
the  refined  article,  5.971  of  a cent  per  pound?  A.  If  that  makes 
a difference  of  1.096. 

Q.  It  makes  a difference  of  1.111?  A.  Yes,  sir. 

Q.  Then  you  admit  those  figures?  A.  Yes,  sir. 

Q.  Now,  looking  at  those  figures,  has  the  consumer  received 
even  the  benefit  of  the  fall  in  the  raw  material  during  that  period 
of  time?  A.  Why  certainly. 

Q.  How  do  you  figure  that  out?  A.  The  consumer  has  had  the 
entire  benefit  of  the  fall  in  the  raw  material,  paying  the  slight 
difference  in  the  cost  of  refining;  the  cost  of  refining,  by  your 
own  figures,  has  followed  down  the  price  of  the  raw  material, 


422  [Senate, 

the  only  difference  being  that  the  margin  between  the  raw  and 
the  refined  was  a trifle  more  during  those  years. 

Q.  Is  it  not  true  that  the  average  price  of  the  raw  material 
after  the  creation  of  the  Trust  dropped  .957  of  a cent  per  pound 
while  the  charge  of  the  refiner  increased  an  average  of  .157  of 
a cent  per  pound?  A.  Undoubtedly. 

Q.  So  that  the  consumers  did  not  get  the  full  benefit  of  the 
drop  in  the  raw  material  to  the  extent  of  the  difference  between 
those  two  figures?  A.  They  didn’t. 

Q.  So,  that  notwithstanding  your  consolidation  had  for  its  ob- 
ject the  introduction  of  economies  in  the  manufacture  of  the  ar- 
ticle by  better  machinery  and  the  concentration  of  facilities,  the 
consumer  did  not  receive  even  the  benefit  of  the  drop  in  the  raw 
material,  but  the  price  of  refining  increased  to  the  extent  of  .157 
of  a cent;  is  that  correct?  A.  The  margin — 

Mr.  Lexow  (interrupting)  Is  that  true;  you  can  answer  that 
question?  A.  I do  not  understand  the  question. 

Mr.  Lexow:  The  stenographer  will  please  repeat  the  question; 
(Question  repeated).  A.  He  did  not  receive  the  entire  benefit 
upon  that  difference  of  margin  making  the  comparison  between 
the  years  you  name. 

Q.  With  other  words,  the  conclusion  from  these  facts  is  this: 
that  while  the  price  of  sugar  to  the  consumer  dropped  in  that 
period  of  time,  it  did  not  drop  even  to  the  extent  of  the  drop  in 
the  raw  material,  but  your  price  of  refining,  notwithstanding 
your  increased  facilities  and  economies,  increased,  so  that  to  the 
extent  of  the  increase  of  the  price  of  the  refined  product  he  did 
not  receive  the  benefit  of  the  drop  in  the  raw  material?  A.  He 
did  not  receive  the  full  difference  in  the  cost  of  the  raw  material; 
your  comparison  being  made  on  a totally  unfair  basis. 

Q.  Didn’t  you  make  that  statement?  We  might  as  strongly 
argue  that  your  comparison,  or  the  comparisons  of  Willett  & 
Gray  are  not  made  on  a fair  basis;  do  you  mean  to  say  that 
taking  a period  of  five  years  prior  to  the  organization  of  the 
Trust  and  five  years  subsequent  to  the  organization,  and  nine 
years  subsequent  to  the  organization,  is  not  a proper  criterion  to 


judge  by,  or  do  you  want  the  consumers  of  this  country  to  grow 
gray  haired  before  they  receiye  the  benefits  of  your  organization  ? 
A.  I mean  to  say  that  the  comparison  that  you  haye  made  is  to- 
tally unfair;  the  free  years  that  you  haye  compared  with  the 
years  prior  to  the  organization  of  the  Trust  were  years  of  disas- 
ter to  this  business;  there  is  a difference  between  doing  business 
at  a loss  and  at  a profit. 

Q.  Let  us  assume  that  the  two  years  haye  been  omitted?  A. 
Four  years. 

Q.  Four  years  that  haye  been  omitted ; in  these  four  years  there 
were  two  years  in  which  the  difference  between  the  raw  mate- 
rial and  the  refined  product  was  in  the  neighborhood  of  one  and 
one-half  cents;  is  that  true?  A.  It  was  not  one  and  a half  cents. 

Q.  Not  approximately;  it  was  one  and  a quarter?  A.  Yes, 
sir. 

Q.  That  would  leaye  almost  one  cent  profit  upon  the  pound  of 
sugar  to  the  refiner?  A.  No,  sir. 

Q.  lias  it  not  been  stated  that  the  cost  of  the  refined  product 
is  about  50  cents  or  56  cents?  -A.  You  quoted  that  from  Mr.  Hc- 
Cahan's  testimony,  yesterday,  I believe.  . 

Q.  That  is  true,  is  it  not?  That  would  leaye  almost  one  cent 
per  pound  as  clear  profit  to  the  refiner?  A.  If  the  refiner  of  that 
day  made  his  sugar  on  that  basis. 

Q.  Your  output  is  about  2,800,000,000  pounds,  is  it  not?  A. 
About  that. 

Q.  Wh  ch  would  leave  to  your  concern  a profit  of  $28,000,000 
annually?  A.  If  we  made  a cent  per  pound. 

Q.  Is  that  so?  A.  If  your  premises  are  correct,  yes,  sir. 

Q.  Do  you  consider  that  these  figures  form  a fair  estimate  for 
comparison  with  the  succeeding  years?  A.  I claim  that  if  you 
are  going  to  take  an  ayerage  that  you  must  take  an  average  in 
the  years  in  which  there  was  a profit  with  the  years  in  which 
there  was  a disastrous  loss  in  order  to  make  any  comparison 
which  is  fair  to  the  refiners. 

Q.  I understand  that  you  said  that  in  the  capitalization  of  the 
so-called  Trust  you  took  as  a basis  of  estimate  the  earning  ca- 
paciry  of  the  companies?  A.  Yes,  sir. 


424 


[Senate, 


Q.  Do  you  mean  to  say  that  for  five  years  previous  to  the  crea- 
tion of  that  Trust  there  had  been  a loss  and  absolutely  no  earning 
capacity  which  you  capitalized  at  the  rate  of  seven  times  the 
original  stock  of  the  company?  A.  I mean  to  say  that  there 
had  been  very  little  profit,  and  to  many  concerns  no  profit  during 
that  period. 

Q.  On  what  then  did  you  base  your  seven-folding  of  the  original 
stock  that  you  mentioned  when  this  elimination  of  any  profits  in 
the  business  occurred?  A.  First;  there  was  no  seven-folding;  in 
the  second  place  — 

Mr.  Lexow,  interrupting:  Then,  within  a fraction?  A.  Only 
about  six-folding;  there  were  only  42,000,000  issued. 

Q.  You  capitalized  7,000,000?  A.  6,590,000;  in  the  second 
place,  the  earning  capacity  of  the  properties  was  not  the  money 
which  they  had  lost  working  under  the  conditions  which  then  ex- 
isted; the  property  was  not  estimated  at  its  value  based  on  those 
conditions  by  any  means;  it  was  based  on  the  capacity  of  the  re- 
finery to  earn  money  under  proper  management  and  under  proper 
conditions. 

Q.  Then  you  didn’t  base  it  on  anything  that  had  occurred  in  the 
past,  but  on  something  that  was  to  be  in  process  of  formation  for 
the  future?  A.  Based  on  capacity  to  earn  under  given  conditions. 

Q.  So  that  notwithstanding  that  you  now  state  that  for  five 
years  previous  .to  the  Sugar  Trust  there  had  been  no  profit  in  the 
concern,  and  that  therefore  it  was  an  unfair  basis  for  estimate; 
you  say  that  you  were  justified  in  six  and  a half-folding  the  capi- 
tal stock  of  the  company  to  the  volume  you  have  mentioned  un- 
der the  circumstances  related?  A.  Undoubtedly. 

Q.  You  said  yesterday,  and  since  I see  it  in  cold  type  I think  it 
is  proper  that  it  should  not  pass  unchallenged,  that  it  should 
be  the  policy  of  the  State  to  invite  rather  than  discourage  capi- 
tal, and  that  it  was  investigations  like  these  and  general  inter- 
ference with  corporations  that  unsettled  business  affairs  and 
drove  capital  out  of  the  State;  do  you  consider,  Mr.  Searles,  that 
the  capitalization  in  the  way  you  have  mentioned  of  future  earn- 
ing capacity  based  upon  a state  of  facts  such  as  has  been  devel- 


No.  40.] 


425 


oped  here,  whereby  you  create  either  a monopoly,  or  a quasi-mon- 
opoly. acting  in  conjunction  with  others,  in  placing  the  consumer 
absolutely  at  the  mercy  of  aggregations  of  capital  of  this  kind,  is 
the  kind  of  business  that  should  fix  itself  permanently  upon  the 
body  politic  and  that  it  should  not  be  interfered  with  by  legisla- 
tion? A.  I can  scarcely  remember  all  of  that  statement;  but  in 
general  terms — 

Mr.  Lexow:  The  stenographer  will  repeat  the  question. 

(Quesion  repeated.) 

A.  In  so  far  as  that  refers  to  the  American  Sugar  Refining 
Company  I see  no  objection  to  it. 

Q.  Do  you  think  that — and  I am  not  asking  you  these  questions 
as  a matter  of  curiosity — but  for  the  purpose  of  forming  a basis 
for  legislation;  do  you  think  that  large  aggregations  of  capital 
should  be  allowed  to  control  the  necessaries  of  life,  whether  oper- 
ating alone  or  operating  in  combination  with  others,  whereby 
they  substantially  control  a given  commodity  and  remove  compe- 
tition either  by  purchase  of  facilities  or  arrangements  with  com- 
peting companies?  A.  Well — I can’t  remember  all  that — 

Mr.  Lexow,  interrupting:  The  stenographer  will  repeat  the 
question. 

(Question  repeated.) 

A.  I don’t  know. 

Q.  I mean  sugar?  A.  In  reply  to  that  question  I do  not  deem 
it  possible  for  any  such  combination  to  be  made  against  the  in- 
terest of  the  consumer;  it  is  impossible  to  control  any  product  in 
an  aggregation  of  capital  because  competition  alone  will  prevent 
the  possibility  of  any  abuses  to  the  consumer,  in  view  of  the  fact 
that  large  amounts  of  capital  are  always  awaiting  to  go  into  any 
enterprise  which  promises  a profit. 

Mr.  Lexow:  That  is  a fair  answer;  but  when  that  awaiting 
capital  goes  into  competition  and  the  aggregate  capital  is  strong 
enough,  either  to  crush  or  by  the  issuance  of  certificates  to  buy  up 
the  awaiting  capital  as  soon  as  it  appears  and  then  permanently 
establish  its  monopoly  or  quasi-monopoly,  do  you  think  the  laws 
of  this  State  ought  to  permit  a system  of  that  kind  to  be  encour- 


426 


[Senate, 


aged?  A.  I do  not  think,  in  any  event,  that  such  purchase  or 
such  action  can  result  to  the  damage  of  the  consumer. 

Q.  Does  it  not  result  to  the  damage  of  the  consumer  when  it  is 
shown  that  the  agriculturalist  and  the  producer  of  the  raw  ma- 
erial,  not  acting  in  combinations  and  not  able  to  combine  for  the 
purpose  of  controlling  the  price,  has  the  price  of  the  raw  material 
forced  down  upon  him,  and  that  the  hold  of  such  an  aggregation 
upon  the  consumer  is  such  that  the  consumer  cannot  even  get  the 
benefit  of  the  reduction  in  the  raw  material?  A.  I must  dispute 
your  premises. 

Q.  I am  not  applying  this  now  to  the  American  Sugar  Refining 
Company;  I am  asking  it  as  a general  proposition;  if  this  is  the 
situation  do  you  think  the  laws  of  the  State  or  of  the  nation  ought 
to  permit  it?  A.  I cannot  imagine  a case  of  the  kind  you  refer 
to. 

Q.  Well,  imagine  it;  I imagine  you  have  a fairly  good  imagina- 
tion; now,  just  try  it;  you  have  a thoroughly  well  developed  im- 
agination. A.  Will  you  please  repeat  the  question?  (Question 
repeated.)  If  such  a condition  existed  as  to  raw  material  and 
such  an  aggregation  existed  as  to  produce  that  result,  I should 
scarcely  think  that  it  would  be  in  the  interest  of  the  State. 

Q.  Then  you  admit  that  if  there  are  any  aggregations  of  capi- 
tal— the  records  of  which  demonstrate  a situation  of  that  kind — 
that  no  matter  what  effect  it  may  have  on  the  financial  interests 
of  the  country,  the  State  or  the  nation  should  intervene  to  stop 
it?  A.“  I do  not  admit  that;  I think  it  is  a matter  which  will  cure 
itself  by  the  competition  of  business  more  quickly  than  it  can  be 
cured  by  any  other  means. 

Q.  And  what  in  the  meanwhile,  the  State,  which  represents 
the  whole  people,  should  close  its  eyes  to  the  situation  and  per- 
mit that  kind  of  evil  if  it  can  prevent  it?  A.  I do  not  believe 
that  any  legislation  which  can  be  formulated  will  as  effectively 
reach  it  as  will  the  law  of  supply  and  demand  and  the  law  of  le- 
gitimate trade. 

Q.  Is  that  precisely  what  those  who  make  these  combinations 
are  speculating  on,  that  the  Legislatures  and  the  people  will 


No.  40.] 


427 


stand  passively  by  until  after  years  and  years  the  law  of  supply 
and  demand  shall  dually  regulate  the  situation?  A.  I know 
nothing  about  the  expectations  of  speculators;  I have  no  interest 
with  them. 

Q.  You  have  a general  knowledge  of  the  financial  system  of 
the  world?  A.  I have  a general  idea. 

Q.  Do  you  believe  that  the  situation  that  I developed  in  that 
question  exists?  A.  I don’t, 

Q.  Then,  why  is  it,  in  your  judgment,  that  these  large  aggrega- 
tions designed  to  control  prices  are  formed?  A.  They  are  formed 
for  the  more  economical  production  of  certain  articles  produced, 
which  can  be  secured  with  greater  economy  by  a combination  of 
capital,  giving  it  a buying  power  which  no  single  company  can 
have,  and  enabliug  it  by  concentration  of  its  business  to  make  a 
profit,  whereas,  under  ordinary  conditions,  there  would  be  none. 

Q.  And  therefore,  if  that  purpose  is  not  secured  and  the  econ- 
omy does  not  develop  itself  your  design  does  not  exist;  that  even 
that  excuse  for  its  existence  is  not  present?  A.  If  that  does  not 
result  the  companies  fail  and  there  are  records  of  that  kind  all 
along  the  street,  of  organizations  which  have  been  formed  and 
which  have  become  wrecks  because  they  failed  to  recognize  the 
legitimate  law  which  governs  all  businesses,  and  they  have  come 
to  grief ; there  are  several  of  the  kind  in  the  city. 

Q.  And  others  not  recognizing  their  duty  to  the  public  have  in- 
creased the  price  to  the  consumer  as  between  the  value  of  the  raw 
material  and  the  manufactured  product,  and  therefore  should 
either  be  controlled  or  should  not  exist?  A.  I know  of  no  such 
instance;  the  only  company  which  has  come  under  my  business 
observation  particularly  has  been  the  American  Sugar  Refining 
Company,  and  that  has  rescued  a great  industry  from  disaster. 

Q.  And  incidentally  made  profits  to  an  extent  which  have  not 
even  permitted  the  consumer  to  get  the  benefit  of  the  fall  in  the 
raw  material;  that  is  a fact,  is  it  not?  A.  The  consumer  has  had 
the  benefit  of  the  fall  in  the  raw  material  in  every  instance  con- 
sistent with  the  small  margin  of  profit  to  the  people  who  have 
done  the  business. 


428  [Senate, 

Q.  A small  margin  on  the  fall?  A.  The  profit  has  nothing  to 
do  with  the  cost  of  the  raw  material  whatever. 

Q.  You  stated  a few  moments  ago  in  answer  to  a question  from 
me  that  the  consumer  did  not  receive  the  full  benefit  of  the  fall 
in  the  raw  material,  let  alone  anything  else;  is  that  not  true?  A. 
Not  in  the  case  of  the  Sugar  Refining  Company;  you  asked 
whether  the  margin — a 

Mr.  Lexow  (interrupting):  Was  that  true?  The  stenographer 
will  repeat  the  question, 

(Question  repeated.) 

A.  I stated  in  my  answer  that  he  had  not  received  the  full  dif- 
ference between  the  price  of  the  raw  material — in  the  fall  of  the 
raw  material., 

Q.  Not  taking  into  account  any  of  the  economies  which  con- 
centration, aggregation  and  consolidation  have  produced  in  the 
way  of  economical  manufacture  and  distribution  of  the  product? 
A.  That  is  a question  in  economies., 

Q.  Isn’t  it  true?  A.  No,  sir;  it  is  not  true  in  that  statement. 

Q.  Where  is  the  fallacy?  A.  The  fallacy  is  in  stating  that  the 
consumer  has  not  received  the  benefit  of  these  economies,  in  that 
the  margin  between  the  raw  and  the  refined  sugar  could  not  be  as 
low  as  it  is  to-day,  but  for  these  economies. 

Q.  With  other  words,  he  would  not  have  had  the  benefit  of  even 
as  much  the  fall  in  the  raw  material  if  you  had  not  made  this 
consolidation?  A.  He  would  not. 

Q.  You  are  willing  to  leave  that  statement  there  in  that  form? 
A.  Undoubtedly. 

Q.  Where  the  State  or  nation  permits,  or  its  laws  permit,  the 
creation  of  a monopoly  or  a quasi-monopoly,  do  you  not  consider 
that  there  is  at  least  an  underlying  engagement  to  give  labor  on 
the  one  hand  and  the  consumer  on  the  other  hand  its  aliquot 
share  in  the  profits  of  such  monopoly?  A.  If  such  a monopoly 
existed  I should  think  there  would  be  some  such  obligation. 

Q.  And  no  monopoly  would  be  justified  excepting  upon  that 
general  proposition  that  it  would  work  advantageously  to  labor 
on  the  one  hand  and  the  consumer  on  the  other?  A.  I think  that 
would  be  the  necessary  result. 


No.  40.] 


429 


Q.  You  admit  that  the  laws  of  the  State  should  not  favor  or 
foster  or  permit  a monopoly  or  a quasi-monopoly  in  any  event  un- 
less beneficial  to  the  consumer  on  the  one  hand  and  to  labor  on 
the  other?  A.  I do  not  knowT  what  you  mean  by  a monopoly  or  a 
quasi-monopoly. 

Q.  I mean  the  American  Sugar  Refining  Company?  A.  The 
American  Sugar  Refining  Company  is  neither  a monopoly  nor  a 
quasi-monopoly,  as  I understand  the  word. 

Q.  Do  you  think  that  a system  such  as  the  American  Sugar 
Refining  Company  has  developed  itself  to  be,  on  the  examination 
here,  should  be  permitted  or  fostered  by  the  State  in  the  absence 
of  those  two  underlying  considerations  mentioned  in  my  former 
question?  A.  I think  that  the  American  Sugar  Refining  Com- 
pany as  organized  and  conducted  is  in  the  interest  of  the  con- 
sumers of  this  country,  and  that  there  is  no  reason  why  the  State 
should  interfere  with  its  business  in  any  particular 

Q.  That  labor  on  the  one  hand  and  the  consumer  on  the  other 
now  receives  an  aliquot  share  or  proportion  of  the  economies  sup- 
posed to  be  the  result  of  the  monopoly  or  quasi-monopoly?  A.  In 
the  case  of  the  American  Sugar  Refining  Company  the  laborer 
and  the  consumer  do  receive  an  aliquot  share. 

Mr.  Lexow:  Please  answer  the  question.  The  stenographer 
will  repeat  the  question. 

(Question  repeated.) 

A.  I do  not  understand,  Mr.  Chairman,  that  the  investigation 
here,  which  is  referred  to  in  that  question,  has  developed  the  con- 
dition which  you  have  named  in  that  question;  the  American 
Sugar  Refining  Company — 

Mr.  Lexowq  interrupting:  Assuming  for  the  purpose  of  your 
answer,  and  without  any  direct  reference  to  the  American  Sugar 
Refining  Company,  but  as  a general  proposition,  that  the  proposi- 
tion I made  is  true;  that  such  a system  should  carry  with  it  the 
consideration  that  labor  on  the  one  hand  and  the  consumer  on 
the  other  hand  should  receive  an  aliquot  share  in  the  benefit  of 
economy?  A.  I cannot  remember  all  that. 

Mr.  Lexow:  The  stenographer  will  repeat  the  question. 

(Question  repeated.) 


430 


[Senate. 


A.  I can  scarcely  follow  that  question  as  a basis  for  an  answer,, 
because  I can  scarcely  conceive  of  the  conditions  existing  from  a 
business  standpoint. 

Q.  Then  you  are  unable  to  answer  that  question?  A.  As  put; 
yes. 

Q.  Do  you  conceive  that  after  the  establishment  of  a system 
permitted  by  the  State,  indicated  by  the  buying  of  competing 
factories  and  their  consolidation  into  one,  by  factors’  agreements 
and  arrangements,  which,  to  the  extent  of  the  Wholesale  Grocers’ 
Association  of  the  nation,  removes  competition  as  between  them, 
whereby  you  can,  on  substantially  the  same  terms  as  your  com- 
petitors sell  their  sugars  to  the  consuming  public  under  restraints 
mentioned,  that  if  such  a system  is  permitted,  the  consumer  on 
the  one  hand  and  labor  on  the  other  should  not  be  considered 
and  receive  an  aliquot  share  in  the  profit?  A.  I think  they  do; 
they  have  received  adequate  recognition. 

Q.  I am  not  asking  you  that;  I ask  you  whether  you  admit  it  as 
a general  proposition  that  they  should?  A.  Undoubtedly. 

Q.  The  evidence  will  speak  for  itself  as  to  whether  they  do. 

Q.  I want  to  ask  you  another  question  in  regard  to  those  fig- 
ures; computed  on  the  output  of  the  American  Sugar  Refining 
Company  of  1,200,000  tons,  the  increase  of  the  difference  between 
the  price  of  the  raw  material  and  the  manufactured  product  of 
.157  of  one  cent  per  pound — means  what?  Means  how  much 
added  to  the  cost  of  the  product?  A.  On  that  output  the  margin 
of  .157  would  be  $4,396,000,  approximately. 

Mr.  Lexow:  You  see,  I don’t  discriminate  against  you;  I had 
only  $4,200,000?  A.  Probably  my  figures  are  wrong. 

Q.  I will  give  you  the  benefit  of  the  doubt;  and  computing  over 
1896,  after  the  formation  of  the  Trust  as  compared  with  the  five 
years  before,  the  raw  material  has  dropped  a fraction  less 
than  one  cent  per  pound;  the  charge  for  the  refined  product  has 
increased  from  .853  to  .981,  or  .128 — how  much,  computed  on  your 
product  of  1,200,000  tons  would  that  make  annually  added  to  the 
price  of  the  product?  A.  $3,584,000,  I make  it. 

Q.  That  is  $184,000  less  than  I do?  A.  I will  take  your  fig- 
ures, then. 


No.  40.] 


431 


Mr.  Lexow:  I only  wanted  to  show  that  I do  not  discriminate 
against  you. 

Mr.  Searles:  Your  consideration  is  thoroughly  appreciated. 

Q.  Mr.  Searles,  have  you  since  yesterday,  given  the  matter  of 
the  production  of  those  books  any  further  consideration?  A. 
No,  sir. 

Q.  I want  to  call,  before  concluding  the  testimony  of  this  wit- 
ness, the  attention  of  the  witness  and  Mr.  Parsons  to  the  state- 
ment made  by  Mr.  Shepard. 

“I  think,  Mr.  Chairman,  that  we  will  be  able  to  produce  all 
that  you  wish  on  Friday,  and  will  let  you  know  exactly  what  will 
be  produced.” 

Mr.  Lexow:  That  was.  in  answer  to  a question  as  to  the  produc- 
tion of  certain  books  required  of  Mr.  Havemeyer;  one  of  the 
books  was  the  minute  book  referred  to  a moment  ago;  another 
with  reference  to  the  question  of  the  number  of  workmen  dis- 
charged by  the  closing  down  of  the  various  refineries;  another 
as  to  the  amount  of  taxes  paid  in  this  State;  another  with  refer- 
ence to  the  documents  in  the  Knight  suit,  which  Mr.  Shepard 
agreed  to  produce. 

Will  it  be  necessary  in  all  of  these  matters — I mean  those  in 
addition  to  the  books  which  you  have  refused  to  produce,  to  serve 
a formal  subpoena  duces  tecum,  or  will  we  receive  the  informa- 
tion without  such  service? 

Mr.  Parsons:  Do  you  address  that  question  to  me? 

Mr.  Lexow:  Either;  Mr.  Shepard  answered  before. 

Mr.  Parsons:  With  reference  to  any  statement  upon  the  sub- 
ject that  may  have  been  made  by  Mr.  Shepard,  I prefer  to  speak 
to  him  before  assuming  to  make  an  answer.  I have  not  seen  Mr. 
Shepard  since  then  to  have  any  conversation  with  him  upon  the 
subject.  I had  supposed  that  the  documents  in  the  Knight  suit 
were  in  evidence.  I was  present  when  Mr.  H.  O.  Havemeyer  was 
examined;  and  I understood  that  the  chairman  called  his  atten- 
tion to  this  document  as  printed  in  the  Knight  record  and  that 
they  were  put  in  evidence  from  that  record. 

Mr.  Lexow:  The  trouble  is  that  copies  were  not  made  at  the 
time  and  the  book  does  not  appear  to  be  at  hand  now. 


432 


[Senate, 


Mr.  Parsons:  Is  this  all  that  you  desire  from  the  company? 
The  directors  of  the  company  will  meet  to  morrow  and  bring  this 
matter  up  for  consideration,  and  then  the  committee  can  be  au- 
thoritatively answered  upon  the  subject. 

Mr.  Lexow7:  Have  you  reason  to  believe  that  there  will  be  a 
quorum  of  the  directors  present  to-morrow? 

Mr.  Parsons:  I have  no  doubt  but  that  there  will  be  a quorum 
present.  The  American  Sugar  Refining  Company  has  never 
shirked  an  investigation  or  examination  of  any  kind,  and  has 
never  refused,  when  necessary,  to  defend  itself  when  brought 
into  litigation. 

Mr.  Warner:  Mr.  Shepard  has  no  authority  to  produce  books 
here,  as  he  promised. 

Mr.  Parsons:  I have  no  information  that  Mr.  Shepard  made 
such  a promise. 

Mr.  Searles:  His  statement  was  that  he  would  probably  pro- 
duce what  was  wanted. 

Mr.  Parsons:  It  is  for  that  reason  that  I prefer  that  Mr.  Shep- 
ard shall  be  conferred  with  before  I assume  that  any  assurance 
was  given  by  him,  as  to  ■which  there  may  be  some  misapprehen- 
sion. 

Mr.  Lexow:  If  we  will  let  the  matter  stand  until  Thursday,  we 
will  receive  an  answer  from  Mr.  Searles? 

Mr.  Parsons:  From  wThom? 

Mr.  Lexow:  From  Mr.  Searles. 

Mr.  Searles:  I will  be  here  on  Thursday  if  necessary. 

Mr.  Lexow:  I think,  inasmuch  as  we  would  like  to  examine 
Mr.  Searles,  it  w’ould  be  better  for  Mr.  Searles  to  be  here  Thurs- 
day morning. 

Mr.  Parsons:  Mr.  Searles  made  some  suggestion  with  refer- 
ence to  being  here  Thursday., 

Mr.  Searles:  It  is  almost  impossible  for  me  to  be  here  Thurs- 
day. I have  tried  to  be  in  attendance  during  the  days  that  I have 
been  requested  to  be  here  and  to  answer  all  questions  put.  Bur. 
I must  be  absent  Thursday  if  it  is  possible,  although  I do  not 
w7ant  to  show  any  lack  of  courtesy  to  the  committee. 


No.  40.] 


433 


Mr.  Parsons:  What  time  Wednesday  do  you  hold  your  meet- 
ing? 

Mr.  Lexow:  Wednesday  at  one  o’clock.  Then  if  we  should 
remain  in  session  until  four  o’clock  we  could  get  your  answer. 

Mr.  Searles:  I was  going  out  of  town,  but  Mr.  Havemeyer  will 
appear  and  answer  for  these  documents  in  reference  to  any  mat- 
ter that  your  committee  may  desire.. 

Mr.  Parsons:  Mr.  H.  O.  Havemeyer  is  the  President  of  the 
Company  and  he  will  answer  quite  as  well;  he  will  be  here  Thurs- 
day. 

Mr.  Mazet:  Mr.  Havemeyer  has  stated  that  they  would  be  pro- 
duced. t 

Mr.  Parsons:  Mr.  Theodore  disclaimed  knowledge  of  it. 

Mr.  Mazet:  Both  of  them?; 

Mr.  Parsons:  Does  not  the  committee  think  that  it  has  had 
enough  of  Mr.  Searles? 

Mr.  Mazet:  I don’t  know  what  the  committee  thinks. 

Mr.  Parsons:  So  far  as  this  subject  is  concerned  Mr.  H.  O. 
Havemeyer  will  be  able  to  give  every  information  which  can  be 
given  by  anybody.  It  will  be  almost  impossible  to  have  the  mat- 
ter considered  and  have  the  documents  or  other  data  here  by  four 
o’clock. 

Mr.  Lexow:  Mr.  Searles,  so  that  there  may  be  no  misunder- 
standing as  to  what  we  want,  have  you  a copy  of  the  testimony? 

Mr.  Searles : I have  not.  Mr.  Shepard  has. 

Mr.  Lexow:  Down  to  to-day’s  examination? 

Mr.  Searles:  I do  not  know;  probably  it  does  not  include  the 
examination  of  yesterday.  He  has  it  so  far  as  the  stenographer 
has  delivered  it. 

Mr.  Lexow:  We  would  like  to  have  you  produce  the  various 
documents  and  papers,  the  production  of  which  was  asked  for  in 
the  testimony  of  the  two  Mr.  Havemeyers  and  Mr.  Searles. 

Mr.  Searles:  Can  you  state  exactly  what  it  is  that  you  want? 
Let  me  take  a fresh  memorandum. 

Mr.  Lexow : Inasmuch  as  you  have  the  testimony  you  can  go 
through  it. 


28 


434 


[Senate, 


Mr.  Parsons:  It  cannot  be  gone  through  with  between  now 
and  one  o’clock  to-morrow.  I will  ask  the  stenographer  to  give 
me  a statement.  A memorandum  can  be  sent  to  me  calling  my 
attention  to  the  testimony  that  can  be  considered  to-morrow. 

Mr.  Bedell:'  I believe  Mr.  Shepard  took  a memorandum,  or 
some  one  took  one  at  the  time  of  the  examination  of  both  of  the 
Mr.  Havemeyers  and  of  Mr.  Searles;  they  have  a memorandum  of 
just  what  we  desire. 

Mr.  Parsons:  If  he  has  such  memorandum  it  will  answer  the 
purpose. 

Mr.  McCarren:  Mr.  Searles,  there  is  a hypothetical  question 
that  I desire  you  to  answer.  Suppose  that  these  fifteen  refineries 
that  were  originally  consolidated  had  never  been  consolidated 
what,  in  your  opinion,  would  be  the  price  of  raw  sugar? 

Mr.  Searles:  The  price  to-day  would  be  more  or  less  the  same; 
but  during  the  last  nine  years  there  have  been  many  times  when 
the  price  of  raw  sugar  and  the  price  of  refined  sugar  would  have 
been  a cent  a pound  higher  than  it  was  if  there  had  been  fifteen 
refineries  working  under  competitive  conditions. 

Q.  The  result  would  have  been  a rise  in  the  price  of  sugar?  A. 
I believe  that  the  average  during  the  nine  years  would  have  been 
at  a cost  to  the  consumer  of  one  cent  per  pound  greater  than  it 
has  been. 

Q.  Suppose  the  fifteen  refineries  had  never  been  consolidated 
would  the  wages  of  the  employes  have  been  higher  or  any  lower? 
A.  They  certainly  would  not  have  been  higher  ; and  under  compe- 
tition they  doubtless  would  have  been  lower  rather  than  higher. 

Q.  Would  there  have  been  so  many  men  employed  if  there  had 
been  no  consolidation?  A.  There  may  have  been  as  many;  there 
would  have  been  no  more.. 

By  Mr.  Lexow : 

Q.  Doesn’t  the  closing  of  factories  as  the  result  of  a combina- 
tion mean  the  reduction  of  the  output  in  capacity,  and  is  not  that 
represented  by  just  so  many  items  of  labor?  A.  There  is  no  re- 
duction of  the  output  by  the  closing  of  these, refineries;  the  out- 


No.  40.] 


435 


put  is  controlled  absolutely  by  the  consumption ; we  make  all  the 
sugar  that  can  be  sold. 

Q.  You  have  stated  in  your  examination  that  one  of  the  ob-- 
jects  of  consolidation  was  to  control  the  demand  so  that  the  pro- 
d action  should  not  exceed  the  demand;  do  you  mean  to  say  that 
the  same  labor  will  be  employed  under  a system  that  controls 
production  so  that  it  shall  not  exceed  the  demand  that  would  be 
employed  under  conditions  of  free  and  open  competition?  A.  I 
mean  to  say  that  the  output  being  the  same  there  is  a more  uni- 
form employment  of  labor,  and  that  there  is  no  dimunition  in  the 
actual  labor. 

Q.  Will  you  swear,  Mr.  Searles,  that  for  the  same  amount  of 
output  you  employ  the  same  amount  of  labor  under  conditions  of 
combination  that  you  did  for  an  equivalent  output  prior  to  the 
combination?  A.  I have  no  knowledge  of  the  amount  that  was 
employed  prior  to  the  combination ; but  my  judgment  is  that  there 
are  as  many  men  employed  under  present  conditions  as  there  were 
prior  to  the  combination. 

Q.  Yes.  and  hundreds  of  thousands  of  tons  more  manufactured 

I 

because  the  consumption  has  increased?  A.  Independent  of  that. 

Q.  Do  you  mean  to  say  that  for  the  same  output  you  employ  to- 
day the  same  amount  of  labor  that  you  did  prior  to  consolidation? 
A.  I cannot  swear  positively  as  to  the  amount  employed  before 
consolidation;  but  my  judgment  is  that  there  is  as  much  labor 
employed  now  as  then. 

Q.  Per  ton  of  output?  A.  Per  ton  of  output. 

Q.  Is  that  simply  a guess  or  do  you  speak  from  knowledge?  A. 

I have  knowledge  as  to  the  comparison  as  before  stated. 

Q.  We  will  ask  you,  Mr.  Searles,  or  Mr.  Havemeyer,  in  case  he 
proposes  to  produce  those  figures,  to  produce  a statement  show- 
ing the  amount  of  labor  per  ton  of  product  now  employed  as  com- 
pared with  the  labor  per  ton  prior  to  the  combination?  A.  You 
want  the  amount  per  ton? 

Mr.  Parsons : I will  request  Mr.  Havemeyer  to  produce  figures 
for  that  comparison;  but  I do  not  pledge  myself  that  Mr.  Have- 
meyer will  be  able  to  testify  to  the  figures  relating  to  an  earlier 
period. 


436 


[Senate, 


Mr.  Lexow:  The  chances  are  that  those  have  been  destroyed. 

Mr.  Parsons:  It  pleases  the  Chairman  to  say  so. 

Mr.  Lexow:  I understand,  Mr.  Searles,  that  all  the  books  in 
connection  with  the  business  prior  to  the  Trust  were  destroyed; 
now  I ask  whether— 

Mr.  Warner:  Or  missing. 

Mr.  Searles:  I did  not  testify  that  prior  to  the  Trust — it  was 
the  books  of  the  Trust  prior  to  the  organization  of  the  American 
Sugar  Refining  Company  which  you  were  questioning  me  about. 

Q.  Then  you  have  got  the  books  that  ante-date  the  Trust;  but 
those  books  that  came  between  the  Trust  and  the  organization 
of  the  New  Jersey  Company  have  disappeared?  A.  The  books 
prior  to  the  Trust  were  the  property  of  the  different  corporations, 
the  old  corporations,  and  were  retained  by  them  and  never  came 
into  the  possession  of  the  American  Sugar  Refining  Company, 
and  we  have  no  knowledge  of  those  whatever. 

Q.  Then  you  will  be  unable  to  furnish  these  figures?  A.  I can- 
not; perhaps  Mr.  Havemeyer  can. 

By  Mr.  Mazet: 

Q.  What  percentage  of  the  cost  of  refined  sugar  is  represented 
by  labor?  A.  That  I couldn’t  tell. 

Q.  Can  you  ascertain  that?  A.  I cannot  give  those  figures;  they 
are  in  the  possession  of  the  manufacturing  department  of  the 
business. 

Q.  Have  you  any  general  knowledge  about  it?  A.  Not  definite 
enough  to  make  any  statement. 

Q.  Is  it  not  90  per  cent.?  A.  The  labor. 

Q.  The  cost  of  producing  the  refined  from  the  raw  sugar;  is  not 
about  90  per  cent,  made  up  of  labor?  A.  I should  scarcely  think 
so  much  as  that;  still  when  you  contrast  the  labor  in  all  the  de- 
partments, the  barrels  and  all  those  things,  it  would  make  a large 
percentage. 

Q.  You  think  it  is  not  so  much  as  90  per  cent.?  A.  Hardly. 

Q.  75  per  cent.?  A.  I could  not  give  you  definite  figures;  I 
would  not  want  to  hazard  an  answer — a guess. 


No.  40.] 


437 


By  Mr.  Lexow: 

Q.  You  have  given  it  as  your  statement  here  that  the  effect  of 
the  combination  has  been  to  decrease  the  price  of  the  raw  mate- 
rial ; that  if  it  had  not  been  for  this  combination  that  the  price  of 
the  raw  material  would  have  been  one  cent  per  pound  more,  in 
your  judgment?  A.  In  some  instances;  at  certain  times. 

Q.  Then  do  you  now  insist  that  your  combination,  to  that  ex- 
tent, influenced  the  price  of  the  raw  material  and  the  product  of 
the  producer  of  raw  sugars?  A.  To  some  extent. 

Q.  To  that  extent?  A.  Mr,  Chairman,  if  you  will — 

Mr.  Lexow  (Interrupting)  To  that  extent,  one  cent  per  pound? 
A.  Oh,  no;  I didn't  say  that;  I stated  that  there  had  been  times 
during  the  last  few  years  when  I thought  there  would  have  been 
a difference  on  a cent  a pound;  I can  make  that  clear  if  you  will 
give  me  an  opportunity. 

Mr.  Lexow:  Certainly.  A.  I stated  yesterday,  Mr.  Chairman, 
that  the  prices  of  raw  sugar  are  controlled  by  the  London  mar- 
ket— the  London  speculative  market;  and  the  fact  is  that  during 
the  last  three  years  the  London  market  has  been  in  a position 
where  they  supposed  the  necessities  of  the  American  Sugar  Re- 
fining Company  were  such  that  they  could  control  our  price;  and 
the  price  of  the  raw  sugar  has  been  advanced  in  the  London  mar- 
ket as  much  as  four  shillings  a hundred  weight  in  anticipation 
of  forcing  this  company  to  come  into  the  market;  you  read  the 
sugar  journals  of  the  London  market  and  you  will  find  that 
there  are  no  obstacles  to  their  advancing  the  price  of  the  raw 
product;  that  market  speculates  in  sugar  all  over  the  world; they 
speculate  against  our  country's  need  for  the  commodity;  it  is  a 
great  speculative  market;  they  make  paper  sales  and  yet  they 
control  the  markets  of  the  world;  and  in  order  to  compete  with 
that  market  it  means  that  we  must  have  immense  capital;  by 
reason  of  cur  immense  purchasing  power,  we  have  been  able  to 
accumulate  sugars  and  hold  the  price  down,  and  the  result  has 
been  a break  in  the  London  market,  when  they  discovered  that 
they  hadn't  us  in  their  power;  it  is  in  that  way  that  the  Ameri- 
can Sugar  Refining  Company  has  lessened  the  cost  of  raw  sugar; 


438 


[Senate, 


efforts  have  been  made,  and  they  are  made  periodically;  there  is 
not  a year  passes  that  there  is  not  an  effort  in  the  London  mar- 
ket to  take  advantage  of  the  necessities  of  the  American  Sugar 
Refining  Company;  and  it  is  this  aggregation  of  capital  and  the 
power  it  has  to  come  into  the  markets  of  the  world  and  purchase 
sugar  in  large  quantities  which  enables  us  to  hold  it  down;  the 
policy  of  the  company  has  been,  and  is,  to  hold  it  down  to  the 
lowest  possible  price  to  the  consumer  in  order  to  increase  the 
consumption  of  sugar;  its  profit  being  in  the  manufacture  of  the 
greatest  number  of  tons  at  a fractional  profit. 

Q.  Inasmuch  as  that  profit,  according  to  your  own  statement, 
has  increased  in  nine  years  subsequent  to  the  Trust  over  what 
it  was  before,  where  does  the  profit  to  the  consumer  come  in; 
that  is  the  conundrum  I want  answered?  A.  The  profit  is  in 
this:  That  prior  to  the  Trust  the  business  was  conducted  at  a 
loss;  that  since  then  it  has  been  conducted  at  a profit;  and  that 
profit  has  been  a reasonable  one  and  has  been  used  to  facilitate 
the  purchase  of  sugar,  and  to  reduce  the  cost  to  the  American 
consumer. 


By  Mr.  McCarren : 


Q.  What  was  the  price  of  sugar  prior  to  1891?  A.  I have  the 
price  here;  the  average  price  in  1879  was  8.78  for  granulated; 
Mr.  Searles  read  the  following  figures: 

Cents. 


1870 

1880 

1881 

1882 

1883 

1884 
1887 
1S88 

1889 

1890 


8.88 

9.66 

9.71 

9.28 

8.55 

6.81 

6.40 

7.15 

7.80 

6.79 


No.  40.] 


439 


Q.  What  is  it  in  the  present  year?  A.  About  four  cents  per 
pound;  on  that  we  pay  a cent  duty. 

By  Mr.  ^Warner: 

Q.  You  do  not  claim  that  the  American  Sugar  Refining  Com- 
pany is  an  eleemosynary  institution?  A.  I have  distinctly 
stated  that  we  are  not  running  a philanthropic  institution;  but 
we  find  that  our  interests  and  our  profits  lie  in  the  production  of 
sugar  at  the  lowest  possible  cost  to  the  consumer. 

By  Mr.  Lexow: 

Q.  Where  do  the  economics  of  this  large  centralization  come 
in?  A.  In  the  production  of  the  refined  material;  in  various 
ways;  in  the  first  place,  in  large  outlays  for  machinery,  for  im- 
proved machinery;  but  perhaps  the  greatest  of  all  benefits  in  the 
centralization  is  the  concentration  of  technical  knowledge  and 
ability  of  the  people  connected  with  the  business;  at  the  time  the 
original  Sugar  Trust  was  organized  each  one  of  the  refineries  had 
some  method  or  plans  which  they  kept  secret,  and  which  were 
supposed  to  be  of  value,  and  which  had  value;  when  the  Trust 
was  organized,  these  gentlemen  were  brought  together  and  this 
technical  knowledge  and  skill  was  concentrated  and  utilized  for 
the  common  good. 

Q.  Where  does  the  economy  come  in,  the  economy  resulting 
from  the  combination?  Economy  I am  speaking  about,  not  tal- 
ent. What  percentage  of  economy  is  there  in  the  production  of 
the  raw  material  as  contrasted  with  1887?  A.  1 could  not  give 
the  percentage  upon  that  subject. 

Q.  Is  it  possible  that  with  all  this  genius  and  talent  and  tech- 
nical knowledge  you  cannot  give  us  figures  of  increased  economy 
over  the  time  of  non-combination  as  compared  with  now?  A. 
No  figures  which  would  give  intelligently  what  that  economy  has 
been ; we  are  working  at  it  constantly. 

Q.  Have  you  no  figures  going  to  show  how  much  it  cost  to  re- 
fine per  pound  of  sugar  in  1887  and  how  much  to-day,  in  order  to 


440 


[Senate, 


determine  whether  the  spirit  of  your  combination  as  to  economy 
in  manufacture  has  been  secured?  A.  The  price  of  refining  prior 
to  the  combination  was  known  only  to  the  individual  refiners  in 
each  case;  that  they  always  kept  to  themselves. 

Q.  But  you  were  a refiner?  A.  Yes,  sir. 

Q.  Has  it  never  struck  you,  or  have  you  not  been  curious 
enough  to  find  out,  whether,  after  all  these  years  of  concentration 
for  the  purpose  of  economy,  you  have  actually  secured  economy 
as  between  the  production  of  the  refined  article  by  your  company 
in  1887  and  by  the  American  Sugar  Refining  Company  in  1S96? 
A.  That  there  have  been  such  economies  I am  very  sure;  when 
you  ask,  what  those  economies  have  been  I am  not  prepared  to 
answe^ 

Q.  Have  you  a statistician  in  your  company  who  can  give  an 
answer  to  that  question?  A.  No,  sir. 

Q.  Do  you  know  of  any  other  large  concern  dealing  in  a manu- 
factured product  of  this  kind  that  doesn't  keep  an  accurate  ac- 
count of  the  cost  per  pound  of  manufacture?  A.  I think  that  is 
customary  in  all  large  manufacturing  industries. 

Q.  Have  you  such  a computation?  A.  We  have  a computation 
which  shows  our  cost;  but  no  computation. 

Q.  Have  you  any  computation  made  by  the  refinery  of  which 
you  were  manager?  A.  I was  an  officer  of  a company,  but  not 
manager;  I was  treasurer, 

Q.  Have  you  a calculation  of  what  it  cost  to  produce  the  re- 
fined article  by  that  company?  A.  I have  no  such  calculation 

now. 

Q.  Nothing  of  the  kind  preserved  in  the  archives  of  the  Ameri- 
can Sugar  Refining  Company,  or  of  the  New  Jersey  Trust?  A. 
They  have  nothing  whatever  to  do  with  the  archives  of  the  old 
company;  they  had  nothing  to  do  prior  to  the  consolidation. 

Q.  Did  the  Trust  not  keep  such  calculation?  A.  No,  sir. 

Q.  If  that  is  true  and  you  have  not  preserved  any  such  figures 
how  have  you  been  able  to  answer  to  this  committee  that  you  now 
employ  just  as  much  labor  per  ton  of  product  as  you  did  before 
the  combination?  A.  I have  stated  that  to  be  my  impression, 
without  stating  that  I had  definite  knowledge  on  that  point. 


No.  40.] 


441 


Q.  Was  it  a mere  guess?  A.  It  is  my  judgment,  if  you  call 
that  a guess. 

Q.  Was  not  one  of  the  underlying  principles  of  your  combina- 
tion to  economize  in  labor?  A.  Economies  in  cost;  not  neces- 
sarily in  labor. 

Q.  Is  not  the  principal  cost  of  the  product  the  element  of  labor? 
A.  That  depends  upon  the  product. 

Q.  Is  it  not  in  the  case  of  sugar?  A.  It  is  a large  factor. 

Q.  Now,  the  purpose  of  concentration  was  for  the  purpose  of 
economizing  in  all  directions,  including  labor,  was  it  not?  A. 
Not  necessarily  in  labor., 

Q.  What  did  you  mean  when  in  one  of  the  articles  of  incorpora- 
tion of  the  Sugar  Trust  you  said  that  one  of  the  purposes  of  the 
organization  of  the  Trust  was  to  prevent  illegal  combinations  of 
labor?  A.  The  original  Trust? 

Q.  Yes.  A.  Prior  to  the  organization  of  the  Trust  the  various 
corporations  had  been  subjected  to  strikes,  which  were  organized 
by  combinations  of  labor.,  , 

Q Those  strikes  were  for  increased  wages,  were  they?  A.  I 
think  they  were. 

Q.  Now,  that  being  one  of  the  purposes  of  the  organization  of 
the  Sugar  Trust,  to  prevent  what  you  call  illegal  combinations  of 
labor  or  strikes;  is  it  possible  that  you  have  not  after  that  com- 
bination made  any  statistics  showing  how  the  question  of  labor 
has  been  affected  by  4116  combination  or  the  economies  secured  in 
that  direction?  A.  I have  no  statistics  of  comparison  as  to  the 
cost  of  labor  between  the  old  regime  and  the  Trust. 

Q.  Has  anybody?  A.  Not  that  I know  of. 

Q.  Would  you  know  if  there  was  anybody?  A.  No;  not  neces- 
sarily. 

Q.  Have  you  statistics  showing  the  price  of  the  manufactured 
product  the  first  year  of  the  combination?  A.  No,  sir. 

Q.  Any  year  of  the  Trust?  A.  No,  sir. 

Q.  The  first  year  of  the  organization  of  the  New  Jersey  Com- 
pany? A.  I think  there  are  statistics  existing  concerning  it. 

Q.  Statistics  showing  the  price  of  the  product  and  the  amount 


442  [Senate, 

of  labor  employed?  A.  I think  in  the  manufacturing  department 
they  have  those  details. 

Q.  Would  you  secure  for  the  committee  such  details  as  you 
may  have  on  the  question  of  the  price  of  the  refined  article  in 
1891  as  compared  with  the  year  1896?  Also  the  amount  of  labor 
employed  and  the  wages  paid  during  the  year  that  you  had  no 
combination  compared  with  1896?  A.  I will  refer  these  figures 
to  Mr.  Havemeyer  who  has  charge  of  these  statistics. 

By  Mr.  Warner: 

Q.  Mr.  Searles,  can  you  not  give  them  to  us  by  Thursday  morn- 
ing? Has  there  been  any  increase  iu  the  wages  of  laborers  by 
your  company  since  1887?  A.  After  the  organization  of  the 
Trust  there  was  an  increase  in  the  price  of  labor. 

Q.  How  much?  A.  My  recollection  is  that  it  was  about  10  per 
cent. 

Q.  When  was  that?  A.  I think  it  was  the  first  year  after  the 
organization  of  the  Trust,  ( 

Q.  Has  there  been  any  increase  since  then?  A.  No  general  in- 
crease; there  have  been  increases  in  the  different  departments 
from  time  to  time,  I think. 

By  Mr.  Mazet: 

Q.  Any  reduction  at  any  time?  A.  None  whatever. 

Q.  How  are  your  men  paid;  by  the  day?  A.  Yes;  by  the  day. 

By  Mr.  Warner: 

Q.  Did  I understand  you  to  say  that  there  are  now  firms  on  the 
street  who,  not  recognizing  the  laws  of  trade,  will  be  pushed  or 
forced  out  of  business?  A.  I stated  that  there  were  trusts  which 
had  been  organized  and  which  had  failed  to  recognize  the  true 
basis  of  the  organization  and  that  they  had  come  to  grief;  that 
there  were  such  in  New  York. 

Q.  There  is  no  firm  in  New  York  now  dealing  in  sugar  that  is 
liable  to  come  to  grief?  A.  Not  unless  they  have  been  speculat- 
ing in  raw  sugar. 


No.  40.] 


443 


Q.  You  have  none  in  mind?  A.  No,  sir. 

Mr.  Parsons:  With  reference  to  the  time  when  you  desire  those 
statistics;  it  is  manifestly  impossible  to  have  them  here  Thurs- 
day. 

Fuller,  Lawson  N.,  recalled. 

Examined  by  Mr.  Lexow: 

Q.  You  have  been  sworn?  A.  Yes,  sir. 

Q.  Your  competency  as  an  expert  in  the  sugar  business  seems 
to  have  been  questioned;  will  you  please  state  to  this  committee 
what  your  connection  with  the  sugar  business  has  been,  your 
knowledge  of  the  business,  your  general  experience  in  the  sugar 
business  as  a competitor  with  other  concerns;  your  general  knowl- 
edge of  what  led  up  to  the  creation  of  the  Sugar  Trust?  A.  Has 
my  knowledge  of  the  business  been  called  in  question  by  the  com- 
mittee? 

Mr.  Lexow:  No,  sir. 

Q.  In  making  your  statement  limit  yourself  to  the  general 
question  of  competition  prior  to  the  organization  of  the  Trust, 
showing  the  character  of  the  competition  and  the  nature  of  the 
business?  A.  Between  1860  and  1865  there  were  48  sugar  re- 
fineries refining  sugar  and  competition  was  fierce,  as  I said  the 
other  day;  and  in  my  opinion  a great  many  more  men  were  em- 
ployed in  the  running  of  48  sugar  houses  than  the  Trust  employed 
in  the  running  of  two;  it  strikes  me  that  that  don’t  want  much 
showing;  I think  that  28  sugar  refining  houses  going  out  of  busi- 
ness reduced  the  labor  list  from  10,000  to  15,000  men  unquestion- 
ably; and  if  that  Sugar  Trust  was  not  formed  to  reduce  expenses, 
then  I don’t  know  for  what  it  was  formed;  labor  was  a large  fac- 
tor in  that  business. 

Q.  Have  you  any  definite  personal  knowledge  of  the  number  of 
men  employed  when  the  48  factories  were  in  operation  as  con- 
trasted with  the  number  afterwards  employed  by  the  Trust  and 
after  the  closing  of  the  factories  closed  by  the  creation  of  the 
Trust?  A.  I have  no  knowledge  of  the  number  of  men  that  the 


444 


[Senate, 


Sugar  Trust  now  employs;  but  I take  it  for  granted  that  they 
must  employ  a great  many  less  men  or  they  could  not  have  re- 
duced the  expense  of  refining  sugar;  that  will  go  without  saying; 
I do  know  pretty  nearly  how  many  men  were  thrown  out  of  em- 
ployment when  the  28  houses  went  out  of  business. 

Q.  The  impression  has  been  sought  to  be  given  that  the  remain- 
ing factories  increased  their  facilities  or  output,  and  therefore 
employed  more  labor,  and  in  that  way  made  up  for  the  labor  dis- 
charged by  the  closing  of  the  factories?  A.  They  may  have  em- 
ployed a small  percentage  more  labor,  but  they  have  better  facili- 
ties and  machinery;  they  have  discovered  that  they  can  produce 
sugar  a great  deal  cheaper  with  less  men,  there  is  no  question 
about  that;  so  how  could  they  employ  the  same  number  of  men 
and  make  more  money  than  the  48  houses? 

Q.  Do  you  know  how  many  men  were  employed  by  the  48 
houses?  A.  Not  nearly  so  well  as  I know  about  the  28  that  went 
out;  they  employed — I forget  the  exact  number — between  10,000 
and  14,000,  as  nearly  as  I can  get  at  it. 

Q.  Who  were  discharged  at  the  time  of  the  cessation  of  busi- 
ness? A.  Yes,  sir. 

Q.  How  much  was  the  product  of  all  the  factories  together  at 
that  time  as  compared  with  now?  A.  I don’t  remember  the  fig- 
ures; that  was  some  30  years  ago;  of  course  there  has  been  a large 
increase  in  the  product. 

By  Mr.  McCarren: 

Q.  Do  you  say  that  you  have  no  knowledge  of  the  number  of 
men  that  were  employed  by  those  48  refineries  in  the  year  1869; 
do  I understand  you  to  say  that  you  have  no  knowledge  of  the 
number  of  men  that  were  employed?  A.  I should  judge  there 
were  25,000  or  30,000  men. 

Q.  Do  you  know  whether  they  were  employed  continuously  ah 
the  year  around  or  whether  there  were  periods  of  idleness?  A. 
Usually  in  the  winter  season  we  reduce  the  number  of  men. 

Q.  What  would  be  the  average  number  of  men  employed  tak- 
ing into  consideration  that  fact?  A.  There  were  times  in  the 


No.  40.] 


445 


winter  season  when  the  factories  were  idle  and  wTe  usually  took 
that  time  to  take  an  account  of  stock  and  clean  up  the  factory. 

Q.  In  what  way  do  you  arrive  at  your  knowledge  of  the  num- 
ber of  men  employed  before  that?  A.  In  the  28  houses? 

Q.  Yes,  sir.  A.  Well,  by  counting  up  the  number  of  men  that 
different  houses  employed. 

Q.  Where  were  you  a refiner?  A.  The  corner  of  Washington 
and  Canal  streets., 

Q.  Where  were  the  other  27  or  47  situated? 

(Witness  reads  list  of  sugar  houses.) 

Mr.  McCarren  (interrupting) : That  is  sufficient. 

Q.  Within  a radius  of  this  city?  A.  Yes,  sir. 

Q.  You  took  the  trouble  to  ascertain  the  number  of  men  that 
were  employed  in  all  of  them?  A.  It  was  the  general  knowledge 
of  all  sugar  refiners  to  know  about  how  many  men  were  employed 
in  the  other  houses,  etc.,  in  order  to  know  how  to  compete  with 
them  successfully. 

Q.  I understood  you  to  say  that  you  could  not  state  exactly  the 
output  at  that  time  of  all  those  refineries?  A.  No,  sir;  I don’t 
remember. 

Q.  You  don’t  know  what  the  average  capacity  per  refinery  was 
at  that  time?  A.'  What  refinery? 

Q.  The  average  capacity  of  each  refinery?  A.  I do  not  recall 
now;  I did  know  at  the  time  within  a few  barrels. 

Q.  Do  you  know  the  average  capacity  of  the  refineries  now  that 
are  owned  by  the  American  Sugar  Refining  Company?  A.  No, 
sir;  that  is  an  unknown  quantity. 

Q.  Then  you  know  nothing  at  all  about  those  figures?  A.  No, 
sir. 

Q.  Do  you  know  anything  about  the  number  of  men  employed 
by  that  company?  A.  No,  sir. 

Q.  It  is  simply  a conclusion  on  your  part  as  to  the  fact  that 
there  are  a less  number  of  men  employed  now  than  at  that  time? 
A.  My  dear  sir,  two  refineries  could  not  employ  as  many  men  as 
48  refineries  or  20  refineries;  and  the  fact  of  their  forming  into  a 
Trust  was  to  decrease  the  labor  that  they  employed. 


446 


[Senate, 


Q.  If  men  were  thrown  out  of  work  was  it  not  simply  because 
they  did  more  work  by  machinery  and  that  they  employed  less 
help  in  consequence?  A.  They  can  employ  less  help  in  large 
houses. 

Q.  How  do  you  know  they  do  more  work  by  machinery?  A. 
They  say  so;  and  I believe  it. 

Q.  Do  you  believe  every  thing  you  hear?  A.  No,  sir. 

Q.  How  is  it  that  you  believe  that  part  and  discredit  other?  A. 
Because  I have  some  knowledge  of  the  methods  employed  30 
years  ago  and  now. 

Q.  Suppose  that  one  refinery  covered  ten  blocks,  would  it  not 
follow  as  a mathematical  proposition  that  there  should«*be  more 
employed  than  in  two  refineries  that  occupied  but  one  block?  A. 
Undoubtedly  there  would  be  a few  more  men  employed. 

Q.  Wouldn’t  there  be  a greater  number  employed?  Suppose 
one  refinery  occupied  a half  a dozen  blocks  and  was  ten  or  twelve 
stories  high  and  a number  of  men  employed  on  each  floor,  would 
it  not  follow  as  a matter  of  course  that  the  number  of  men  em- 
ployed in  that  refinery  would  be  greater  than  the  number  of  men 
employed  in  two  refineries  of  two  or  three  stories  high?  A.  The 
machinery  for  carrying  coal  black  over  17  lots  is  smaller  than  it 
would  be  to  carry  it  over  three;  there  are  no  more  men  employed 
to  do  that. 

Q.  Have  you  any  idea  of  the  number  of  men  that  are  employed 
in  any  of  the  leading  sugar  refineries  in  unloading  sugar  from 
foreign  countries  as  contrasted  with  the  number  that  were  em- 
ployed in  your  time?  A.  I have  not;  that  wouldn’t  amount  to 
many  more  men. 

Q.  You  have  no  knowledge  on  the  subject?  A.  On  the  subject 
of  unloading  ships? 

Q.  On  the  number  of  men  employed?  A.  Yes,  sir. 

Q.  I understood  you  to  say  that  you  had  no  knowledge?  A. 
I have  no  knowledge  of  the  entire  number  of  men  they  employ;  I 
have  knowledge  that  they  employ  probably  ten  per  cent.;  it  may 
be  20  per  cent,  more  now  than  before  they  enlarged  the  factories 
and  swallowed  up  the  other  factories;  from  1860  to  1865  and  to 


No.  40.] 


447 


1S75,  it  was  stated  by  Mr.  Searles  that  the  combination,  the  Sugar 
Trust,  was  not  for  the  purpose  of  driving  weak  refiners  out  of 
business,  as  he  worded  it;  the  weak  refiners  did  go  out  of  busi- 
ness; there  is  no  question  about  that;  and  the  weak  refiners,  such 
men  as  R.  L.  Stuart,  the  New  York  Sugar  Refining  Company  and 
twelve  or  fifteen  others;  they  were  the  strongest  men  and  the  men 
of  largest  experience  in  the  business  at  that  time. 

Q.  Explain  how  they  were  driven  out?  A.  That  is  a ticklish 
business;  but  if  you  want  me  to  explain  I will;  he  stated  it  was 
to  get  the  weak  men  out;  I think  it  was  to  get  the  honest  men  out. 

Q.  How  were  the  honest  men  separated  from  the  dishonest 
men?  A.  Simply  because  it  cost  them  half  a cent  per  pound  more 
than  it  did  the  men  who  had  their  factories  on  the  water’s  edge. 

Q.  Was  there  any  such  thing  as  determining  their  honesty  by 
the  price  of  the  raw  material?  Was  their  honesty  determined  by 
the  price  they  paid  for  sugar?  A.  It  was  the  price  they  paid 
upon  the  duty  of  sugar;  and  in  January,  1879,  I had  to  stand  a 
suit,  where  the  able  and  amiable  gentleman,  Mr.  Parsons,  acted 
as  counsel,  for  declaring  that  some  sugar  refiners  got  through 
their  sugars  cheaper  than  others;  I had  made  that  charge  two  or 
three  months  previously;  there  was  a committee  sent  here  from 
Washington  to  examine  into  the  frauds  in  the  Custom  House; 
Fernando  Wood  was  appointed  by  the  committee;  he  came  here 
and  held  a long  session;  and  most  of  the  sugar  refiners  were  in- 
vited here  by  Mr.  Wood;  among  others  there  were  members  of 
this  Trust. 

Q.  Was  the  Trust  in  existence  at  that  time?  A.  No,  sir;  we 
called  them  a “ring”  then;  the  evidence  was  taken  down  and  pub- 
lished in  pamphlet  form;  I read  the  evidence  and  then  called  a 
public  meeting  at  which  Cyrus  W.  Field  presided;  I made  a 
statement  in  regard  to  the  frauds  at  the  Custom  House;  I read 
from  the  testimony  of  one  who  is  now  a prominent  man  in  the 
Sugar  Trust;  his  brother  occupied  a seat  in  front  of  me  at  the 
time;  and  while  I assured  him  he  gave  that  testimony,  he  said  it 
was  a lie;  I told  him  that  I thought  his  brother  would  swear  to  it. 

Q.  I understand  you  to  say  that  he  charged  his  brother  with 


448 


[Senate, 


being  a liar?  A.  The  testimony  that  I was  reading  was  his 
brother's  testimony,  and  he  didn't  know  it;  I was  prosecuted  for 
$100,000  damages,  which  suit  was  tried  in  1881  and  dismissed;  I 
proved  upon  that  occasion  that  certain  refiners  got  their  sugars 
through  the  Custom  House  at  a half  a cent  per  pound  lower  than 
some  15  or  20  other  refiners;  and  they  said  that  I could  not  prove 
it;  I bought  two  cargoes  of  sugar  in  bond;  I paid  the  duty  of  a 
cent  and  three-quarters,  if  I remember  correctly;  then  I told  our 
sampler  to  go  to  the  Custom  House  and  sample  the  sugars;  to  get 
a Custom  House  sampler  to  go  over  and  sample  the  sugars;  that 
is,  he  would  sample  them  for  the  ring;  he  did  I suppose;  I got  his 
sample  and  instead  of  being  sampled  out  of  the  foots,  heads  and 
sides  it  was  taken  out  of  the  foot  entirely;  and  I got  a notice 
from  Colonel  Burt  in  the  Custom  House  that  I had  overpaid 
duty  to  the  amount  of  $2,200;  the  money  is  there  in  gold;  I took 
my  samples  which  were  correct  down  to  Colonel  Burt  and  told 
him  those  were  correct  samples;  there  was  nothing  said  about  it, 
but  the  $2,200  is  there  to  our  credit. 

Q.  Was  that  investigation  by  a Congressional  committee?  A. 
It  was  by  Fernando  Wood. 

Q.  What  was  the  report  of  the  committee?  A.  It  was  not 
much  of  a report;  I suppose  you  gentlemen  know  of  Fernando 
Wood. 

Mr.  McCarren:  I was  quite  a young  politician  at  that  time. 

Q.  Did  the  report  of  the  committee  sustain  the  charge?  A. 
They  didn't  give  it — it  was  impossible  to  get  at  them — only  those 
not  opposed  to  the  ring. 

Q.  Did  they  sustain  the  charge?  A.  No,  sir. 

Q.  Then  it  was  not  sustained?  A.  No,  sir;  that  didn’t  change 
the  fact,  though. 

Q.  It  did  in  the  estimation  of  the  committee?  A.  Of  Fernando 
Wood. 

Q.  Then  the  charge  was  not  sustained?  A.  Not  by  Fernando 
Wood;  I want  to  say  right  here  that  these  gentlemen  in  the 
sugar  business  are  neighbors  of  mine;  they  are  bright  men;  you 
can  see  that. 


No.  40.] 


449 


Q.  Your  eulogy  on  tlie  Sugar  Trust  only. 

Mr.  Lexow:  Allow  me  to  suggest  that  we  confine  this  investi- 
gation to  live  issues;  this  tariff  question  is  a matter  for  Congress; 
we  will  stick  to  the  sugar  refining  business. 

Mr.  McCarren:  You  are  in  favor  of  Federal  legislation?  A. 
I am  in  favor  of  electing  men  to  Congress  who  will  legislate  in 
the  interest  of  the  people;  I think  sugar  is  taxed  enough  now; 
it  might  be  cheaper;  there  is  no  question  about  that;  there  should 
be  proper  legislation  in  regard  to  this  matter;  and  from  what  I 
have  seen  and  known  and  read  in  regard  to  legislation  is  to  in- 
vite this  state  of  things;  and  that  is  not  the  worst  feature;  it  is 
creating  distrust,  and  unless  stopped,  I am  afraid  that  if  this  thing 
continues  it  will  bring  about  a revolution  in  the  end;  it  will  be 
viewed  from  a higher  plane  than  now. 

Mr.  Lexow:  Those  are  pretty  severe  terms  to  use. 

Mr.  Parsons:  Before  Mr.  Fuller  leaves  the  stand  may  I ask  the 
committee  to  ask  about  the  number  of  laborers  employed  in  his 
refinery  when  it  was  running,  and  the  output  of  that  refinery 
and  the  difference  between  the  raw  and  the  refined  at 
that  time;  those  are  matters  about  which  Mr.  Fuller  ought  to 
know;  and  I assume  he  does  know;  I would  like  to  have  him  com- 
municate the  facts.  > 

Mr.  Lexow:  How  many  men  did  you  employ  in  your  factory 
compared  with  the  output  per  ton  of  sugar  produced?  A.  I told 
you  how  many;  it  was  about  300  barrels;  about  250  men  per  day. 

Q.  The  average  number  that  you  employed?  A.  Yes,  sir. 

Q.  With  an  average  output  of  about  300  barrels  per  day?  A. 
Yes,  sir. 

Q.  How  about  the  other  question;  I ask  you  now  with  refer- 
ence to  the  first  year  and  the  last  year's  production;  how  large 
then,  and  what  was  the  difference  between  the  value  of  the  raw 
material  and  the  price  of  the  refined  product,  as  produced  by 
you?  A.  During  the  war  we  had  three  cents  per  pound  margin; 
after  the  war  it  went  to  less  than  a cent  per  pound. 

Q.  What  year  was  that?  A.  I think  it  was  in  1871  and  1872. 

Q.  Do  you  mean  to  say  that  in  1871  and  1872  a small  inde- 
29 


450 


[Senate, 


pendent  concern,  producing  300  barrels  per  day  of  sugar  could 
produce  tliat  sfigar  and  did  produce  it  within  the  margin  of  one 
cent  per  pound  between  the  raw  and  the  manufactured  product? 
A.  No;  we  could  not  produce  at  one  cent  per  pound;  it  cost  about 
a cent  and  a half  per  pound;  the  gentlemen  in  the  Brooklyn 
Sugar  Refining  Company  claimed  that  tliej7  refined  on  a margin 
of  five-eighths;  he  said  they  got  their  material  cheaper;  and  it 
■was  only  a question  of  time  when  -we  should  have  to  go  out  of 
business. 

Q.  You  claimed  that  they  had  an  advantage  of  one-half  a cent 
per  pound?  A.  Yes,  sir. 

Q.  Where  did  you  get  your  figures  from,  according  to  which 
you  make  a statement  that  they  can  produce  the  manufactured 
article  at  a cost  of  five-eighths  of  a cent  per  pound?  A.  That 
was  so  stated  by  them. 

Q.  Who  ? A.  I don't  remember  all  of  them ; they  claimed  that 
we  wrere  making  the  cost  of  manufacture  cheaper. 

Q.  Where  did  you  get  your  figures  of  five-eighths  of  a cent  per 
pound?  A.  Prom  the  statements  of  those  wTho  said  they  could 
turn  them  out. 

Q.  Can  you  particularize  any  person  who  made  that  statement? 
A.  I could. 

Q.  Mr.  Havemeyer?  A.  One  of  the  Havemeyers. 

Q.  Which  one?  A.  Not  the  one  that  is  living  now;  Mr.  Elder 
of  the  firm  said  so  repeatedly. 

Q.  To  you?  A.  Yes,  sir;  I believed  they  could  do  it. 

Q.  Did  Mr.  Searles  ever  make  such  a statement?  A.  He  was 
not  in  the  business  then. 

Q.  What  year  was  that?  A.  1865. 

Q.  Was  it  later?  A.  Sometime  between  ’65  and  ’70;  I couldn’t 
tell  you;  I think  all  through  that  period. 

Q.  Was  that  true  of  the  situation  in  1875?  A.  We  were  not  in 
business  in  1875. 

Q.  In  1873?  A.  Yes,  sir. 

Q.  Do  you  mean  to  say  that  the  concerns  then  competing 
against  you  could  produce  the  manufactured  article  at  a differ- 


No.  40.] 


451 


ence  between  the  raw  material  and  the  manufactured  product  of 
five-eighths  of  one  cent  per  pound?  A.  Yes;  that  is  what  they 
claim  now. 

Q.  What  did  they  claim?  A.  They  claimed  that  then. 

Q.  Large  economies  have  been  introduced  since  then?  A.  Yes, 
sir. 

Q.  In  the  direction  of  machinery?  A.  Yes,  sir. 

Q.  And  processes?  A.  Yes,  sir. 

Q.  Not  to  speak  of  the  benefits  of  concentration  and  consolida- 
tion? A.  Yes,  sir. 

Q.  That  is  true?  A.  Yes,  sir. 

Mr.  Lexow:  We  will  now  take  an  adjournment. 


SEVENTH  PUBLIC  HEARING.  COMMON  COUNCIL  CHAM- 
BER, NEW  YORK,  FEBRUARY  16,  1897,  10:30  A.  M. 

Flint,  Charles  R.,  having  been  duly  sworn,  testified  as  follows: 

Examined  by  tylr.  Lexow: 

Q.  What  is  your  full  name?  A.  Charles  R.  Flint. 

Q.  What  official  position  do  you  carry  in  the  United  States 
Rubber  Company  so-called?  A.  I am  the  treasurer  and  a mem- 
ber of  the  Board  of~  Directors. 

Q.  Were  you  one  of  the  original  organizers  of  the  Company? 
A.  I took  part  in  bringing  about  the  organization. 

Q.  Were  you  one  of  the  incorporators?  A.  No,  sir. 

Q.  One  of  the  first  directors  under  the  certificate  of  organiza- 
tion? A.  No. 

Q.  Have  you  a copy  of  the  certificate  of  organization  of  the 
United  States  Rubber  Company?  A.  I haven’t  a copy  with  me; 
I will  send  you  a copy  if  you  wish. 

Q.  Will  you  produce  one  after  the  adjournment?  A.  I will 
send  you  one. 


452  [Senate, 

Q.  Where  was  your  company  organized?  A.  Under  the  laws  of 
the  State  of  New  Jersey. 

Q.  When?  A.  In  1892. 

Q.  About  this  season  of  the  year;  what  time  of  the  year?  A. 
About  the  middle  of  the  year. 

Q.  With  a capital  of  what?  A.  With  an  authorized  capital 
of  $50,000,000;  but  the  original  issue,  I don’t  remember  that. 

Q.  Do  you  remember  the  issue  first  made,  not  that  made  in 
your  certificate;  but  the  issue  made  afterwards,  or  immediately 
afterwards,  upon  the  acquisition  of  the  property?  A.  I don’t  re- 
member the  exact  amount;  the  first  property  that  we  purchased 
was  a plant  in  New  Brunswick,  N.  J. 

Q.  The  New  Brunswick  Rubber  Company?  A.  No,  sir;  the 
New  Jersey  Rubber  Shoe  Company;  that  was  the  first  property 
that  we  purchased;  and  the  value  of  that  property  was  submitted 
to  appraisal;  one  of  the  appraisers  was  named  by  the  United 
States  Rubber  Company,  another  was  named  by  the  New  Jersey 
Rubber  Shoe  Company,  and  these  two  named  the  third;  and  upon 
their  report  the  amount  of  the  capital  stock  was  issued;  I think 
the  amount  was  about  $2,000,000;  shall  I go  on  and  give  the  steps 
taken  ? 

Mr.  Lexow:  Yes,  sir.  A.  At  a later  period,  say  in  the  fall  of 
1892— 

Mr.  Lexow,  interrupting:  You  say  that  the  first  was  about 
$2,000,000?  A.  About  that;  I don’t  remember  the  exact  amount 
it  was  issued  to  the  stockholders  of  the  New  Jersey  Rubber  Shoe 
Company  of  New  Brunswick;  in  the  fall,  after  the  acquisition  of 
the  New  Brunswick,  or  New  Jersey  plant,  we  opened  our  office 
and  became  a New  Jersey  corporation  in  fact,  being  a company 
not  having  any  properties  in  New  York;  then  appraisers  were 
secured,  who  examined  the  different  rubber  companies  which  we 
thought  of  purchasing  and  finally  a committee  was  appointed, 
the  directors  of  the  company  selecting  a man  of  well  known  con- 
servatism, the  present  president  of  the  New  York  Clearing  House 
being  chairman  of  the  committee,  and  that  committee  examined 
the  reports  of  the  experts  and  appraisers  and  obtained  informa- 


No.  40.] 


453 


tion  as  to  the  business,  as  to  the  value  of  the  trade  mark,  pat- 
ents, etc.,  and  made  a report  to  the  Board  of  Directors  recom- 
mending the  purchase  of  certain  properties  for  about  $22,000,000. 

Q.  What  were  those  properties;  those  in  addition  to  the  $2,000,- 
000  originally  authorized?  A.  I am  not  able  to  remember  all 
the  properties. 

Q.  The  New  Brunswick  Bubber  Company?  A.  It  was  in- 
cluded. 

Q.  The  National  India  Bubber  Company?  A.  The  purchase 
of  the  stock  of  the  New  Brunswick  Bubber  Company  was  one  of 
the  reasons  why  we  organized  under  the  New  Jersey  law;  we 
were  advised  at  that  time  that  there  was  some  question  as  to 
whether  a company  could  hold  stock  in  another  corporation  under 
the  laws  of  the  State  of  New  York;  since  then,  I understand  that 
legislation  has  been  passed  that  will  permit  a New  York  corpo- 
ration to  hold  the  stock  of  a corporation  organized  under  the 
laws  of  another  State;  under  the  New  Jersey  law  there  was  a 
specific  right  to  hold  stock  in  another  corporation;  and  under 
that  law  the  United  States  Bubber  Company  acquired  stock  in 
other  corporations;  stock  in  the  New  Brunswick  Bubber  Com- 
pany; the  Myer  Bubber  Company;  the  Lycoming  Bubber  Com- 
pany of  Pennsylvania;  the  New  Brunswick  Bubber  Company  of 
New  Brunswick,  N.  J.;  the  Myer  Bubber  Company  of  Milltown, 
N.  J. 

Q.  Is  that  near  New  Brunswick?  A.  Within  a few  miles; 
also,  El  Cande  of  New  Haven,  Conn.;  the  Goodyear  Metallic  Bub- 
ber Shoe  Company,  of  Nantucket,  Conn.;  the  National  Bubber 
Company,  of  Bristol,  Bhode  Island;  the  Boston  Bubber  Company, 
which  had  a factory  at  Franklin,  and  another  factory  in  Chelsea, 
Mass.;  the  American  Bubber  Company  of  Cambridgeport. 

Q.  That  is  near  Boston?  A.  Yes,  sir. 

Q.  Those  were  the  original?  A.  And  a mortgage  was  pur- 
chased on  the  Colchester  Bubber  Company  and  a majority  of 
the  Bubber  Manufacturers  Selling  Company. 


454 


[Senate, 


By  Mr.  Mazet: 

Q.  Where  is  that  located?  A.  That  is  located  at  Colchester, 
Conn.;  that  is  my  impression. 

By  Mr.  Lexow: 

Q.  The  Colchester  Rubber  Company  and  the  Rubber  Manu- 
facturers Selliug  Company  go  hand  in  hand?  A.  The  Rubber 
Manufacturers  Selling  Company  handles  the  product  of  the  Col- 
chester Rubber  Company. 

Q.  Were  these  companies,  this  mortgage  and  stock  that  you 
have  referred  to,  all  part  and  parcel  of  the  first  general  stock  is- 
sue? A.  Of  the  stock  issued? 

Q.  I mean  the  first,  that  $22,000,000?  A.  Yes,  sir. 

Q.  And  all  included  within  the  $22,000,000  of  a stock  that  you 
have  testified  to?  A.  All  included  in  about  that  figure. 

Q.  When  was  this  transaction  made?  A.  This  transaction 
was  made  in  September,  1892;  and  in  further  explanation,  Mr. 
Chairman,  this  purchase  did  not  include  all  the  stock  of  these 
corporations;  the  company  purchased  the  stock  of  the  minority 
stockholders  at  a later  period. 

Q.  What  part  of  the  output  or  product  of  these  concerns  was 
sold  or  bought;  what  part  of  the  output  or  product  did  these  con- 
cerns control?  A.  I should  think  about  50  per  cent. 

Q.  Of  the  total  product  of  the  United  States?  A.  Yes,  sir. 

Q.  The  concerns  that  you  had  acquired  by  September,  1892, 
controlled  a total  of  one-half  the  entire  product?  A.  About  that. 

Q.  You  then  continued  your  purchases,  didn’t  you?  A.  We 
took  in  some  shares  after  that;  minority  shares. 

By  Mr.  Warner: 

Q.  Of  these  same  companies?  A.  Of  these  same  concerns;  the 
idea  being,  so  far  as  it  was  possible,  to  treat  the  majority  stock- 
holders, practically  all  the  stockholders  in  these  corporations,  ex- 
actly alike. 


No.  40.] 


455 


By  Mr.  Lexow : 

Q.  How  long  after  did  you  acquire  this  additional  stock?  A. 
It  was  acquired  from  month  to  month;  I don’t  remember  the  ex- 
act  period. 

Q.  Do  you  mean  picking  it  up?  A.  In  individual  lots  as  par- 
ties desired  to  dispose  of  it. 

Q.  What  was  the  basis  of  computation  upon  which  this  first 
issue  of  |2,000,000  and  the  subsequent  issue  of  $22,000,000  was 
made?  How  did  you  reach  those  figures?  A.  That  matter  was 
reached  by  appraisers  and  by  a committee  appointed  for  that  pur- 
pose; in  making  their  report,  as  I understood  it,  they  took  into 
consideration  the  value  of  the  plants  and  the  productive  capaci- 
ties; there  were  experts  in  real  estate,  experts  in  machinery,  in 
rubber  machinery,  experts  in  motive  power,  experts  in  the  rubber 
business,  called  in  and  they  made  full  and  complete  reports  as  to 
the  condition  of  all  these  different  properties. 

Q.  Had  the  rubber  manufacturing  business  been  remunerative 
just  prior  to  the  making  otf  this  consolidation?  A.  In  some  cases 
it  was  remunerative  and  in  other  cases  it  was  not. 

Q.  These  various  concerns  that  were  taken  into  this  combina- 
tion were  prior  to  their  consolidation  independent  competing  con- 
cerns, were  they  not?  A.  Yes,  sir. 

Q.  So  that  by  this  combination  the  competition  of  ten  or  eleven 
concerns  then  freely  competing  in  the  open  market  were  re- 
moved? A.  Yes;  but  there  were  concerns  manufacturing  50  per 
cent,  of  the  product  that  were  not  in  the  combination. 

Q.  I understand  tHat ; but  these  concerns  that  were  taken  into 
the  combination  were  freely  competing  as  between  themselves  at 
the  time  of  the  combinat j.on  ? A.  They  were. 

Q.  And  immediately  after  the  consolidation,  so  far  as  competi- 
tion was  concerned,  it  was  limited  to  the  50  per  cent,  not  consoli- 
dated into  this  one  company?  A.  Well,  perhaps  competition 
may  have  been  eliminated  to  some  extent  as  between  those  con- 
cerned; but  on  the  other  hand,  in  some  respects  it  continued; 
they  had  separate  salesmen  for  each  concern  and  there  was  a 
natural  competition  between  the  salesmen. 


456 


[Senate, 


Q.  Didn’t  the  central  organization  fix  the  price  at  which  the 
product  should  be  sold  to  the  consumer?  A.  No  more  in  a gen- 
eral way  than  it  had  been  fixed  heretofore;  since  I have  been  con- 
nected with  the  rubber  shoe  business  there  has  always  been  some 
understanding,  or  rather  there  has  been  the  same  uniformity  in 
regard  to  the  price  of  manufactured  goods;  that  has  existed,  I am 
informed,  for  twenty  years  back,  as  it  exists  in  a great  many  lines 
of  manufactured  goods. 

Q.  If  there  was  an  understanding  which  substantially  fixed  the 
price  between  the  independent  companies  prior  to  the  consolida- 
tion what  was  the  purpose  and  object  of  consolidation?  A.  The 
object  of  consolidation  was  to  centralize,  manufacture  and  to  se- 
cure economies  by  means  of  such  centralization. 

Q.  The  fact  is,  however,  you  have  had  one  central  Board  of 
Directors  governing  and  controlling  what  had  formerly  been  ten 
or  twelve  independent  companies;  that  is  a fact,  is  it  not?  A. 
To  a certain  extent;  not  to  the  full  extent. 

Q.  The  policy  of  those  companies  whose  stock  you  have  ac- 
quired, and  which  is  in  your  treasury,  was  governed  and  dictated 
by  a central  Board  of  Directors  and  the  president  of  the  central 
organization  held  the  stock?  A.  To  a very  considerable  extent. 

Q.  Was  it  not  absolutely?  A.  Not  absolutely. 

Q.  To  what  extent  was  it  not  controlled?  A.  It  didn’t  work 
that  way  from  the  fact  that  there  remained  in  the  organizations 
of  the  different  companies  the  old  officers  and  the  policy  con- 
tinued of  the  concerns  being  run  under  the  management  of  the 
former  officers  of  those  corporations;  one  reason  for  that  was 
that  the  rubber  shoe  industry — the  product  is  variable  and  the 
conditions  are  complex — and  it  was  found  advantageous  to  con- 
duct the  business  in  that  way. 

Q.  But  so  far  as.  uniformity  of  price  was  concerned  the  de- 
termination of  that  question  rested  with  the  president  of  the 
United  States  Rubber  Company  as  regards  the  companies  taken 
into  the  combination,  didn’t  it?  A.  The  president  of  the  com- 
pany could  have  exercised  that  control,  I suppose,  having  as  the 
United  States  Rubber  Company  has  a majority  of  the  shares;  but 


No.  40.] 


437 


that  policy  was  not  carried  out  in  full;  it  was  carried  out  to  a con- 
siderable extent. 

Q.  To  what  extent  did  you  utilize  at  that  time  the  entire  ca- 
pacity of  the  various  factories  which  came  into  the  combination? 
A.  I suppose  that  about  one-half  of  the  producing  capacity  of 
those  companies  was  used. 

Q.  About  one-half?  A.  Yes;  50  per  cent,  of  the  capacity  of  the 
concerns  that  we  took  over. 

Q.  And  that  would  average  during  the  entire  year,  1892  and 
1S93,  at  that  point?  A.  About  that. 

Q.  In  1895  what,  if  any  concerns,  did  you  acquire?  A.  I don’t 
remember;  in  1893  we  acquired  the  Woonsocket  Rubber  Com- 
pany; the  Woonsocket  Rubber  Company  of  Rhode  Island. 

Q.  Of  Woonsocket,  R.  I.?  A.  Yes,  sir;  and  the  Marvel  Rubber 
Company,  of  Woonsocket,  R.  I. 

Q.  Any  others?  A.  No  others. 

Q.  Were  not  in  1S93  four  then  competing  concerns  acquired  by 
the  United  States  Rubber  Company?  A.  I don’t  know  of  any 
more  that  I have  in  mind;  there  was  the  Woonsocket  Rubber 
Company,  including  two  factories,  one  in  Woonsocket  and  one  in 
Millville;  and  then  we  built  a rubber  reclaiming  plant  at  Nan- 
tucket. 

Q.  Was  that  in  1S93?  A.  That  was  in  1893. 

Q.  That  you  built  the  one  in  Nantucket?  A.  Yes,  sir. 

Q.  I have  not  the  names,  but  I have  either  correct  or  erroneous 
information,  that  you  purchased  four  concerns  in  1893;  will  you 
kindly  think  the  matter  over  carefully  and  see  whether  or  not 
your  statement  is  correct,  that  you  only  secured  two? 

(Witness  examines  book.) 

A.  There  was  an  interest  obtained  in  the  Hammond  Buckle 
Company. 

Q.  How  much  of  the  Hammond  Buckle  Company  did  that  in- 
terest represent?  A.  It  represented  the  full  amount;  the  entire 
capital  stock. 

Q.  Then  you  bought  the  whole  of  that  company?  A.  We 
bought  the  whole. 


458  [Senate, 

Q.  Was  there  not  another  company  that  you  purchased?  A. 
The  Lawrence  Felting  Company. 

Q.  Hoy/  much  of  that?  A.  Entire;  that  was  not  a stock  com- 
pany; it  was  owned  by  individuals  and  we  bought  it  all. 

Q.  Did  you  buy  it  all  incorporated  or  did  you  have  it  trans- 
ferred directly  to  the  United  States  Rubber  Company  A.  It  was 
transferred  directly  to  the  United  States  Rubber  Company. 

Q.  What  amount  of  stock  did  you  issue  in  the  purchase  of 
those  four  properties  acquired  by  you  in  1893?  A.  About  $12,- 
000,000. 

Q.  Which  added  to  the  former  issue  made  altogether,  if  I am 
correct  in  my  figures,  $39,566,500  of  stock  issued?  A.  That  is  the 
total  amount  of  capitalization. 

Q.  At  that  time?  A.  That  is  the  total  amount  now;  about  $40,- 

000,000. 

Q.  Will  you  explain  to  this  committee  why,  with  mills  on  your 
hands  of  which  you  cannot  utilize  more  than  50  per  cent,  of  the 
capacity,  you  acquired  these  additional  mills  at  a cost  to  you  of 
about  $12,000,000?  A.  With  the  idea  of  a larger  centralization 
of  the  business  and  the  economies  that  would  result  therefrom. 

. Q.  What  amount  of  business  had  the  Woonsocket  and  the  four 
companies  acquired  by  you  in  1893  done  as  compared  with  the 
whole  trade?  A.  I should  say  that  the  four  companies  manufac- 
tured perhaps  one-fifth. 

Q.  Twenty  per  cent.  ? A.  About  that. 

Q.  So  that  with  the  companies  originally  acquired  and  the  com- 
panies acquired  in  1893  you  had  secured  about  70  per  cent  of  the 
total  rubber  product  of  the  country;  is  that  right?  A.  I could 
not  say;  I should  think  that  we  had  about  60  per  cent.;  I am  giv- 
ing these  figures  as  my  opinion;  I do  not  give  them  accurately;  I 
am  not  regularly  engaged  in  the  rubber  shoe  business,  so  that  I 
have  not  the  figures  in  mind  as  would  a man  who  gave  his  con- 
stant attention  to  the  business;  I should  say  that  we  are  produc- 
ing about  60  or  65  per  cent,  of  the  total  business  of  the  country,  or 
the  total  consumption. 

Q.  I would  like  to  have  you  inform  the  committee  why,  with  a 


No.  40.] 


459 


capacity  in  band,  more  than  50  per  cent,  of  which  was  unavail- 
able. you  still  deemed  it  necessary  to  acquire  an  additional  20  per 
cent,  of  the  producing  facilities  of  the  country?  A.  Our  object 
was  to  secure  a business  that  was  sufficiently  large  so  that  we 
could  get  the  advantage  and  economies  that  would  result  from 
the  centralization  of  manufacture. 

Q.  And  incidentally  to  destroy  competition  to  that  extent? 
A.  No. 

Q.  It  did  do  it;  it  did  have  that  effect,  didn't  it?  A.  I don’t 
know;  I don’t  think  so. 

Q.  After  you  had  secured  control  of  the  product  and  the  facili- 
ties represented  by  these  four  companies  in  1893  you  didn’t  allow 
them  to  continue  a competitive  business  as  against  the  other  con- 
cerns that  you  had  acquired,  did  you?  A.  I think  that  a competi- 
tive business  was  continued  to  some  extent. 

Q.  When  you  speak  of  competitive  business  do  you  mean  that 
competition  exists  in  this  way : That  certain  brands  had  become 
well  known  in  the  market,  and  that  instead  of  destroying  those 
brands  you  still  continued  to  push  them  in  the  market?  A.  In 
the  rubber  business  the  value  of  the  trade  mark  is  one  of  the 
principal  items  of  value. 

Q.  That  is  what  I mean  by  brand?  A.  And  making  sales  of 
rubber  goods — inasmuch  as  it  is  practically  impossible  for  the 
consumer  to  form  an  accurate  idea  of  the  quality — the  merchan- 
dise is  bought  largely  on  brands,  and  there  is  a difference  in  the 
price  not  largely  dependent  on  the  bi’ands  of  goods. 

Q.  Do  the  factories  have  different  brands?  A.  Each  factory 
has  different  brands., 

Q.  And  each  brand  was  competing  in  the  market  against  the 
other  brands?  A.  To  an  extent. 

Q.  After  acquiring  this  property  all  that  was  left  of  the  compe- 
tition was  that  you  pushed  one  or  the  other  of  the  brands  accord- 
ing to  the  exigencies  of  the  case,  and  controlling  all  brands  you 
didn’t  permit  any  one  brand  to  compete  against  any  other  brand 
controlled  by  you  in  the  market,  did  you?  A.  It  was  within  the 
power  of  the  company,  to  the  extent  of  the  United  States  Rubber 


400 


[Senate. 


Company,  to  control : but  there  was  a certain  amount  of  compe- 
tition; I think  there  was  some  competition  on  price;  in  reference 
to  that  business,  Mr.  Chairman,  I have  taken  no  part. 

Q.  Who  is  there  in  your  company  who  knows  about  these  ques- 
tions of  competition  between  what  otherwise  were  free  and  inde- 
pendent factories?  A.  The  gentlemen  in  the  sales  department; 
we  have  a department  of  sales,  with  which  I am  not  familiar. 

Q.  Who  is  he?  A.  Mr.  Charles  L.  Johnson. 

Q.  Has  he  been  subpoenaed?  A.  No,  sir. 

Q.  Where  is  his  office?  A.  At  the  office  of  the  company. 

Q.  Where  is  that?  A.  88  Reade  street. 

Q.  Does  Mr.  Ford,  who  is  here  in  the  room,  know  anything 
about  that  particular  branch  of  the  business?  A.  I think  not. 

Q.  Would  you  explain  the  way  in  which  you  figured  the  val- 
ues in  reaching  the  amount  of  stock  that  was  issued  to  those  va- 
rious companies?  A.  Which  companies  do  you  mean? 

Q.  The  original  companies  included  in  the  first  distribution  of 
the  two  million  dollars;  and  then  in  the  second  distribution  of 
a little  over  $22,000,000?  A.  As  I stated  before,  the  committee 
was  appointed  by  the  directors  of  the  company,  the  United 
States  Rubber  Company — 

Q.  I understand  that;  you  need  not  go  over  it  again. 

Q.  Was  there  any  basis  of  computation  upon  which  you  pro- 
ceeded in  fixing  the  values,  and  if  so,  what  was  that  general 
basis?  A.  That  basis,  Mr.  Chairman,  was  put  upon  the  value 
of  the  plants,  the  value  of  quick  assets  over  liability  of  concern^ 
which  quick  assets  were  guaranteed  and  secured  by  deposit  of 
stock;  and  also  the  value  of  the  patents,  trade  marks  and  busi- 
ness franchises;  all  the  elements  were  taken  into  consideration 
and  a report  rendered  by  Mr.  Simmons  as  chairman  of  the  com- 
mittee that  recommended  the  purchase  by  the  United  States 
Rubber  Company. 

Q.  You  have  stated  that  once  before;  when  you  speak  of  the 
value  of  a franchise,  what  element  of  value  was  given  in  reach- 
ing the  value  of  the  various  acquired  properties  proportionately 
to  the  whole?  A.  The  franchise  represents  the  value  of  trade- 


No.  40.] 


461 


marks  and  patents  in  tlie  concern,  some  of  which  had  been  run- 
ning for  25  or  50  years. 

Q.  Goodwill?  A.  Value  of  trade-marks,  patents  and  business 
organization;  one  interesting  fact  in  this  business  is  owing  to 
variety  of  product,  and  to  give  you  some  idea  of  this  variety, 
one  of  the  factories  turns  out  30,000  different  shoes;  and  in  addi- 
tion to  that  we  manufacture  clothing,  belting,  packing  material 
and  hose  and  other  rubber  goods;  our  principal  product  is  rub- 
ber boots  and  shoes;  one  of  the  elements  of  value  is  the  cost  of 
creating  an  organization  for  the  conduct  of  the  business — a busi- 
ness of  infinite  variety. 

Q.  Do  you  estimate  what  is  called  the  ultimate  prospective 
earning  capacity  of  the  various  plants  in  the  distribution  of  the 
stock?  A.  I personally  made  no  estimate;  I was  not  a member 
of  the  Board  of  Directors  and  was  not  a member  of  the  commit- 
tee of  which  Mr.  Edward  Simmons  was  chairman. 

Q.  Do  you  remember,  however,  from  the  general  interest  you 
had  in  the  plan  of  organization  that  there  was  issued,  or  rather 
that  the  basis  of  issue  was  the  general  ultimate  prospective  earn- 
ing capacity  of  the  plants?  A.  I should  think  that  was  taken 
into  consideration;  undoubtedly. 

Q.  Do  you  know  how  much  stock  was  issued  for  that?  A.  I 
don’t. 

Q.  Do  you  know  whether  it  was  based  upon  the  then  earning  ca- 
pacity of  the  business,  or  upon  an  estimate  of  the  possible  earn- 
ings under  the  plan  of  consolidation?  A.  I do  not  think  that 
the  basis  was  upon  the  then  earnings  of  the  companies;  examina- 
tion was  made  in  certain  companies  to  ascertain  what  the  earn- 
ings were;  but  in  determining  the  value  they  took  into  consider- 
ation all  the  different  elements,  the  trade-marks,  the  patents,  tan- 
gible property,  real  estate,  etc.;  undoubtedly  in  making  those 
values  they  made  them  with  a view  to  their  future  earning  ca- 
pacity. 

Q.  And  the  system  upon  which  the  companies  are  conducted 
under  their  centralized  management  justifies  this  original  esti- 
mate of  the  prospective  earning  capacity,  does  it  not?  A.  It  is 


462 


[Senate, 


the  policy  of  the  company  to  earn  for  its  stockholders  — and  by 
the  way,  I might  say  that  the  number  of  stockholders  has  in- 
creased; originally,  there  were  only  three  or  four  hundred;  now, 
there  are  three  thousand  preferred  and  three  thousand  common 
stockholders — and  it  is  the  policy  of  the  directors  of  the  com- 
pany to  earn  mone}r  for  those  stockholders,  without  especially 
considering  the  capitalization;  as  trustees  we  earn  for  those 
stockholders  all  the  money  that  we  lawfully  can. 

Q.  In  fixing  the  issue  of  stock  the  appraisers,  approved  by  the 
Directors  of  the  United  States  Rubber  Company,  gave  to  the 
properties  acquired  what  has  been  termed  here  a prospective 
ultimate  earning  capacity;  from  that  time  has  the  system  upon 
which  the  company  is  conducted,  been  in  line  to  justify  that  ap- 
praisement or  decision  of  the  directors  in  the  issue  of  the  stock? 
In  my  judgment  that  matter  has  not  received  the  consideration 
of  the  Board  of  Directors  in  the  conduct  of  the  business. 

Q.  You  have  been  endeavoring  in  the  conduct  of  that  business 
to  make  and  earn  dividends  for  the  stockholders  upon  the  stock 
issued  in  the  manner  indicated?  A.  It  has  been  endeavoring  to 
earn  all  the  money  that  it  lawfully  could  for  the  stockholders  of 
the  United  States  Rubber  Company. 

Q.  Holding  both  preferred  and  common  stock  issued  upon  the 
general  plan  referred  to?  A.  We  have  endeavored  to  earn  all  the 
money  possible;  all  the  money  that  we  could  lawfully  earn  for  the 
stockholders  in  general  under  our  plan;  the  preferred  stock  is  8 
per  cent,  non-cumulative  stock;  of  course  profits  are  divided  in  ac- 
cordance with  the  provisions  of  the  stock  issues. 

Q.  The  common  stock  in  case  the  company  makes  any  divi- 
dends, carries  everything  beyond  the  eight  per  cent,  earned  upon 
the  preferred  stock?  A.  That  is  the  condition ; the  preferred  stock 
si  non-cumulative. 

Q.  That  is  to  say  it  only  gets  dividends  in  the  year  in  which  it 
is  earned  and  don’t  carry  a credit  of  dividends  from  year  to  year, 
from  one  year  to  another  if  not  earned?  A.  That  is  correct. 

Q.  Do  you  remember  the  assets  and  property  that  were  pre- 
formed on  the  first  two  million  dollar  issue  of  the  stock?  A.  That 


No.  40.] 


463 


was  the  New  Jersey  Rubber  Company;  the  New  Jersey  Rubber 
Company,  of  New  Brunswick;  we  started — 

Mr.  Lexow  interrupting:  Was  that  a corporation?  A.  Yes,  sir. 

Q.  What  was  the  amount  of  the  capital  stock  of  that  corpora- 
tion? A.  I don’t  remember;  I think  the  amount  of  capital  stock 
was  exceedingly  small. 

Q.  What  was  it?  A.  I don't  remember;  I think  it  was  consid- 
erably less  than  the  amount  issued. 

Q.  Do  you  know  what  proportion  it  held  to  the  amount  issued? 
A.  I do  not  know  the  proportion;  I think  that  the  great  bulk  of 
the  property  of  this  concern  was  owned  by  a few  individuals,  who 
had  held  it  for  a great  many  years;  and  they  had  pursued  a simi- 
lar policy  to  that  of  the  Chemical  Bank  of  New  York  city;  the 
amount  of  capital  stock  had  no  bearing  or  significance  as  to  the 
intrinsic  value  of  the  business  or  the  property. 

Q.  But  you  cannot  state  what  the  original  stock  issue  of  that 
company  was?  A.  I cannot;  I know  it  was  not  very  much. 

Q.  Will  you  be  able  to  give  that  figure  to  the  committee?  A. 
I think  I can  ascertain  it. 

Q.  The  New  Brunswick  Rubber  Company  of  New  Brunswick; 
what  was  the  capital  stock  of  that  company  at  the  time  it  was 
taken  in  to  the  consolidation?  A.  I don’t  remember;  but  I think 
it  was — although  the  concern  was  of  less  value  than  the  New  Jer- 
sey Company,  I think  the  capital  stock  was  more;  I know  that  the 
aggregate  capital  stock  of  all  these  corporations,  in  which  I had 
no  interest,  would  not  amount  to  the  $22,000,000  issued. 

Q.  How  much  less  than  the  $22,000,000  of  all  the  stock  issued 
was  the  aggregate  of  the  capital  stock  of  the  companies  acquired? 
A.  I don’t  know;  but  I know  that  many  of  these  concerns  had 
been  running  for  a long  time,  for  many  years — perhaps  from  30 
to  50  years  in  the  hands  of  men  who  found  it  convenient  to  run 
the  concerns  with  the  original  capital ; so  that  as  the  concerns  ac- 
cumulated profits  the  value  of  the  properties  increased;  but  they 
did  not  increase  the  volume  of  the  capital  stock;  the  case  being 
precisely  like  that  of  the  Chemical  Bank  of  this  city,  whose  capi- 
tal stock,  I understand,  is  about  $300,000,  and  it  is  selling  at 
about  the  rate  of  a million  and  a half  dollars. 


464 


[Senate, 


Q.  Have  you  got  the  figures  and  can  you  give  us  the  amount  of 
the  capital  stock  of  each  of  these  companies  acquired?  A.  I 
think  I can  obtain  that  information,  Mr.  Chairman;  I haven’t  it 
with  me. 

Q.  I would  like  to  have  it  if  you  can  secure  it;  the  date  of  the 
organization  of  each  one  of  these  sub-companies,  together  with 
the  amount  of  capital  stock? 

Q.  Did  the  issue  of  the  common  stock,  or  the  general  stock, 
bear  any  relation  to  the  issue  of  the  preferred  stock?  If  so,  what? 
A.  In  the  report  made  by  the  committee  that  advised  the  pur- 
chase of  the  property  which  I have  enumerated  they  stated  what 
the  amount  of  the  preferred  should  be  and  also  what  the  amount 
of  the  common  should  be. 

Q.  Was  the  common  issued  for  any  specific  class  or  character 
of  property?  A.  The  entire  issue  was  made  in  accordance  with 
the  recommendations  of  the  Simmons  Committee. 

Q.  Do  you  understand  my  question?  Was  the  preferred  stock 
issued  for  any  particular  class  of  property,  and  was  the  common 
stock  issued  for  any  particular  class  of  property  or  any  particular 
kind  or  class;  and  if  so,  which?  A.  In  that  matter  I would  have 
to  refer  you  to  the  committee  that  made  the  report. 

Q.  Have  you  got  a copy  of  the  report  of  that  committee?  A. 
Copy  of  the  report  is  in  the  archives  of  the  company. 

Q.  Will  you  produce  it?  A.  I will  if  the  directors  approve. 

Q.  Is  it  in  your  custody?  A.  It  is  not;  I am  not  the  secretary 
of  the  company;  it  is  in  the  custody  of  Mr.  Samuel  P.  Colt. 

Q.  Who  is  he?  A.  The  President  of  the  Industrial  Trust  Com- 
pany of  Providence,  Rhode  Island. 

Q.  Is  he  here  in  the  city  of  New  York?  A.  He  is  at  the  present 
time  in  Providence. 

Q.  Where  is  the  book  itself  that  shows  the  original  appraise- 
ment of  the  property?  A.  It  is  in  the  company’s  office  in  New 
Brunswick,  New  Jersey,  as  I understand  it. 

Q.  Has  the  company  an  office  in  the  city  of  New  York?  A.  It 
has  an  office  in  New  York  and  in  the  principal  cities  of  the  United 
States. 


No.  40.] 


465 


Q.  Is  the  main  office  of  the  company  in  the  city  of  New  York? 
1A-.  No;  its  main — 

Mr.  Lesow  (interrupting) : I do  not  mean  main  office  in  a legal 
sense;  I mean  in  a business  sense.  A.  The  business  is  very  wide- 
ly distributed;  we  have  no  factories  in  the  State  of  New  York; 
we  have  an  office  at  S8  Eeade  street,  where  we  conduct  consider- 
able business. 

Q.  Are  your  general  accounts  kept  in  the  office  in  Reade  street? 
A.  The  general  accounts  of  the  company  are  kept  in  New  Bruns- 
wick. so  I am  informed., 

Q.  Do  you  keep  an  account  in  the  city  of  New  York  showing 
the  business  being  done,  the  general  accounts  of  your  affiliated 
companies?  A.  I don’t  think  so. 

Q.  Where  do  you  hold  the  meetings  of  the  Board  of  Directors 
of  your  company?  A.  We  hold  them  over  in  New  Jersey;  some- 
times we  hold  them  in  New  Brunswick  and  sometimes  in  the  city 
of  New  York;  at  times  we  hold  them  in  Boston,  Providence  and 
New  Haven;  our  by-laws  provide  that  our  official  meetings  shall 
be  held  in  New  Brunswick  and  in  the  city  of  New  York. 

Q.  I ask  you  as  a matter  of  fact  if  the  proposition  is  not  true 
that  you  do  hold  your  directors  meetings,  as  a rule,  in  the  city  of 
New  York;  arid  that  the  meetings  that  are  held  elsewhere  are  held 
but  very  seldom  in  places  other  than  New  York?  A.  Since  the 
company  was  organized  I would  say  that  a majority  of  the  meet- 
ings of  the  Board  of  Directors  have  been  held  in  the  city  of  New 
York;  but  we  have  held  A very  large  number  of  meetings  outside 
of  New  York  city. 

Q.  Where  was  the  meeting  at  which  the  report  of  the  ap- 
praisers of  the  value  of  these  respective  properties  was  offered? 
A.  In  the  city  of  New  York, 

Q.  Where  was  the  action  taken  which  resulted  in  the  issue  of 
this  stock  by  resolution  of  the  Board  of  Directors?  A.  In  the 
city  of  New  York., 

Q.  Where  was  the  transaction  made  as  a whole  that  resulted 
in  the  transfer  of  the  $22,000,000  of  stock  issued  by  the  United 
States  Rubber  Company  to  these  different  purchased  or  acquired 


30 


466 


[Senate, 


concerns?  A.  The  central  point  was  in  the  city  of  New  York;  most 
of  the  stockholder  receiving  that  stock  were  not  residents  of  the 
State  of  New  York;  as  I have  stated  before,  we  have  no  factory 
in  the  city  of  New  York;  and  most  of  the  stockholders  of  the 
United  States  Rubber  Company  live  in  Pennsylvania,  New  Jer- 
sey, Connecticut,  Rhode  Island  and  Massachusetts;  and  those 
stockholders  received  their  stock  at  their  respective  places  of 
residence;  but  the  central  point  of  business  was  in  the  city  of  New 
York. 

Q.  And  has  continued  to  be  from  the  time  of  the  organization 
of  the  United  States  Rubber  Company  down  to  the  present  day? 
Is  that  a fair  statement?  A.  Not  quite;  we  have  conducted  and 
held  more  meetings  in  New  York  than  any  other  point;  but  large 
meetings  have  been  held  in  Boston,  Providence,  New  Haven  and 
New  Brunswick., 

Q.  Those  were  not  in  the  nature  of  annual  meetings  of  the  sub- 
sidiary companies,  were  they?  A.  No,  sir;  they  were  not. 

Q.  When  the  Board  of  Directors  of  the  United  States  Rubber 
Company  met  at  these  other  points  it  was  at  times  when  the  sub- 
sidiary companies  were  holding  their  annual  meetings?  A.  No, 
sir. 

Q.  Do  you  remember  any  time  when  that  was  not  the  case? 
A.  I can  remember  twenty  times  when  that  was  not  the  case; 
and  probably  many  more;  in  fact,  there  was  no  coincidence  be- 
tween the  meetings  of  the  directors  and  the  meetings  of  the  sub- 
sidiary companies. 

Q.  Now,  Mr.  Flint,  if  all  the  transactions  that  resulted  in  the 
issue  of  this  stock  were  had  in  the  city  of  New  York,  why  is  it 
that  the  minutes  which  those  transactions  have  been  removed 
from  the  State  of  New  York?  A.  We  have  understood  that  un- 
der the  New  Jersey  law  that  we  should  keep  our  records  in  New 
Jersey;  and  as  this  is  a New  Jersey  corporation,  and  as  the 
original  business  of  the  corporation  was  in  New  Jersey,  it  is 
unlike  many  organizations  which  have  only  nominal  property; 
but  in  this  case  we  have  our  actual  business  in  the  State  of  New 
Jersey,  in  New  Brunswick,  and  we  have  been  advised  that  our 
records  should  be  kept  there. 


No.  40.] 


407 


Q.  Does  that  apply  to  more  than  the  minute  book  and  the  stock 
certificate  book,  under  the  law  of  the  State  of  New  Jersey?  A. 
I am  not  familiar  with  the  law;  but  in  a general  way  I under- 
stand that  we  should  keep  our  records  in  New  Brunswick,  N.  J. 

Q.  Does  the  law  not  simply  require  that  upon  demand  the  re- 
cord book  of  the  company  shall  be  produced  in  the  State  of  New 
Jersey;  do  you  know  of  any  affirmative  requirement  in  the  New 
Jersey  law  that  compels  you  to  keep  any  of  the  books  mentioned 
in  the  State  of  New  Jersey,  except  upon  demand?  A.  I have 
understood  that  it  was  the  spirit  of  the  law  that  we  should  keep 
the  records  there;  we  have  been  exceedingly  careful  to  comply 
with  the  conditions  of  the  statute  under  which  we  were  organ- 
ized. 

Q.  Have  you  any  objection  to  this  committee  becoming  pos- 
sessed of  the  general  facts  upon  which  this  appraisal  committee 
estimated  the  value  of  the  companies  that  were  taken  by 
the  United  States  Rubber  Company?  A.  I have  no  objection 
whatsoever. 

Q.  Or  of  the  form  in  which  the  issue  of  certificates  was  had,  as 
to  the  ratio  of  value  and  the  particular  class  of  property?  A.  I 
have  no  objection;  that  data  is  very  voluminous;  that  data  I 
think  can  be  obtained;  it  covers,  perhaps,  about  three  thousand 
pages  of  detail  and  estimates;  but  there  is  no  reason  that  I can 
see  why  there  should  be  any  objection  to  giving  the  committee 
that  information. 

Q.  Is  it  true  that  common  stock  of  the  company  amounting  to 
about  $20,160,000  was  issued  exclusively  for  what  is  called  “good 
will'’?  A.  That  matter  can  only  be  answered  by  the  committee 
recommending  the  purchase. 

Q.  Do  you  remember  whether  it  was  a fact?  A.  I don’t  re- 
member; I was  not  a member  of  the  board  or  of  the  committee; 
I was  not  present  at  their  deliberations. 

Q.  Do  you  remember  what  class  of  property  the  preferred  stock 
was  issued  for?  A.  I answer  the  same  way;  I was  not  a member 
of  the  committee;  as  I have  stated,  this  Simmons  committee  went 
into  the  matter  very  fully;  they  had  experts. 


4GS 


[Senate, 


Q.  We  understand  that  very  well ; have  you  not  acquired  prop- 
erty since  the  acquisition  of  the  four  companies  in  1889?  A.  We 
have  acquired  stock  in  the  Goodyear  Rubber  Company,  of  Nan- 
tucket. 

Q.  Glove  Company,  India  Rubber  Glove  Company?  A.  Yes, sir. 

Q.  What  else?  A.  I don’t  remember. 

Q.  When  did  you  acquire  the  stock  in  the  glove  company? 
A.  It  was  obtained  at  different  times. 

Q.  When  did  you  first  acquire  stock  in  that  company?  A.  I 
don’t  remember  the  date;  it  may  have  been  acquired  in  1893  or 
1894;  some  may  have  been  bought  in  1893  and  1S94. 

Q.  Did  you  acquire  control  or  all  the  stock  in  1894?  A.  I 
think  we  acquired  all  of  it  in  1894;  that  is  the  balance  of  it. 

Q.  What  portion  of  the  business  did  the  Goodyear  Glove  Com- 
pany do?  A.  Perhaps  five  per  cent. 

Q.  So,  that  until  the  first  acquisitions  you  controlled  fifty  per 
cent,  of  the  business;  under  the  second,  twenty  per  cent.,  and  un- 
der the  third  five  per  cent.,  making  a total  of  seventy-five  per  cent, 
of  the  business;  do  you  now  mean  to  say  that  it  has  been  re- 
duced to  sixty-five  per  cent.?  A.  In  figuring  the  percentage,  you 
must  take  into  consideration  that  some  of  those  concerns  manu- 
facture other  articles  than  rubber  boots  and  shoes;  so,  that  in 
thinking  of  this  output  I have  had  in  mind  just  roughly  the  total 
output;  in  addition  to  shoes,  we  make  clothing,  mechanical  goods 
and  bicycle  tires. 

Q.  Did  the  Goodyear  Rubber  Company  manufacture  shoes  as 
well  as  gloves?  A.  They  manufacture  a great  variety  of  goods; 
rubber  sundries. 

Q.  Didn’t  they  manufacture  the  same  kind  of  rubber  goods  that 
you  were  manufacturing  previously  through  the  other  concerns 
that  you  had  acquired?  A.  No,  sir;  that  is  to  say,  they  were  man- 
ufacturing the  same  goods;  but  they  manufactured  an  average 
line  of  goods  entirely  different  from  the  goods  manufactured  by 
any  other  concerns  through  the  United  States  Rubber  Company. 

Q.  Was  it  because  of  these  other  grades  of  articles  manufac- 
tured that  you  acquired  that  company?  A.  That  was  one  reason. 


N o.  40.] 


469 


Q.  What  was  the  other?  A.  The  other  was  that  the  company 
was  doing  a good  business;  it  had  an  excellent  reputation;  and 
we  thought  it  would  be  in  the  interest  of  the  six  thousand  stock- 
holders to  acquire  this  property,  the  stock  of  that  corporation. 

Q.  You  wanted  its  business?  A.  We  wanted  its  manufactur- 
ing facilities. 

Q.  You  are  on  record  here  as  testifying  that  you  had  50  per 
cent,  of  your  facilities  that  you  could  not  use;  and,  therefore,  you 
didn't  want  the  facilities  of  the  Goodyear  Rubber  Company;  it 
must  have  been  something  else  that  you  wanted?  A.  In  this  busi- 
ness, Mr.  Chairman,  there  are  certain  concerns  that  have  special 
points  of  advantage  owing  to  the  complex  character  of  the  busi- 
ness; we  do  not  realize  the  points  of  business  as  quickly  as  con- 
cerns manufacturing  one  product,  like  sugar,  for  instance;  but 
each  concern  has  some  point  of  advantage;  that  is  true  of  the 
Goodyear  India  Rubber  Company;  that  company  had  points  of 
advantage  that  none  of  the  others  had. 

Q.  You  said  that  that  was  one  of  the  reasons,  but  that  there 
were  others;  I desire  to  know  the  other  I’easons  that  operated? 
A.  Advantages  in  connection  with  the  processes  of  manufacture; 
they  had  certain  advantages  in  that  regard;  also  the  value  of 
trade-marks  and  the  value  of  patents  and  the  value  of  organiza- 
tion. 

Q.  What  do  you  mean  by  the  value  of  organization?  A.  The 
trained  persons  that  conduct  certain  branches  of  the  business; 
certain  branches  of  the  rubber  trade. 

Q.  Was  not  the  primary  object  in  securing  the  business  of  the 
Goodyear  Rubber  Company  the  removing  to  that  extent  the  com- 
petition that  you  were  then  having  to  meet?  A.  No,  sir. 

Q.  Didn’t  that  enter  into  consideration  at  all?  A.  Undoubt- 
edly; the  value  of  the  business;  and  the  fact  that  the  Goodyear 
Rubber  Company  had  a good  business  entered  into  the  value  of 
the  stock  which  we  purchased. 

Q.  I am  asking  you  directly  the  question  as  to  whether  the  com- 
petition in  the  market  of  the  Goodyear  Rubber  Glove  Company 
was  not  one  of  the  elements  that  induced  you  to  purchase  that 
factory?  That  admits  of  a categorical  answer?  A.  I think — 


470 


[Senate, 


Mr.  Lexow  interrupting:  Was  that  one  of  the  elements  that 
entered  into  the  consideration?  A.  I don’t  think  so;  I desire  to 
explain  that  the  Goodyear  Rubber  Company  had  a good  business; 
a profitable  business;  that  it  had  advantages  in  manufacture  and 
had  valuable  patents  and  trade-marks. 

Q.  They  were  competing  against  you  in  the  open  market,  were 
they  not?  A.  They  were  selling  their  goods;  as  I understand — 

Mr.  Lexow  interrupting:  You  know  what  I mean;  were  they 
competing  or  were  they  not?  A.  They  were  in  the  same  market; 
yes,  sir. 

Q.  And  competing  in  price  against  you?  A.  Yes,  sir;  they 
were  competing. 

Q.  That  was  one  of  the  elements  that  entered  into  the  arrange- 
ment that  you  made;  that  you  wanted  to  get  rid  of  that  open 
market  competition  which  you  were  having  to  face;  is  that  true? 
A.  That  may  be  one;  allowing  for  the  fact  that  that  glove  com- 
pany was  selling  its  goods  for  higher  prices  than  we  were  selling 
ours;  but  still  they  made  very  superior  goods  and  we  wanted  that 
business. 

Q.  You  wanted  to  get  rid  of  the  competition  that  enabled  them 
to  secure  a higher  price  for  their  product  than  you  were  receiving 
for  yours?  A.  We  wanted  to  get  the  benefit  of  their  facilities; 
in  purchasing  that  stock  we  were  purchasing  a profitable  busi- 
ness; they  were  in  the  market  selling  goods,  but  they  were  not  in- 
terfering with  our  making  profits;  there  was  no  interference  on 
the  part  of  that  company  as  against  our  trade;  although  there 
was  competition  in  a certain  sense;  they  were  parties  to  it. 

Q.  If  there  was  competition  there  was  necessarily  interference? 
A.  Well,  that  is  a matter — 

Mr.  Lexow  (interrupting):  There  was?  A.  You  could  answer 
that  question  as  well  as  I. 

Q.  I am  not  in  the  business?  A.  Well,  I am  not;  I am  an  ex- 
port commission  merchant,  and  have  an  investment  in  the  United 
States  Rubber  Company, 

Q.  You  are  the  treasurer  of  the  company?  A.  Yes,  sir. 

Q.  Always  taken  an  active  part  in  its  affairs?  A.  I have  taken 


No.  40.] 


471 


an  active  part  in  connection  with  the  financial  affairs;  I have 
never  sold  any  goods;  I have  never  seen  a jobber. 

Q.  The  treasurer  does  not  sell  goods;  we  understand  that. 

By  Mr.  Mazet: 

Q.  You  attend  the  meetings  of  the  directors?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  Are  these  questions  not  discussed  there?  A.  Yes,  sir. 

Q.  Questions  of  properties?  A.  Yes,  sir. 

Q.  Questions  of  competition?  A.  Yes,  sir. 

Q.  Wasn’t  the  question  of  competition  between  your  company 
and  the  Goodyear  Rubber  Glove  Company  one  of  the  reasons  that 
actuated  the  board  of  directors  in  making  that  stock  transac- 
tion? A.  I don't  think  that  idea  was  ever  expressed  in  the  meet- 
ings; the  purchase  of  the  glove  company  was  considered  on  its 
earning  capacity;  we  thought  it  was  good  business  to  buy  that 
property  and  we  thought  we  made  a very  good  deal  when  we  pur- 
chased it. 

Q.  When  you  purchased  the  other  companies  that  represented 
20  per  cent,  of  the  producing  capacity  did  the  question  of  compe- 
tition as  between  you  and  them  enter  into  the  transaction?  A. 
In  recommending  the  purchase  of  that  stock  the  committee  may 
have  taken  into  consideration  that  question;  I don’t  know  what 
they— ; 

Mr.  Lexow  (interrupting):  Didn’t  you  in  making  that  trans- 
action seek  to  get  the  business  then  competing  for  the  purpose 
of  introducing  economies  in  your  own  plants  and  thereby  get  rid 
of  that  free  competition  that  existed  against  you?  A.  Our  pri- 
mary object  was  to  securem  profitable  business,  and  we  thought 
that  in  time  the  character  of  the  business  would  progress  and 
that  we  would  be  able  to  secure  economies  and  advantages  by  ac- 
quiring these  properties. 

Q.  In  the  two  directions  mentioned  by  me  in  my  questions? 
A.  I suppose  that  the  committee  considered  the  matter;  certainly 
they  had  data  enough  and  they  took  time  enough  fnom  every 

point  of  view. 


472 


[Senate, 


Q.  Whether  that  point  was  the  one  that  entered  into  this  gen- 
eral system  of  the  acquisition  of  property,  you  don’t  know?  A. 
I was  not  a member  of  the  committee;  I was  not  a director  in  the 
United  States  Rubber  Company. 

Q.  Were  you  not  a director  of  the  company  at  the  time  of  the 
acquisition  of  the  Goodyear  Glove  Company,  which  represented 
20  per  cent,  of  the  output  in  1S93?  A.  I was  not  a director  of  the 
company  in  1893. 

Q.  And  were  you  not  treasurer  of  the  company?  A.  I was. 

Q.  And  had  control  of  the  stock  books  and  the  certificate  books 
of  the  organization?  A.  Yes,  sir;  nominally. 

Q.  So  that  the  transaction  was  practically  made  through  your 
instrumentality?  A.  No. 

Q.  Through  the  issuance  of  the  stock?  A.  I was  not  a member 
of  the  committee  that  arranged  that  business;  I don’t  think  that 
I signed  any  certificates. 

Q.  Did  you  as  treasurer  of  the  company  consent  to  the  issuance 
of  about  $12,000,000  of  stock  without  knowing  the  business  propo- 
sition upon  which  that  transaction  was  based?  A.  In  a general 
way  I had  a certain  general  knowledge;  but  I carried  out  the  or- 
ders of  the  board  of  directors;  the  board  of  directors  gave  in- 
structions to  me  as  an  officer  of  the  company;  I do  not  think  that 
I personally  gave  it  attention;  the  assistant  treasurer  of  the  com- 
pany carried  out  the  order. 

Q.  Is  it  not  a fact  that  you,  while  not  in  name,  are  in  fact  the 
head  of  this  United  States  Rubber  Company?  A.  I cannot  claim 
that  distinction. 

Q.  Is  not  that  understood?  A.  Some  people  may  have  that 
idea. 

Q.  Isn’t  it  generally  understood?  A.  I cannot  say. 

Q.  Why,  don't  you  care  to  take  that  flattering  unction  on  your 
soul?  A.  I shouldn’t  like  to  admit  it. 

Q.  You  know  all  about  the  steps  that  led  up  to  the  acqui- 
sition of  these  properties?  A.  In  a general  way. 

Q.  Do  you  mean  to  say  here  under  oath  that  the  element  of 
disposing  of  competition  was  not  the  reason  for  the  purchase  of 
that  property?  A.  I cannot  admit  that  it  was. 


No.  40.] 


473 


Q.  You  don't  deny  that  it  was?  A.  It  may  have  been  an  ele- 
ment. 

Q.  How  many  factories  have  been  closed  since  the  acquisition? 
A.  In  answering  that  question,  do  I understand  that  you  mean 
practically  a permanent  closing? 

Q.  How  many  are  closed  now?  A.  I don’t  know;  we  close  fac- 
tories at  certain  times  of  the  year  for  the  purpose  of  repairs ; but 
understanding  your  question  as  I have  stated,  I will  calculate 
three  factories. 

Q.  Are  any  of  those  permanently  closed?  A.  They  are  all 
permanently  closed. 

Q.  Which  are  they?  A.  The  Colchester  Rubber  Company,  the 
Franklin  plant,  formerly  owned  by  the  Boston  Rubber  Company, 
and  the  Para  Rubber  Company. 

Mr.  Lexow:  The  Board  of  Aldermen  want  the  chamber  and  I 
will  have  to  suspend;  but  I will  ask  you  another  question: 

Q.  What  percentage  of  the  business  did  those  companies  do 
before  being  closed  up?  A.  About  one-fifteenth. 

Q.  Of  the  whole?  A.  Of  the  whole,  at  one  time. 

Q.  Not  the  whole  business;  I am  speaking  of  the  whole  rubber 
business  of  the  United  States  Rubber  Company?  A.  At  one  time 
the  aggregate  business  of  the  three  plants  must  have  amounted 
to  one-fifteenth. 

Q.  So  that  you  have  closed  up  since  this  combination  went  in- 
to effect  25  per  cent,  of  the  total  capacity  that  you  have  acquired? 
A.  One-fifteenth  of  the  wThole  wouldn’t  be  that  percentage. 

Q.  Would  it  be  about  25  per  cent,  of  65  per  cent.?  A.  No. 

Q.  What  would  it  be?  A.  One-fifteenth  of  the  whole;  that 
would  be  in  round  figures — well,  I will  figure  it  out.  (Witness 
figures). 

Q.  I think  that  you  will  find  that  I am  pretty  close  to  the  mark 
— there  may  be  a fractional  difference?  A.  That  would  be  one- 
half  per  cent.;  one-fifteenth  of  the  whole;  it  would  be  one  and  a 
half  per  cent,  of  the  whole. 

Q.  One-fifteenth  of  the  whole  is  fifteen  per  cent,  of  the  whole? 
A.  One-seventh  of  the  whole;  to  answer  your  question  without 


474  [Senate, 

going  into  mental  arithmetic  I should  say  that  they  did  a busi- 
ness at  one  time  of,  say  five  per  cent. 

Q.  Of  what?  A.  Of  the  whole. 

Q.  But  you  say  it  was  fifteen  per  cent,  of  the  whole?  A. 
I said  one-fifteenth  per  cent.,  not  fifteen  per  cent. 

Q.  One-fifteenth;  instead  of  seven  per  cent,  you  reduce  that  to 
five  per  cent,  of  the  whole?  A.  I do  it  for  the  reason  that  in 
considering  the  business  of  the  Para  Rubber  Company,  I have  in 
mind  that  that  company  had  just  lost  in  attempting  to  establish 
a new  trade-mark  about  three-quarters  of  its  capital  stock;  prior 
to  the  organization  of  the  United  States  Rubber  Company  it  was 
doing  little  or  no  business. 

Mr.  Lexow:  Will  you  please  report  here  to-morrow  morning  at 
ten  o’clock? 

Q.  Does  the  report  made  by  the  appraisers  cover  all  the  finan- 
cial features  of  that  transaction,  the  value  of  the  property,  its 
original  stock,  and  the  amount  of  stock  to  be  issued  in  exchange 
for  it?  A.  I think  it  practically  covers  everything  in  detail. 

Q.  Then,  if  you  have  it,  we  would  like  to  have  all  of  the  ap- 
praisers’ details?  A.  It  was  hardly  an  appraisers’  report;  the 
appraisers  made  a detailed  examination,  and  then  the  Simmons 
committee  with  that  data  in  view  then  made  its  report;  and  that 
report  embodies  the  entire  financial  operations. 

Q.  We  would  like  to  have  that? 


EIGHTH  PUBLIC  HEARING.  MORNING  SESSION,  WED- 
NESDAY, FEBRUARY  17,  1897. 

Mr.  Lexow7:  Is  Mr.  Flint  in  court?  If  he  is  in  court  at  present 
the  committee  will  come  to  order. 

Those  subpoenaed  in  the  matter  of  the  Wall  Paper  Company 
need  not  attend  further  to-day;  their  matter  will  be  heard  to-mor- 
row— the  witnesses  subpoenaed  need  not  attend  further  to-day. 


No.  40.] 


475 


Charles  R.  Flint,  recalled: 

By  Mr.  Lexow: 

Q.  Mr.  Flint,  have  you  come  to  any  conclusion  with  reference 
to  the  production  of  the  documents  inquired  of  yesterday?  A. 
Mr.  Chairman,  I produce  herewith  the  certificates  of  organiza- 
tion of  the  United  States  Rubber  Company;  the  information  in 
reference  to  the  capitalization  of  the  different  companies  referred 
to  yesterday,  or  the  companies  purchased  under  the  recommenda- 
tion of  the  Simmons  committee  were  not  in  the  archives  of  the 
United  States  Rubber  Company,  and  I was  obliged  to  telephone, 
to  send  to  the  different  companies  in  order  to  obtain  the  informa- 
tion; I think  it  is  accurate,  Mr.  Chairman,  perhaps  with  one  or 
two  small  items. 

(Witness  produces  paper.) 

Mr.  Lexow:  Will  the  stenographer  mark  this  “Exhibit  A”  in 
this  case? 

Q.  Now  this  is  in  answer  to  the  request  to  produce  information 
relative  to  the  amount  of  capitalization  of  the  original  companies 
that  went  into  the  so-called  rubber  combination,  the  United 
States  Rubber  Company?  A.  Yes,  sir;  and  you  also  requested 
me  to  ascertain  the  date  of  their  organizations. 

Q.  Yes?  A.  The  E.  L.  Candee  & Co.  was  organized  in  1842 — 

Q.  Where?  A.  New  Haven,  Connecticut. 

Q.  Their  capital?  A.  §600,000. 

Q.  Now,  the  next  one?  A.  The  Goodyear  Metallic  Rubber 
Shoe  Company  was  organized  in  1843. 

Q.  Yv'here?  A.  Of  Naugatuck. 

Q.  Capital?  A.  One  million. 

Q.  The  next  one?  A.  The  Meyer  Rubber  Company  was  organ- 
ized in  1844;  of  New  Brunswick,  New  Jersey. 

Q.  Capital?  A.  §200,000. 

Q.  The  next  one?  A.  Mr.  Chairman,  if  you  will  permit  me  to 
ask  Mr.  Martin  when  the  New  Jersey  Company  was  organized? 

Mr.  Lexow:  Certainly;  does  he  know? 

Mr.  Flint:  I infer  so.  Mr.  Martin,  what  year  was  the  New  Jer- 
sey Rubber  Company  organized? 

Mr.  Martin : 1877. 


476  [Senate, 

By  Mr.  Lexow : 

Q.  Which  company  is  that?  A.  The  New  Jersey  Rubber  Com- 
pany, of  New  Brunswick,  New  Jersey. 

Q.  1877?  A.  Organized  in  1877;  capital  $200,000. 

Q.  The  next  one?  A.  The  New  Brunswick  Rubber  Company, 
of  New  Brunswick,  New  Jersey;  organized  1849;  capital,  $300,000. 

Q.  The  next  one?  A.  The  Woonsocket  Rubber  Company — 

Q.  Well,  leaving  out  all  that  went  into  the  first  combination — 
won't  you  get  at  those  you  have  left  out;  the  American  Rubber 
Company?  A.  Oh,  yes;  the  American  Rubber  Company  was  or- 
ganized 1877 ; of  Cambridgeport,  Mass. 

Q.  Capital?  A.  One  million;  the  Boston  Rubber  Company  of 
Boston  and  Chelsea,  Mass.,  organized  1888;  capita!  $300,000. 

Q.  That  was  Chelsea,  did  you  say?  A.  It  was  a factory  in 
Chelsea;  yes  sir. 

Q.  Lycoming?  A.  I — (to  Mr.  Martin:  Do  you  remember  the 
capital  of  the  Lycoming?) 

Mr.  Chairman,  we  were  unable  to  get  the  Lycoming  Rubber 
Company  last  night,  but  the  company  was  organized,  I think, 
about  ten  years  ago., 

Q.  1886?  A.  I don’t  remember  about  that — 

Q.  About  that?  A.  About  that;  and  the  capital,  I think,  is 
$400,000. 

Q.  Have  you  any  distinct  knowledge  as  to  the  amount  of  the 
capital?  A.  No;  I don’t  know — 

Q.  Organized  in  the  State  of  Pennsylvania?  A.  In  the  State 
of  Pennsylvania. 

Q.  Are  those  all  the  companies  that  entered  into  the  original 
combination,  representing  an  issue  of  $25,000,000  of  preferred  and 
common  stock?  A.  There  was  the  Rubber  Manufacturing  Sell- 
ers’ Company,  organized  in  1891;  capital  $300,000. 

Q.  No;  that  was  after  the  issuance  of  the  first  two  millions  and 
the  following  twenty-two  millions  of  stock;  these  companies  that 
you  have  now  mentioned  include  all  the  companies  that  partook 
of  those  first  two  issues?  A.  Mr.  Chairman,  in  the  issue  which 
you  have  referred  to  there  was  included  1,500  and  odd  shares  of 
the  stock  of  the  Rubber  Manufacturing  Sellers’  Company — 


So.  40.] 


477 


Q.  Ob,  of  the  first  purchase?  A.  Of  the  purchase  under  the 
Simmonds  Committee  recommendation. 

Q.  You  state  that  the  Rubber  Manufacturing — A.  The  Rub- 
ber Manufacturing  Sellers’  Company  of  Connecticut. 

Q.  How  many  shares?  A.  Fifteen  hundred  and  odd. 

Q.  Of  what  par?  A.  $100. 

Q.  One  million  five  hundred  thousand  dollars — A.  Total  cap- 
ital $300,000. 

Q.  Then  it  could  not  have  been  par  at  a hundred?  A.  This  did 
not  include  all  the  stock. 

Q.  That  was  $150,000?  A.  In  round  figures. 

Q.  Now  for  all  the  companies  that  you  have  mentioned,  leaving 
out  those  acquired  in  1S93,  how  much  of  the  capital  stock  of  the 
United  States  Rubber  Company  was  issued?  A.  In  round  fig- 
ures $26,000,000.i 

Q.  How  much  of  that  stock  was  issued  in  purchase  of  the  Bos- 
ton Rubber  Company?  A.  The  total  amount  of  stock  was  under 
the  recommendation  of  the  Simmonds  Committee,  was  issued  for 
all  of  the  properties;  there  was  no  subdivision;  the  committee  re- 
ported or  recommended  the  purchase  of  all  the  properties  men- 
tioned for  a stated  amount  of  stock  and  all  of  the  properties  were 
purchased  for  a round  amount  of  stock  under  that  recommenda- 
tion. 

Q.  Do  you  mean  to  be  understood  as  stating  that  a syndicate 
had  control  of  all  those  properties  prior  to  the  purchase  and  re- 
ceived a lump  amount  of  stock?  A.  Not  a syndicate,  but  a bank- 
ing house  was  in  a position  to  offer  to  the  United  States  Rubber 
Company  all  of  the  properties  referred  to. 

Q.  In  a lump?  A.  In  lump. 

Q.  But  in  reaching  the  amount  of  capital  stock  of  the  Rubber 
Company  to  be  distributed  over  the  whole  there  must  have  been 
some  appraisement  or  calculation  as  to  the  value  of  each  of  the 
ingredients;  can  you  state  how  much  value  was  placed  upon  the 
property  of  the  Boston  Rubber  Company?  A.  I cannot. 

Q.  Who  can?  A.  That  work  was  done  by  the  Simmonds  com- 
mittee; it  was  a very  laborious  work;  as  I stated  yesterday,  there 
were  some  three  thousand  pages  of  data  obtained  by  experts  and 


478 


[Senate, 


others,  and  it  was  on  the  basis  of  all  these  detailed  reports  and 
examinations  that  the  Simmons  committee  recommended  the  | 
purchase  of  all  these  properties  at  the  figure  mentioned. 

By  Mr.  Warner : 

Q.  Haven’t  you  got  that  data  easily  accessible  whereby  you  can 
tell  how  much  capital  stock  was  issued  to  each  of  these  compan- 
ies? A.  I have  not;  the  fact  is  that  that  data  was  never  in  my 
possession,  the  possession  of  the  parties  making — 

Mr.  Lexow:  All  the  witnesses  in  the  matter  of  the  Soda  syndi- 
cate so-called  are  dismissed  now,  to  return  at  two  o’clock  this 
afternoon. 

Witness  (continuing) : All  that  data  has  never  been  in  my  pos- 
session; I have  never  had  access  to  it;  the  position  of  these  par- 
ties was  one  where  they  didn’t  deem  that  it  was  proper  that  I 
should  have  access  to  that  information;  and  those  detailed  re- 
ports and  that  information  has  not  and  never  has  been  in  the 
possession  of  the  United  States  Rubber  Company,  has  never  been 
in  my  possession,  and  I have  not  any  access  to  it. 

By  Mr.  Warner: 

Q.  Why  would  it  be  impossible  that  you  should  have  access 
to  it?  A.  From  the  fact  that  they  were  acting  as  independent 
parties,  independent  purchasesrs,  and  they  thought  that  it  was, 
that  they  should  have  that  data  for  their  own  use  in  coming  to  the 
conclusions  which  I have  stated. 

Q.  Your  company  of  which  you  were  the  treasurer  issued  this 
stock  to  them;  now  do  you  mean  to  say  that  you  have  not  in  easily 
accessible  form  the  data  whereby  you  can  tell  how  much  stock 
was  issued  to  these  separate  companies?  A.  At  the  time  that 
this  transaction  was  made  I was  not  the  treasurer  of  the  com- 
pany— I was  not  a member  of  the  committee;  I was  not  a director 
of  the  company. 

By  Mr.  Lexow: 

Q.  You  have  been  a director  of  the  company  ever  since,  have 
you  not?  A.  I can  give — I was  elected  afterwards,  but  as  to  how 


No.  40.] 


470 


long  after  that  period  I don’t  remember;  I can  get  that  informa- 
tion. 

Q.  Can't  you  give  that — A.  It  was  sometime  after — 

Q.  Can’t  you  give  us  this  information?  Were  you  not  the  prin- 
cipal actor  in  producing  the  result,  to  wit,  this  combination?  A. 
I would  not  feel  that  it  would  be  proper  for  me  to  claim  that  dis- 
tinction. 

Q.  Waiving  all  questions  of  modesty,  Mr.  Flint,  were  you  not, 
as  a matter  of  fact,  the  leader  in  the  movement  with  reference  to 
this  combination?  A.  Others  might  dispute  with  me  that  posi- 
tion.L 

Q.  But  you  don’t  dispute  it,  do  you?  A.  I would  not  like  to 
say  that  I was,  but  I took  an  active  part,  Mr.  Chairman. 

Q.  From  the  beginning?  A.  I took  an  active  part,  Mr.  Chair- 
man, in  the  work  of  organization.. 

Q.  Isn’t  it  a fact  that  it  was  through  your  instrumentality  that 
the  United  States  Rubber  Company  was  organized?  A.  Well,  I 
should  be  very  glad  if  I could  answer  that  question  in  the  affirma- 
tive; but  I would  not  want  to  take  the  position  that  I did  that 
work. 

Q.  Were  you  present?  A.  I was;  yes,  I was  in  New  York. 

Q.  Were  you  present  at  the  time  of  the  organization  of  the 
United  States  Rubber  Company?  A.  At  what  time,  Mr.  Chair- 
man? 

Q.  Time  of  the  organization?  A.  Well,  I was  in  New  York, 
and  I was  having  to  do  with  the  matter;  I was  informed;  I kept 
informed  in  regard  to  it. 

Q.  Were  you  not  in  touch — A.  I was  interested;  I expected 
to  be  interested  in  it. 

Q.  Were  you  not  in  touch  with  counsel  who  were  drawing  up 
the  papers?  A.  I was. 

Q.  Did  you  not,  with  them,  follow  every  movement  that  was 
made  in  the  direction  of  organization  both  before  the  organiza- 
tion and  afterwards?  A.  Not  every  movement,  Mr.  Chairman. 

Q.  Leaving  out  unimportant  details?  A.  Oh,  in  general,  I was 
informed  as  to  the  organization. 


[Senate, 


^80 

Q.  Expected  to  take  an  interest  in  it?  A.  I expected  to. 

Q.  Expected  to  become  a director  in  and  the  treasurer  of  it? 
A.  No. 

Q.  Leaving  out  treasurer,  then ; expected  to  become  a director 
in  it?  A.  I hoped  to. 

Q.  Expected  to,  did  you  not?  A.  I think  1 had  reason  for  ex- 
pecting that. 

Q.  Wasn’t  that  part  of  the  original  plan?  A.  No;  but  I ex- 
pected to  become  a director. 

Q.  Were  the  conferences  that  led  up  to  the  organization  of  the 
United  States  Rubber  Company  not  held  in  your  office?  A.  No. 

Q.  Where  were  they  held?  A.  They  were  held  at;  the  work 
was  done  in  the  office  of  Lowery,  Stone  & Auerbach — of  organi- 
zation— 

Q.  Your  counsel?  A.  No. 

Q.  Acting  for  you?  A.  They  never  have  acted  for  me  in  any 
capacity;  I never  had  any  relations  with  the  firm. 

Q.  But  you  met  at  their  office  in  connection  with  the  organiza- 
tion? A.  I did;  I was  in  their  office — 

Q.  Frequently?  A.  Frequently. 

Q.  During  the  time  immediately  preceding  and  subsequent  to 
organization?  A.  Oh,  yes. 

Q.  Were  you  active  in  the  appointment  of  the  committee  on 
appraisal  whose  report  was  made?  A.  No;  that  committee  was 
appointed  by  the  original  directors;  I saw  some  of  the  parties, 
but  the  committee  was  appointed  by  the  then  directors  of  the 
United  States  Rubber  Company. 

Q.  Friends  of  yours?  A.  Some  of  them;  some  of  them  not; 
some  of  them  unfriendly. 

Q.  You  kept  yourself  informed  as  to  what  was  being  done? 
A.  in  a general  way, as  far  as  I could,  but  I didnothaveaccess,and 
the  parties  making  up  this  report  did  not  give  me  the  data  to 
which  I have  referred. 

Q.  Was  the  capital  stock  of  the  company  that  was  issued  in 
payment  of  the  properties  mentioned,  issued  by  you  as  treasurer 
and  secretary  of  the  company?  A I never  was  secretary. 


No.  40.] 


481 


Q.  Or  treasurer  of  the  company?  A.  I think  not;  I don’t 
think  I was  treasurer,  Mr.  Chairman,  at  the  time;  in  fact,  I am 
quite  well  satisfied  that  I was  not. 

Q.  Don't  you  remember  whether  you  signed  certificates 
amounting  to  twenty-five  millions  of  common  and  preferred  capi- 
tal stock?  A.  I don’t  remember  that  I did. 

Q.  Do  you  remember  that  you  did  not?  A.  I am  satisfied 
that  I did  not. 

Q.  Who  was  the  treasurer  before  you?  A.  Can  I ask  my  as- 
sociates? 

Q.  If  that  wmuld  give  you  any  information  or  refresh  your  re- 
collection. (Witness  goes  to  side  of  room  and  talks  with  some- 
body). A.  John  P.  Townsend,  then  president  of  the  Knicker- 
bocker Trust  Company. 

Q.  What  relation  did  he  bear  to  you?  A.  He  was  the  presi- 
dent of  the  Knickerbocker  Trust  Company. 

By  Mr.  Mazet: 

Q.  He  was  the  treasurer  of  this  company?  A.  He  was  the 
treasurer  of  this  company. 

By  Mr.  Lexow: 

Q.  As  a temporary  or  permanent  appointment?  A.  That  de- 
pended on  the  Board  of  Directors;  as  I stated,  I was  elected 
treasurer  afterwards;  I could  not  give  the  exact  date,  but  I think 
it  was  in  the  fall  of  1892. 

By  Mr.  Mazet: 

Q.  Soon  after  the  organization  of  the  company?  A.  Not  long 
after. 

By  Mr.  Lexow: 

Q.  This  issue  of  stock  occurred  in  July,  1892? 

Witness:  I want  to  correct  that  statement  which  I have  just 
made  to  a member  of  the  committee. 

31 


482 


[Senate, 


What  was  the  date  of  the  organization;  you  have  it  there? 

Mr.  Bedell:  The  acknowledgment  or  verification;  29th  day  of 
March,  1892. 

Witness:  It  was  some  time  after  the  organization  of  the  com- 
pany that  I was  elected  treasurer;  perhaps,  say  six  months  after 
the  organization  of  the  company. 

By  Mr.  Lexow: 

Q.  This  stock  was  issued  in  June  or  July,  1892,  was  it  not? 
A.  I think  not. 

Q.  When  was  it  issued?  A.  It  was  issued  in  the  fall  of  1892; 
perhaps,  along  the  month — in  early  September. 

Q.  Just  prior  then  to  your  election  as  treasurer?  A.  I don’t 
remember  the  exact  date,  but  I was  elected  treasurer  shortly 
after. 

Q.  After  the  issue  of  the  stock?  A.  After  the  issue  of  the 
stock. 

Q.  Was  it  because  of  the  issue  of  that  stock  and  the  acquisi- 
tion of  those  properties  that  you  were  elected  treasurer  of  the 
company?  A.  No;  I don’t  think  that  that  had  any  special  bear- 
ing on  the  minds  of  the  directors  in  giving  me  that  distinction. 

Q.  Why  was  it,  immediately  after  the  issue  of  the  stock  of  the 
company,  amounting  to  twenty-five  or  twenty-six  millions  of  dol- 
lars, that  the  President  of  the  Knickerbocker  Trust  Company 
ceased  to  be  treasurer  of  your  company  and  you  commenced  to  be 
treasurer?  A.  I infer,  although  not  knowing  the  views  of  the 
directors  in  the  matter  in  detail,  I infer  that  they  considered  that 
I perhaps  had  had  more  experience  in  some  branches  of  the  busi- 
ness. 

Q.  Were  you  in  the  importing  rubber  line  at  the  time?  A.  I 
have  been  since  1878. 

Q.  Do  you  mean  to  be  understood  here  as  saying  that  you  as- 
sumed the  duties  of  treasurer  of  that  company  immediately  after 
the  issuing  of  twenty-five  or  twenty-six  millions  of  dollars  of  its 
capital  stock  without  inquiring  into  the  legality  or  validity  or 
the  propriety  of  that  issue  of  stock?  A.  When  I accepted  that 


No.  40.] 


483 


position  I felt  that  the  stock  had  been  issued  legally  and  properly; 
every  precaution  was  taken  to  have  the  matter  done  in  a legal 
way,  and  the  most  eminent  counsel  that  could  be  retained  were 
retained  to  my  knowledge  by  the  United  States  Rubber  Company 
in  order  that  the  organization  might  be  formed  absolutely  in  ac- 
cordance with  the  law,  and  every  precaution  has  been  taken  in 
every  way — 

Q.  That  is  the  basis  upon  which  you  assumed  your  position 
without  inquiry  into  the  issue  of  stock;  is  that  your  explanation; 
otherwise  it  is  unnecessary  to  put  this  life  history  on  the  record? 
A.  Yes,  sir. 

Q.  (Question  read).  A.  Mr.  Chairman,  I depended  in  that  mat- 
ter— 

Q.  (Interrupting)  Is  that  true?  A.  (Continuing)  On  the  su- 
perior wisdom  of  counsel. 

Q.  That  is  it;  now  why  state  that  fifteen  times  over;  do  you 
mean  to  be  understood  as  stating  that  as  the  fiscal  officer  of  this 
company  you  have  never  demanded  to  see  whether  the  values  and 
figures  certified  by  that  committee  on  appraisement  were  proper 
and  justifiable — A.  The — 

Q.  Now,  answer  yes  or  no,  Mr.  Flint;  did  you  or  did  you  not? 
(Question  read.)  Did  you  or  did  you  not?  A.  I understood  that 
the  data  was  not  accessible  to  me;  I made  no  demand  in  regard 
to  it,  but  in  general  I knew  as  to  these  properties  as  to  their 
value. 

Q.  Yes,  that  is  right;  we  assume  that  (have  known  them  since). 
Didn’t  it  occur  to  you  as  a badge  of  very  considerable  suspicion 
that  data  should  be  withheld  from  the  directors  of  the  company 
.going  to  indicate  the  actual  value  of  the  properties  received — 
A.  No;  from  the  fact — 

Q.  No;  that  is  enough.  Have  you  in  your  experience  as  a mat- 
ter of  business  in  connection  with  companies  ever  known  of  a 
case  where  the  report  of  appraisers  have  been  surrounded  with 
such  secrecy  and  guarded  so  carefully  from  directors  and  stock- 
holders? A.  I have  had  comparatively  little  experience  in  that 
class  of  business. 


484 


[Senate. 


Q.  Have  you  ever  known  of  a case?  A.  My  business  is  that  of 
an  export  merchant — 

Q.  We  have  heard  that  twenty-five  times  now,  Mr.  Flint.  Have 
you  ever  in  your  experience  whether  large  or  small  known  of  a 
similar  case?  A.  My  experience  as — I have  not  known  as*  to  the 
appointment  of  appraisers  under  like  conditions. 

Q.  This  is  a case  solitary  in  your  experience?  A.  I have  had 
very  little  experience  in  corporate  matters;  it  is  a new  field. 

Q.  Has  it  not  occurred  to  you  that  the  fact  that  so  far  as  you 
and  your  associates  in  the  directorate  were  concerned  these  fig- 
ures were  kept  from  you,  or  hedged  in  so  that  you  could  not  dis- 
cover them,  was  in  itself  sufficient  to  raise  a suspicion  in  your 
mind?  A.  Not  at  all;  the  men  who  had  charge  of  those  figures 
were  among  the  leading  men  of  this  city;  the  chairman  of  the 
committee  is  the  present  president  of  the  clearing  house — 

Q.  We  know  all  their  names;  they  are  on  the  record  now  two  or 
three  times — A.  And  I relied  on  their  wisdom  and  conservatism. 

Q.  Do  you  mean  to  say  that  they  are  the  persons  who  have  in- 
sisted upon  the  secrecy  of  their  estimate  of  appraisement?  A.  I 
do. 

f 

Q.  And  not  the  United  States  Rubber  Company?  A.  I do. 

Q.  And  that  the  United  States  Rubber  Company  is  unable  to 
secure  or  its  officers  are  unable  to  secure  an  inspection  of  those 
appraisements  because  of  the  objections  of  the  committee  of  ap- 
praisement? A.  I do  not  think  the  United  States  Rubber  Company 
have  made  any  demand;  the  United  States  Rubber  Company  buy 
under  the  recommendation,  as  before  stated — purchased  all  these 
properties  for  a given  amount,  approximately  as  stated;  they 
made  the  purchase  under  the  conditions  as  before  stated,  and  there 
has  been  no  reason  to  attack  or  go  over  these  data;  the  general 
condition  of  the  business  has  been  familiar  to  those  in  interest 
and  the  values  of  the  properties  were  generally  known  to  them. 

Q.  What  interest  have  the  committee  on  appraisement  to  keep 
concealed  from  the  directors  and  stockholders  of  the  company  the 
facts  and  the  figures  upon  which  the  appraisement  was  made?  A. 
That  I can’t  answer;  they  gave  their  decision,  and  they  didn’t  see 
fit  to  give  up  the  data  on  which  it  was  based. 


N o.  40.] 


485 


Q.  You  mean  then  now  to  be  understood  that  instead  of  that 
appraisal"  report  being  in  the  archives  of  the  company  in  New 
Jersey  it  has  been  kept  by  the  committee  on  appraisement?  A. 
No,  Mr.  Chairman. 

Q.  Where  is  it?  A.  That  is  a part  of  the  archives  of  the  United 
States  Rubber  Company  in  New  Jersey. 

Q.  Under  your  control?  A.  No;  not  under  my  control. 

Q.  Whose  control?  A.  Under  control  of  the  directors  of  the 
corporation. 

Q.  One  moment:  Let  me  ask  you  about  that;  are  all  of  the 
records  and  documents  of  the  United  States  Rubber  Company, 
pursuant  to  the  by-laws  of  your  company,  under  your  control? 
A.  Eh? 

Q.  Answer  yes  or  no,  Mr.  Flint;  they  must  be  or  must  not  be. 
A.  No;  under  provision  of  the  by-laws  the  papers  of  the  corpora- 
tion are  deposited  in  a safe  deposit  vault  in  New  Brunswick,  New 
Jersey. 

Q.  Subject  to  whose  order?  A.  (Continuing)  And  under  the 
by-laws,  and  I think  I remember  correctly  Mr.  Chairman,  those 
documents  can  only  be  obtained  by  two  officers  of  the  corporation, 
so  that  there  are  two  keys — 

Q.  Are  you  one  of  them?  A.  I am  one  of  the  officers. 

Q.  Who  is  the  other?  A.  I think  that  the  provision  is  that  the 
president  or  vice-president  has  access  to  those,  to  that  deposit 
with  either  the  treasurer  or  another  officer — I don’t  remember  the 
name  of  the  fourth  officer. 

Q.  You  mean  it  requires  four  to  get  into  that  safe  deposit 
vault?  A.  No,  Mr.  Chairman;  it  requires  either  the  president  or 
the  vice-president,  or  either  the  treasurer  or  one  other  officer. 

Q.  Have  you  ever  gone  to  that  vault?  A.  I never  have. 

Q.  Never  looked  at  any  of  the  documents  contained  in  it?  A. 
I have;  but  I saw  them  before  they  went  in;  but  not  living  in 
New  Brunswick,  and  not  being  convenient  to  go  there,  that  de- 
posit vault  has  been  visited  by  other  officers  of  the  company  un- 
der the  by-laws  as  stated. 

Q.  You  went  there  once?  A.  I have  not  been  there  as  yet. 


I 


486, 


[Senate, 


Q.  Did  you  make  the  original  deposit?  A.  I did  not. 

Q.  Was  it  made  in  your  presence?  A.  It  was  not. 

Q.  It  was  just  after  the  original  deposit  was  made  that  you 
went  there?  A.  I have  never  been  there. 

Q.  You  never  have?  A.  Never  have. 

Q.  Have  you  ever  made  an  effort  to  see  that  report?  A.  I have; 
and  I am  generally  as — familiar  with  its  conditions — as  I have 
already  testified. 

Q.  You  are  familiar  with  its  conditions?  A.  In  general,  as  I 
have  already  testified. 

Q.  Well,  can  you  give  us,  according  to  the  tenor  of  that  re- 
port, the  amount  of  capital  stock  that  was  distributed  over  each 
of  these  companies  separately?  A.  The  report  did  not — 

Q.  Can  you,  Mr.  Flint,  or  can  you  not?  A.  I will  give  the 
facts — 

Q.  Can  you  give  the  figures?  A.  I will  give  the  facts. 

Q.  I ask  you  whether  or  not  you  can  give  those  figures;  can 
you,  or  can  you  not?  A.  Approximately — 

Q.  Separately  for  each  company?  A.  If  you  will  permit  me 
to  explain,  Mr.  Chairman — 

Q.  Well,  you  are  explaining  at  the  rate  of  a volume  every  fif- 
teen minutes,  and  we  will  never  get  through  at  this  rate?  A. 
Well,  I can’t  answer  your  question  unless  you  permit  me  to  say 
that  the  report  recommending  the  issue  of  a round  amount  of 
stock  as  I before  testified,  for  all  of  the  properties,  as  stated — 
the  report  did  not  name  an  amount  for  each  company;  the  re- 
port provided  that  there  should  be  issued  an  amount  of  stock, 
as  before  stated,  for  all  the  properties — 

Q.  In  bulk?  A.  In  bulk. 

Q.  To  whom?  A.  To  the  bankers. 

Q.  Who  were  they?  A.  H.  B.  Hollins  & Company. 

Q.  Did  they  own  the  property?  A.  They  offered  them  in  bulk. 

Q.  Did  they  own  them?  A.  They  had  the  right  to  offer  them. 

Q.  Did  they  own  them?  They  must  have  owned  them,  or  have 
not?  Yes  or  no?  A.  They  had  the  right  to  offer  them;  as  to  the 
legal  position,  as  to  ownership,  or  the  exact  legal  position  at  that 
point  I am  not  certain  about. 


No.  40.] 


487 


Q.  Now,  if  you  are  drawing  such  fine  hairs,  Mr.  Flint,  don’t 
you  know  that  they  had  the  right  to  offer  them?  A.  No,  sir;  I 
assumed  that  when  they  made  an  offer. 

Q.  Why  did  you  assume  that  on  the  one  side  of  the  case  and 
you  won’t  assume  anything  on  the  other?  A.  I assumed  that 
they  had  the  right  to  offer  them  inasmuch  as  they  formally  made 
the  offer;  they  made  the  offer  to  the  United  States  Company. 

Q.  And  they  received  the  stock  in  bulk?  A.  I think  they  did. 

Q.  Do  you  know  how  much  they  distributed,  or  they  were  per- 
mitted under  the  receipt  of  that  stock,  to  distribute  over  the 
separate  companies?  A.  I do  not. 

Q.  Did  they  make  a distribution  over  the  separate  companies? 
A.  No;  they  didn’t  distribute  to  the  companies;  what  they  offered 
was  the  stocks  of  these  corporations  in  the  main  with  certain 
exceptions  that  we  have  explained  and  accounted  to  the  stock- 
holders. 

Q.  To  the  stockholders?  A.  All  these  corporations  that  have 
been  mentioned,  not  to  the  corporations  themselves. 

Q.  Do  you  mean  that  they  received  the  individual  sharehold- 
ings of  stockholders  and  then  distributed  the  stock  to  the  stock- 
holders directly,  instead  of  through  the  medium  of  the  corpora- 
tion? A.  They  had  no  relations  to  the  corporation. 

Q.  Is  that  true?  That  question  can  be  answered  yes  or  no;  did 
they  make  the  distribution  directly  to  the  stockholders  in  pur- 
chase of  several  stockholdings  or  did  they  make  the  distribution 
through  the  channel  of  the  corporation  itself?  A.  As  far  as  I 
know,  and  I think  I am  correctly  informed  in  regard  to  it,  they 
distributed  the  stock  to  the  stockholders  and  not  through  the 
corporations. 

Q.  Now,  you  might  just  as  well  have  said,  “I  think  they  did 
it  in  the  form  of  distribution  through  stockholders  and  not  cor- 
porations”; if  you  continue  this  form  of  answer  it  will  take  two 
weeks  to  examine  you.  A.  Mr.  Chairman,  I am  endeavoring  to 
anstver  as  well  as  possible — 

Q.  Well,  don’t  trifle,  or  go  round  Robin  Hood’s  barn — A.  I 
have  spent  more  time  ir.  this  room  than  I have  in  all  my 
life  in  a court  room  before. 


488 


[Senate, 


Q.  Well,  you  will  spend  a good  deal  more  unless  you  answer 
positively.  A.  1 have  had  no  experience  as  a witness  in  my  life; 
I am  endeavoring  to  give  you  the  exact  facts;  I have  not  spent 
ten  hours  in  court  in  my  life  either  as  a juror,  a witness  or  a 
party. 

Q.  Now,  have  you  ever  ascertained  as  treasurer  of  the  company 
or  personally  the  amount  of  stock  paid  for  any  one  of  the  corpora- 
tions  mentioned  in  this  schedule?  A.  There  has  been  no  pay- 
ment for  corporations;  as  I have  stated  before  these  properties 
were  purchased  from  the  bankers,  and  the  bankers  dealt  with  the 
stockholders  of  corporations. 

Q.  Do  you  know  what  was  paid  per  share  for  any  of  the  stock 
of  any  of  the  companies  mentioned  in  this  schedule?  A.  I do  not. 

By  Mr.  Warner: 

Q.  Not  even  your  own  company?  A.  I never  had  a company. 

By  Mr.  Lexow . 

Q.  Well,  that  answers  the  question,  Mr.  Flint.  A.  I want  to 
give  the  whole  truth  as  sworn  to  do. 

Q.  Well,  if  you  never  had  a company  that  must  be  true  or 
false?  A.  That  is  true. 

Q.  Was  there  no  company  that  you  had  an  interest  in  or  that 
you  owned  capital  stock  in  represented  in  this  schedule?  A.  I 
had  no  direct  interest;  but  as  a party  interested  in  a crude  rubber 
company  I had  an  interest  in  that  way;  that  is,  indirectly. 

Q.  What  companies  were  you  indirectly  interested  in  in  the 
way  you  mention ; I mean  beyond  those  contained  in  this  sched- 
ule? A.  I was  interested  in  the  Lycoming  Rubber  Company. 

Q.  To  what  extent?  A.  Perhaps  a half  of  one  per  cent  of  the 
capitalization. 

Q.  Of  the  capitalization  of  the  Lycoming  Rubber  Company? 
A.  Of  the  Lycoming  Rubber  Company. 

Q.  In  stock?  A.  Interested  as  a stockholder? 

Q.  Yes;  now,  don’t  you  know  what  you  got  for  that  stock?  A. 

No;  I don’t. 


No.  40.] 


489 


Q.  Yon  don't  know  what  you  got  for  your  stock?  A.  I do  not; 
I can  ascertain. 

Q.  Don’t  you  remember  the  proportion  of  stock  in  the  United 
States  Rubber  Company  that  you  got,  as  compared  with  your 
nominal  holding  in  the  Lycoming  Company?  A.  I dcm7t  know; 
but  I can  get  that  information,  and  will  be  very  glad  to  obtain  it 
and  give  it  to  you. 

Q.  Well,  we  want  to  get  the  facts  as  rapidly  as  possible,  Mr. 
Flint.  A.  Mr.  Chairman  I think  I can  get  them  for  this  after- 
noon; I think  I can  get  that  information,  but  it  is — with  a variety 
of  interests — I have  not  got  that  information  in  hand;  but  I will 
be  very  glad — 

Q.  I am  speaking  more  particularly  of  your  examination;  it  has 
taken  just  about  fifteen  minutes  now  to  ascertain,  I mean,  that 
you  have  an  interest  in  one  of  these  companies;  you  absolutely 
and  positively  denied  any  interest  in  the  first  instance?  A.  I had 
no  direct  interest  and  I was  not  an  original — 

Q.  Do  you  call  it  a direct  interest  when  you  were  a stockholder 
in  one  of  the  companies  that  were  taken  into  this  pool,  the  stock 
of  which  was  all  bought?  A.  Well,  I was  not  a stockholder  of 
record  of  the  company,  but  I was  interested  in  a crude  rubber 
company  which  had  an  interest. 

Q.  We  have  that,  all — that  you  had  a stockholding,  and  you  re- 
ceived your  proportion  in  the  United  States  Rubber  Company 
for  that  stock?  A.  I received  a proportion  from  the  crude  rubber 
company  of  a certain  interest  that  I had. 

Q.  Now,  we  would  like  to  know  what  you  received  proportion- 
ate to  the  amount  of  stock  held  by  your  company  in  the  Lycom- 
ing? A.  I will  look  it  up,  Mr.  Chairman,  and  give  it  to  you  this 
afternoon. 

Q.-  Do  you  know  of  any  other  exchange  of  certificates  and  the 
basis  or  proportion  of  that  exchange  for  stock  represented  in  this 
schedule?  A.  I can  ascertain. 

Q.  Can  you  ascertain  it  with  reference  to  each  one  of  the  sep- 
arate companies?  A.  I will  endeavor  to. 

Q.  Do  you  understand  that  this  syndicate  or  banking  firm  ap- 
portioned the  stock  that  was  delivered  to  the  United  States  Rub- 


490 


[Senate, 


ber  Company  over  the  stock  of  these  consolidated  companies  and 
turned  the  stock  of  the  consolidated  companies  or  sub-compan- 
ies over  into  the  treasury  of  the  United  States  Rubber  Company; 
was  that  the  proceeding?  A.  The  proceeding  was  that  the  bank- 
ers offered  the  stock  of  these  corporations  to  the  United  States 
Rubber  Company,  the  bankers  received  the  stock  of  the  United 
States  Rubber  Company  and  accounted  for  it  to  the  stockholders 
of  the  corporations  mentioned. 

Q.  Then  the  bankers  represented  the  United  States  Rubber 
Company  as  well  as  representing  the  individual  stockholders  of 
the  companies  the  stock  of  which  was  purchased?  A.  They  did 
not  represent  the  United  States  Rubber  Company;  they  acted  as 
principals  in  offering  those  stocks  to  the  United  States  Rubber 
Company;  and  distributed  the  stock  to  the  stockholders  of  those 
companies. 

Q.  Now,  isn’t  it  true  that  the  United  States  Rubber  Company 
paid  them  a commission  of  2-|  per  cent,  upon  the  transaction?  A. 
No— 

Q.  Did  they  or  did  they  not?  A.  When  the  bankers — 

Q.  Did  they  or  did  they  not,  Mr.  Flint?  A.  Mr.  Chairman — 

Q.  Is  it  fact;  it  must  be  or  not?  A.  No;  but  I state  that — 

Q.  Well,  then,  say  no?  A.  But  Mr.  Chairman,  I desire  to  ex- 
plain— and  you  don’t  give  the  correct— you  ask  me  to  answer 
specifically,  when  you  state  the  wrong  amount;  now,  if  I say  no, 
I may  be  misunderstood;  now,  you  ask  whether  they  were  paid  a 
commission  of  2\  per  cent ; I say,  Mr.  Chairman,  that  they  did  not 
pay  a commission  of  2J  per  cent. 

Q.  (Interrupting)  But  they  did  pay — A.  They  paid  a commis- 
sion— Mr.  Chairman;  I want  to  answer  in  good  faith — I want  to 
give  you  the  facts;  now,  then — 

Q.  If  I am  incorrect  in  my  question,  you  have  a perfect  right  to 
answer  categorically,  “No;”  that  is  your  right,  and  nobody  can 
criticise  it;  now,  did  they — I would  have  followed  that  up  with 
this  question — which  I am  going  to  do  now;  did  they  pay  any 
commission?  A.  When  the  bankers — • 

Q.  Did  they  or  did  they  not?  A.  If  you  will  allow  me  to  an- 


No.  40.] 


491 


swer — I want  to  state  when  the  bankers  offered  these  stocks  to 
the  United  States  Rubber  Company  the  bankers  provided  for  a 
certain  compensation  for  themselves. 

Q.  And  they  provided  for  the  compensation  with  the  United 
States  Rubber  Company?  A.  That  was  made  part  of  the  offer; 
when  the  offered  the  properties  they  provided  for  a compensation 
for  themselves  and  that  w7as  embodied  in  their  offer  and  made  a 
part  of  it. 

Q.  And  was  paid  by  the  United  States  Rubber  Company?  A. 
The  United  States  Rubber  Company  in  paying  for  these  proper- 
ties paid  the  amount  provided  by  the  bankers  under  the  offer. 

By  Mr.  Warner: 

Q.  Was  that  a commission?  A.  I think — that  is  to  say — there 
was  a certain  amount  which  was  figured — a percentage;  I should 
say  it  was  a commission. 

By  Mr.  Lexow: 

Q.  Wasn’t  it  called  commission?  A.  I don’t  remember. 

Q.  And  wasn’t  that  commission  made  expressly  payable  by  the 
United  States  Rubber  Company?  A.  In  making  the  offer — 

Q.  Was  it?  A.  They  provided  a compensation  and  it  was  paid 
by  the  United  States  Rubber  Company. 

By  Mr.  Warner: 

Q.  How  much  was  that  compensation?  A.  I don’t  remember 
the  amount. 

Q.  Now,  Mr.  Flint,  this  is  only  four  years  ago,  and  do  you  mean 
to  say  that  having  been  a promoter  of  that  company,  and  knowing 
all  of  its  affairs  and  details,  that  you  cannot  tell  us  what  that 
commission  was?  A.  I cannot  give  the  exact  amount. 

By  Mr.  Mazet: 

Q.  Well,  it  was  not  2 1-2  per  cent.?  A.  I will  be  very  glad  to 
ascertain.  i j.. 


492 


[Senate, 


Q.  Was  it  more  or  less  than  2 1-2  per  cent.?  A.  In  stating  that 
I could  not  give  the  amount  I inferred  that  it  was  not;  I was 
going  to  give  the  total  amount  of  the  commission  received,  and 
would  be  glad  to  get  that  information;  or  the  total  amount  of  the 
stock  received. 

By  Mr.  Lexow : 

Q.  Well,  it  was  five  hundred  thousand  dollars,  wasn’t  it?  A. 
Oh,  it  was — 

Q.  Wasn’t  it  five  hundred  thousand  dollars?  A.  Of  stock? 

Q.  Commission?  A.  Well,  do  you — it  was;  I think  it  was. 

By  Mr.  Warner  :i 

Q.  In  money  or  stock?  A.  In  stock — payment  made  in  stock. 

By  Mr.  Mazet: 

Q.  At  par  value?  A.  There  was  a provision  made  in  this  offer 
of  a certain  amount;  I will  ascertain  the  exact  conditions;  I have 
not  them  in  mind  now. 

By  Mr.  Lexow: 

Q.  Was  it  in  a printed  pamphlet  or  in  a typewritten  instrument 
that  this  agreement  was  made?  A.  The  offer  was  in  writing,  or 
in  a typewritten  statement;  there  was  no  printed  offer. 

Q.  Have  you  a copy  of  the  offer?  A.  I have  not. 

Q.  When  did  you  last  see  it?  A.  Not  for  some  time;  not  for  a 
year  or  more. 

Q.  Now,  who  in  that  transaction  protected  the  interests  of  the 
United  States  Rubber  Company?  A.  The  directors  and  the  com- 
mittee specially  appointed  to  investigate  the  matter,  the  Sim- 
mons committee. 

Q.  You  mean  the  Simmons  committee?  A.  The  Simmons 
Committee. 

Q.  Is  Mr.  Simmons  a director  of  the  company?  A.  He  was 
one  of  the  incorporators  and  was  a director  of  the  corporation  at 

that  time. 


No.  40.] 


493 


Q.  Is  he  now?  A.  He  is  not. 

Q.  He  resigned?  A.  He  resigned. 

Q.  Because  of  the  issuance  of  this  stock?  A.  No;  he  did  not; 

I don’t  think  he  resigned  for  perhaps  a year  after  the  issuance  of 
the  stock.  ( 

Q.  Because  of  the  issuance  of  any  stock?  A.  No — I — he  re- 
signed because  his  duties  in  connection  with  the  clearing  house 
and  banks  didn’t  enable  him  to  give  the  time  to  remain  in  the 
corporation  as  a director;  I think  a year  after  the  issuance  of 
this  stock.  « 

Q.  Will  you  produce  to  us  immediately  after  the  adjournment 
of  to-day  the  figures  involved  in  the  transaction  with  this  bank- 
ing concern  and  the  amount  of  stock  apportioned  over  each  share 
of  the  stock  of  these  sub-companies  that  were  purchased?  A. 
I will  endeavor  to  get  the  information. 

Q.  We  must  have  it,  Mr.  Flint.  A.  Mr.  Chairman,  I shall  en- 
deavor to  get  it  from  the  bankers — 

Q.  If  you  can’t  get  it  from  the  bankers  we  must  have  it  from 
the  report  of  the  Simmons  committee;  we  don’t  want  to  proceed 
to  severe  measures  and  deprecate  them,  and  will  go  as  far  as  we 
can  to  avoid  them;  but  we  regard  this  question  of  capitalization 
as  one  of  the  important  questions  of  this  investigation,  and 
whether  vour  company  be  a New  Jersey  corporation  or  a New 
York  corporation  you  do  business  here  and  your  system  affects 
the  economic  conditions  of  our  State,  and  we  are  entitled  as  a 
legislative  committee  to  know  it,  and  will  know  it  if  there  is  any 
authority  in  the  Legislature  to  get  it.  A.  Mr.  Chairman,  I was 
advised  that  through  being  a New  Jersey  corporation,  not  having 
any  factories  in  this  State,  that  I might  refuse  to  testify;  instead 
of  acting  under  that  advice  I have  voluntarily  come  before  this 
committee  and  am  endeavoring  to  give  the  information  that  you 
desire. 

By  Mr.  Mazet: 

Q.  You  were  subpoenaed,  were  you  not?  A.  I was  subpoe- 
naed, but  as  I ha\e  stated,  1 have  come  before  the  committee. 


494 


[Senate, 


By  Mr.  Lexow : 

Q.  You  don’t  wish  to  withhold  anything — that  is  what  you 
mean — A.  I do  not;  I think  my  testimony  shows  that. 

Q.  Here  is  an  opportunity  to  show  your  good  faith;  and  it 
does  seem  to  me  that  concealment  by  these  companies  of  essen- 
tial questions  would  make  the  public  suspicious  of  their  good 
faith  and  the  character  of  their  management?  A.  Mr.  Chair- 
man, I am  desirous  of  giving  the  information;  of  course,  in  the 
conduct  of  business,  you  well  appreciate  that  there  are  many 
matters  of  a confidential  nature. 

Q.  Certainly;  we  have  not  asked  a question  of  that  character, 
have  we?  A.  Mr.  Chairman,  I think  that  you  will  give  me  the 
consideration  that  I am  entitled  to  in  that  regard. 

Q.  Your  case  is  exactly  similar  to  that  of  the  American  Sugar 
Refining  Company  upon  this  proposition;  we  do  not  propose  to 
undertake  an  inquisitorial  investigation  into  your  business,  but  so 
far  as  your  official  acts  are  concerned  as  a corporation,  whether 
of  the  State  of  New  York  or  of  the  State  of  New  Jersey — so  far 
as  they  affect  legislation  in  this  State,  we  propose  to  get  at  those 
facts.  A.  I desire  to  give  all  the  information  that  I consistently 
can. 

Q.  Now,  you  understand  the  situation,  and  we  ask  you  to  pro- 
duce those  documents? 

By  Mr.  Warner: 

Q.  Will  you  produce  the  documents;  this  appraisers’  report, 
which  is  in  the  Safe  Deposit,  of  which  you  have  the  key,  and  to 
which  you  have  access?  A.  I will  obtain  the  information  that 
has  been  asked  for,  or  endeavor  to  obtain  it. 

By  Mr.  Lexow: 

Q.  And  this  afternoon,  Mr.  Flint?  A.  I will  endeavor  to  do 
80. 

Q.  How  many  bookkeepers  are  there  in  the  Read  street  office? 
A.  There  is  a great — I don’t  remember  the  number,  Mr.  Chair- 


No.  40.] 


495 


man,  but  there  is  quite  a number;  inasmuch,  as  in  that  office  a 
great  deal  of  detail  work  is  done  in  connection  with  the  dispo- 
sition of  goods,  which,  as  I have  stated,  has  been  of  a great  vari- 
ety. 

Q.  Have  you  about  thirty  bookkeepers  in  your  New  York  Read 
street  office?  A.  I could  not  say,  but— 

Q.  About  that?  A.  There  are  quite  a number  of  them. 

Q.  About  that?  A.  Well,  say  twenty  bookkeepers. 

Q.  How  many  have  you  in  the  New  Brunswick  office?  A.  I do 
not:  I should  say  five  bookkeepers,  or  five  men  connected  with  the 
office. 

Q.  And  they  do  the  bookkeeping  for  that  special  branch  of 
your  business  which  is  located  in  New  Brunswick,  do  they  not? 
A.  They  do. 

Q.  The  bookkeepers  in  the  city  of  New  York  attend  to  the 
business  of  the  United  States  Rubber  Company  as  a central  or- 
ganization, do  they  not?  A.  Well,  the  reason  for — 

Q.  Do  they,  or  do  they  not?  A.  Well,  they  attend  to  it  as  an 
organization  selling  the  goods. 

Q.  And  that  is?  A.  That  is  the  detail. 

Q.  And  with  general  direction  over  the  affairs  of  the  company? 
A.  No;  the  companies,  Mr.  Chairman,  are — except  those  compan- 
ies that  we  expect,  where  we  own  the  plants  and  have  taken 
them  from  the  companies,  are  run  independently;  they  are  run  as 
independent  organizations;  they  have  got  in  general  the  original 
officers,  the  original  bookkeepers  and  accountants  in  each  corpor- 
ation and  the  business  is  being  run  by  them,  as  it  has  been  run  for 
ten  or  twenty  or  thirty  years. 

Q.  Is  not  the  business  run  in  the  name  of  the  United  States 
Rubber  Company?  A.  No;  it  is  not;  the  business — 

Q.  I mean  the  general  business  of  the  company  with  reference 
to  factors,  factor  agreements,  contracts  and  matters  of  that  de- 
scription? A.  In  that  connection  I desire  to  explain  that  recently 
the  United  States  Rubber  Company  has  acted  as  sales  agent  of 
some  of  these  companies;  they  have  occupied  the  same  relation 
to  these  companies  that  a commission  house  would  occupy  to  any 


496 


[Senate, 


manufacturing  concern;  that  has  caused  the  employment  of  many 
bookkeepers  here  in  New  York,  to  look  after  the  details  of  sales. 

Q.  You  mean  to  be  understood  that  the  United  States  Rubber 
Company,  owning  the  stocks  of  these  various  companies  and  con- 
trolling their  organizations  by  the  ownership  of  that  stock,  is  an 
agent  for  these  other  corporations?  A.  I mean  to  say  that  the 
organizations  or  the  companies  are  under  the  control  and  direc- 
tion of  their  respective  directors ; that  in  the  main  the  same  offi- 
cers still  hold  office  as  have  held  office  for  many  years,  long  before 
the  organization  of  the  United  States  Rubber  Company,  and  un- 
der an  arrangement  for  the  purpose  of  securing  economies  in  the 
sale  of  goods  and  doing  away  with  the — 

Q.  (Interrupting)  We  have  had  all  that — A.  (Interrupting) 
You  haven't  had  that,  Mr.  Chairman  — 

Q.  (Interrupting)  Yes,  we  have  had  it — a number  of  times — 
A.  (Continuing)  Economies  of  manufacture  is  in — but  this  is 
economies  in  selling  — j 

Q.  Now,  look  at  this,  and  state  whether  that  is  the  agreement 
that  the  United  States  Rubber  Company  makes  with  those  who 
purchase  from  it?  (Showing  witness  paper.) 

Q.  Is  it,  or  isn’t  it?  A.  I don’t  know,  Mr.  Chairman,  as  I stated 
yesterday — 

Q.  (Interrupting)  Look  at  these  documents,  and  state 
whether  or  not  these  are  the  documents  issued  by  the  United 
States  Rubber  Company?  (Showing  witness  papers.)  A.  It  has 
the  United  States  Rubber  Company  name  upon  it;  but  as  I stated 
yesterday,  I am  not  familiar  with  sales — I never  have  sold  any 
goods;  I never  have  taken  any  part  in  it. 

Q.  Who  has?  A.  Charles  L.  Johnson,  the  director  of  sales. 

Q.  Is  Mr.  Martin?  A.  He  is  not. 

Q.  Mr.  Ford?  A.  They  are  not;  Mr.  Charles  L.  Johnson  is  the 
director  of  sales. 

Q.  You  disclaim  any  knowledge  about  these  documents;  is  that 
true  ? A.  And  I have  requested  Mr.  J ohnson — 

Q.  Do  you  disclaim  any  knowledge  about  these  documents?  A. 
In  detail;  yes. 

Q.  Well,  now,  just  let  it  rest  there? 


No.  40.] 


497 


By  Mr.  Mazet: 

Q.  Has  this  company  an  office  in  Chicago?  A.  Yes;  they  for- 
merly had — they  have  an  office  there;  have  sales  agents  there. 

By  Mr.  Lexow: 

Q.  Do  you  know  the  New  Brunswick  Rubber  Company  that 
was  made  part  of  this  combination?  A.  I do. 

Q.  How  long  had  it  been  iii  business  prior  to  the  combination? 
A.  Been  in  business  since  1849. 

Q.  In  constant  business  during  that  period  of  time?  A.  I 
think  so;  I am  not — 

Q.  (Interrupting)  Employing  how  many  men?  A.  It  was  only 
1894  when  it  commenced. 

Q.  I mean  from  your  general  knowledge  of  the  trade?  A.  In 
general? 

Q.  Employing  how  many  men?  A.  I suppose  they  employed 
perhaps  four — I should  suppose  at  different  times  from  one  to 
four  hundred  men — or  employees,  Mr.  Chairman. 

Q.  Making  how  many  pairs  of  rubber  boots  and  shoes  yearly; 
one-half  million  pairs?  A.  If  you  will  excuse  me,  I will  get 
that  (Witness  leaves  the  stand  and  inquires  of  some  person  in 
the  audience);  they  have  made  from  several  hundred  thousand 
to  perhaps  a million  pairs;  I don’t  know  of  my  own  knowledge. 

Q.  Has  it  not  been  as  high  as  a million  and  a half,  and  was  not 
that  the  regular  trade  output  of  that  factory?  A.  I do  not 
know. 

Q.  Was  it  not  the  custom  of  that  factory  to  run  full  time  ex- 
cepting for  two  or  three  weeks  during  the  stock  taking  period  in 
March  and  April  of  each  year?  A.  That  I could  not  say;  but 
they  run  regularly  as  a rubber  manufacturing  concern. 

Q.  They  did?  A.  They  run  regularly. 

Q.  They  did?  A.  They  did. 

Q.  Before  they  were  absorbed  by  the  United  States  Rubber 
Company?  A.  They  did. 

Q.  Now,  since  the  absorption  of  that  company  by  the  United 
32 


498  [Senate, 

> 

States  Rubber  Company,  were  these  operations  restricted?  A. 
Asa  matter  of  economy. 

Q-  I am  not  speaking  about  the  reasons  for  it  yet;  we  will  get 
to  ihat  in  a few  minutes;  were  the  operations  restricted?  A. 
Mr.  Chairman,  if  you  will  let  me  give  you  the  facts — 

Q.  I will  get  the  facts;  do  not  be  alarmed;  we  are  after  the 
facts;  were  the  operations  restricted?  A.  I cannot  say;  I cannot 
answer  the  question. 

Q.  Were  the  operations  of  that- company  restricted  to  the 
manufacture  of  certain  lines  of  goods  and  the  output  very  largely 
reduced?  A.  I do  not  know. 

Q.  Don’t  you,  as  treasurer  of  the  company,  keep  yourself  post- 
ed with  reference  to  the  operations  of  the  several  factories?  A. 
I do  not. 

Q.  Do  you  know  whether  the  year  after  the  absorption  they 
worked  only  nine  months,  and  the  year  after  that  only  seven 
months,  with  a restriction  of  the  character  of  goods,  and  a reduc- 
tion of  the  output?  A.  The  business  of  the  New  Brunswick 
Company  was  put  in  the  New  Jersey  plant,  which  was  enlarged, 
fop  the  purpose  of  economies,  and  they  are  manufacturing  in  the 
New  Brunswick  Company,  at  present,  bicycle  tires,  and  the  la- 
borers— 

Q.  Isn’t  it  true  that  you  closed  down  the  New  Brunswick  fac- 
tor}" after  working  seven  months  in  the  year  1895,  in  the  dead 
of  winter,  and  discharged  all  your  hands?  A.  We  enlarged — 

Q.  Is  that  true?  A.  I don’t  know;  I know  that  we  enlarged 
the  New  Jersey  plant,  and  I know  that  the  hands  of  the  New 
Brunswick  Company  went  into  the  New  Jersey  plant,  and  there 
the  manufacture  of  rubber  shoes  was  conducted,  and  I know  that 
in  the  New  Brunswick  plant  that  that  was  used  for  the  purpose 
of  manufacturing  bicycle  tires. 

Q.  Do  you  mean  to  say  that  the  New  Brunswick  plant,  speak- 
ing of  ike  New  Brunswick  Rubber  Company’s  plant,  has  been 
running,  compared  to  the  time  previous  to  the  formation  of  the 
United  States  Rubber  Company,  as  to  number  of  hands,  amount 
of  output,  or  number  of  men  engaged,  comparable  to  what  it  did 


No.  40.] 


499 


prior  to  the  organization  of  the  United  States  Rubber  Company? 
A.  I have  no  specific  information  on  that  point,  Mr.  Chairman. 

Q.  Can  you  ascertain  it?  A.  I can. 

Q.  Isn’t  it  a fact  that  the  President  of  the  New  Brunswick  Rub- 
ber Company  offered  orders  for  what  you  know  as  or  call  third 
quality  goods  that  would  have  enabled  you  to  have  kept  that  fac- 
tory running  at  a profit  during  the  entire  winter,  that  you  re- 
fused the  offer,  closed  the  factory  and  discharged  all  hands?  A. 
Well,  Mr.  Chairman — 

Q.  Is  that  true  or  false?  A.  I don’t  know,  and  I would  like  to 
explain — 

Q.  Now,  I would  like  to  have  a definite  statement  from  you 
whether  you  have  any  knowledge  on  that  subject  at  all?  A.  I 
have  not;  I don’t  know  about  that  part  of  the  business. 

Q.  Never  heard  of  it?  A.  I have  not — that  I remember. 

Q.  Isn’t  it  a fact  that  in  the  following  spring  you  fitted  up  a 
small  factory  belonging  to  the  United  States  Rubber  Company 
and  that  since  that  time  the  average  time  of  employment  has 
been  about  five  months  in  the  year?  A.  In  general  I know  that 
owing  to  the  depression  of  business — 

Q.  Now,  is  that  a fact?  A.  I know  that — 

Q.  Isn’t  that  a fact?  A.  As  I have  explained  I am  not  in  the 
details  of  the  business;  I do  not  give  detailed  attention  to  it;  I 
have  got — I am  in  another  line  of  business;  I have  got  a general 
knowledge  which  I can  state  in  regard  to  these  plants,  but,  Mr. 
Chairman,  I have  not  specific  knowledge,  and  I don’t  know. 

Q.  Don’t  know?  Well,  but  you  do  know,  do  you  not,  that  at 
the  very  time  when  you  were  discharging  these  men  you  pur- 
chased the  Colchester  factory,  closed  that  down  and  dischargel 
500  men  there,  don’t  you?  A.  Mr.  Chairman — 

Q.  Is  that  a fact  or  not,  Mr.  Flint?  A.  I want  to  make  a state- 
ment— 

Q.  Is  that  a fact  or  isn’t  it?  A.  I want  to  make  this  statement, 
Mr.  Chairman,  with  reference  to  the  capacity;  the  United  States 
Rubber  Company  has  a larger  productive  capacity  to-day  than  it 
has  ever  had;  we  have  put  in  new  machinery,  we  have  extended 


500 


[Senate, 


plants  and  we  are  manufacturing  all  the  goods  that  we  can  mar- 
ket; in  fact,  we  are  manufacturing  more,  in  order  to  keep  our  la- 
borers employed  and  in  order  to  keep  up  our  organizations;  when 
I stated  yesterday  that  we  were  not  working  to  a greater  extent 
than  50  per  cent,  of  the  capacity  I stated  what  was  strictly  cor- 
rect, but  I will  explain  that  owing  to  the  variety  of  our  output 
we  never  can  work  to  the  full  capacity;  we  are  making  a great 
variety  of  shoes;  we  have  an  order  for  some  particular  kind;  we 
will  run  a factory  on  that  kind,  but  we  will  not  run  it  to  its  full 
capacity;  where  we  closed  factories,  on  the  other  hand,  we  have 
put  in  new  machinery  and  increased  plants;  we  have  extended 
buildings,  wTe  have  put  in  new  machinery  and  we  have  increased 
our  productive  capacity  in  order  to  make  this  great  variety,  in 
order  to  be  prepared  to  do  it,  to  supply  the  demand  made;  we 
have  got  to  supply  the  variety;  in  one  factory  there  are  thirty 
thousand  different  shoes  made — ■ 

Q.  We  understand  that — A.  (Continuing)  And  this  excessive 
productive  capacity  has  got  to  be  held  by  the  company  in  order 
to  be  prepared  to  supply  this  great  variety;  we  may  have  lasts 
on  hand  and  facilities  to  manufacture  that  may  not  be  used — 

Q.  We  understand  all  that — A.  Well,  that  was  not  under- 
stood— ’ 

Q.  Yes;  you  have  explained  that — A.  I have  not  explained 
that — 

Q.  You  have  made  that  statement  at  least  ten  times.  A.  Well, 
we  have,  when  you  consider  brands,  we  have  got' five  hundred 
thousand  different  shoes;  when  you  consider  brands,  sizes, 
shapes,  styles,  and  we  have  got  to  have  an  excessive  productive 
capacity  in  order  to  supply  that  variety;  furthermore  the  busi- 
ness is  a season’s  business;  if  we  should  have  good  times  and  en- 
terprise was  revived  by  a revival  of  confidence  and  a snowy  win- 
ter, we  would  have  to  work  our  factories  pretty  nearly  to  their 
full  capacity  to  supply  the  demand,  but  we  haven’t  been  having 
very  good  times. 

Q.  Now,  Mr,  Flint,  if  you  have  got  into  that  condition  would  you 
increase  the  average  dividend  orprofit  upon  your  goods  20 — 44  per 


No.  40.] 


501 


cent,  as  you  did  in  1893,  immediately  after  the  consolidation  was 
made?  A.  It  is  the  policy  of  a well  managed  corporation. 

Q.  Would  3 on  do  that  I am  asking — A.  To  give,  to  supply  the 
trade  with  goods  at  a price  that  will  encourage  consumption — 

Q.  If  that  is  the  policy  why  did  you  increase  the  price  of  the 
goods  that  you  made  immediately  after  the  consolidation  in  1893, 
so  that  you  added  from  20  to  44  per  cent,  to  the  value  of  rubber 
shoes  and  boots  in  the  market?  A.  Mr.  Chairman — 

Q.  Now,  did  you  or  did  you  not,  Mr.  Flint?  A.  I don’t  know  of 
any  such  increase,  and  I want  to  explain — 

Q.  Well,  then,  say  you  didn't  do  it  if  it  isn’t  true?  A.  I have 
to  explain  in  order  to  make  myself  understood ; I can't — the  posi- 
tion is  this  that — 

Q.  Did  you  increase  the  price  of  rubber  boots  from  $1.90  to 
$2.60  in  the  Spring  of  1893?  A.  I have  no  specific  knowledge  as 
— I don't  know  the  price  of  any  product  of  the  United  States 
Rubber  Company;  I don’t  know  the  price  of  boots  or  shoes;  I 
never  have  sold  a pair;  I never  have  talked  with  a jobber  about  it; 
I never  have  talked  with  a customer  of  the  United  States  Rubber 
Company  about  buying  goods;  I have  no  detailed  information. 

Q.  Can't  you  give  an  answer  to  the  question  we  ask  with  an 
answer  of  your  own  knowledge?  A.  I don’t  know. 

Q.  Did  you  say  that  you  don’t  know  that  in  the  Spring  of  1893, 
after  the  acquisition  of  the  Woonsocket  Company,  you  increased 
the  price  of  rubber  goods  to  the  consumer  from  $1.90  to  $2.60? 
A.  I don't  know;  and  I don’t  think  it  was  done. 

Q.  Will  you  state  as  a fact  that  that  was  not  done?  A.  I can’t 
state  it  from  the  fact  that  I am  not  familiar  with  that  department 
of  the  business;  I know  in  general  that  we  have  increased  the 
quality  of  the  goods — • 

Q.  We  have  had  that  over  fifty  times  now?  A.  I think  this  is 
the  first  chance  I have  had  to  speak  of  it. 

Q.  Why,  everything  that  you  can  say  about  the  rubber  busi- 
ness has  been  said,  and  you  never  answer  the  question.  A.  I 
can’t  answer  these  detailed  questions  because  I have  not  the 
knowledge;  but  I have  a general  knowledge  which  I am  willing 
to  state.  , , i 


502 


[Senate, 


Q.  Was  there  any  increase  in  the  price,  that  you  know,  m the 
Spring  of  1893?  A.  I don’t  know  as  to  the  details  of  that;  I know 
this — we  have  made  a great  variety  of  goods;  I know  that  we 
have  improved  quailty;  there  are  differences  in  styles,  differences 
in  conditions,  but  I can’t  answer — 

Q.  Now,  Mr.  Flint,  I want  you  to  say  everything  upon  that  sub- 
ject, so  you  can’t  say  hereafter  that  you  haven’t  said  that  before. 
Go  ahead.  The  stenographer  will  take  down  the  whole  state- 
ment of  the  witness. 

A.  Mr.  Chairman,  I want  to  make  the  point  that  since  the  or- 
ganization of  the  Unite  States  Rubber  Company  the  quality  of 
rubber  boots  an  shoes  has  been  improved;  that  new  conditions 
have  arisen  in  regard  to  styles,  and  owing  to  that  fact  there  is  a 
greater  variety  of  product,  and  in  arriving  at  the  question  of  price 
it  is  necessary,  as  every  buyer  knows,  to  take  into  consideration 
the  question  of  quality;  I know  in  general  that  the  price  lists  of 
the  rubber  shoes  has  been  reduced;  I don’t  know  the  price  of  any 
specific  article;  I am  not  familiar  with  the  business;  I never  have 
talked  with  a customer  of  the  company ; I never  have  seen  any  of 
the  jobbers;  I never  have  taken  part  in  any  of  the  details  of  the 
business;  I am  in  another  line  of  the  business;  but  in  general  I 
know  that  the  quality  has  been  improved  and  that  the  public 
have  been  receiving  better  goods;  as  to  the  exact  conditions  I 
have  stated  to  you  the  name  of  the  gentleman  who  is  in  charge 
of  sales — 

Q.  Mr.  Johnson?  A.  (Continuing)  And  he  will  have  that  spe- 
cific information — Mr.  Johnson,  and  as  soon  as  I left  here  yester- 
day morning  I wrote  to  get  all  the  facts ; I had  to  go  to  my  office 
in  Broad  street — I haven’t  even  a desk  in  the  office  of  the  United 
States  Rubber  Company — and  I at  once  wrote  a letter  to  that 
office  asking  Mr.  Johnson  to  appear  here;  I have  not  yet  heard 
from  him,  but  he  has  got  that  specific  information. 

Q.  Now,  Mr.  Flint,  have  you  told  all  about  the  benefits  and  the 
advantages  and  the  reasons  for  the  rubber  consolidation  that  you 
know,  so  that  hereafter  you  can  answer  a question  categorically? 
A.  I don’t  think  I have  told  all  the  advantages  from  the  fact 
that — 


No.  40.] 


503 


Q.  Please  complete  the  story,  because  we  want  categorical  an- 
swers hereafter — A.  From  the  fact  that  I can’t  state  the  bene- 

t 

fit — all  the  benefits  that  arise;  I will  state  one  point,  Mr.  Chair- 
man, that  during  the  years  of  depression  that  I am  informed  on 
good  authority  that  the  United  States  Rubber  Company  have  not 
reduced  the  rate  of  wages;  that  the  United  States  Rubber  Com- 
pany owing  to  its  facilities  has  been  in  a position  where  it  could 
do  business  to  advantage  without  reducing  the  wages  of  its  la- 
borers; and  that  in  order  to  sustain  our  organizations,  although 
the  trade  has  been  bad,  owing  to  the  general  want  of  confidence 
existing  in  the  community  and  the  indisposition  on  the  part  of 
men  to  go  into  industrial  or  business  enterprises,  trade,  as  you 
know,  has  been  dull  owing  to  lack  of  confidence,  while  we  have 
kept  up  our  organizations  and  have  manufactured  all  the  goods 
that  we  possibly  could;  and  while  on  the  other  hand  I think  that 
on  investigation  you  will  find  that  this  point — which  I think  will 
interest  you  and  the  committee — and  that  is  that  the  existence 
of  labor  saving  machinery  and  superior  facilities  through  central- 
ization promotes  the  sustaining  of  the  American  wage  earner; 
and  I am  satisfied  that  on  investigation,  if  you  will  look  into  those 
properties  where  they  do  not  have  those  facilities  that  they  have 
been  obliged  to  cut  the  wages  of  labor  owing  to  the  fact  that  they 
haven’t  had  the  facilities  which  can  be  created  through  the  cen- 
tralization of  manufacture. 

Mr.  Lexow:  That  is  interesting;  but  isn’t  it  a fact  that  these 
combinations  of  interests  place  in  the  hands  of  a compact  organi- 
zation the  ability  to  close  factories  in  one  direction  or  another, 
scattering  its  work  in  factories  in  other  States  at  will — A. 
There  are — 

Q.  Isn’t  it  a fact  that  you  have  got  that  power;  have  you  not? 
A.  I can’t  say. 

Q.  You  can  practically  close  every  factory  in  the  State  of  New 
Jersey  and  continue  your  operations  in  Massachusetts  and  other 
States?  A.  I don’t  think  we  can. 

Q.  To  what  extent  not?  A.  I don’t  think  that  we  can  do  that. 

Q.  Now,  if  you  have  maintained  the  rate  of  wages  in  the  inter- 


504 


[Senate, 


ests  of  labor,  explain  to  the  committee,  if  you  will,  bow  it  came 
that  with  a surplus  productive  capacity  of  50  per  cent,  you  bought 
the  Colchester  works  and  closed  them  down,  throwing  500  men 
out  of  employment;  immediately  proceeded  from  there  to  the 
Goodyear  Glove  concern  at  Naugatuck,  absorbed  that  and  closed 
that  down,  after  some  of  your  employes  in  the  Colchester  works 
had  secured  employment  there,  and  they  were  thrown  out  for  the 
second  time  after  that  was  absorbed  by  your  company?  A.  Mr. 
Chairman,  we  have  run — 

Q Is  that  a fact?  Am  I stating  something  that  is  not  a fact, 
or  is  it  a fact?  A.  I don’t  think  ii  is  a fact. 

Q.  Will  you  swear  that  it  is  not  a fact?  A.  I don’t  think  so. 

Q.  Will  you  swear  that  it  is  nor  a fact?  A.  In  all  its  details 
T will  swear  that  it  is  not  a fact. 

Q.  Will  you  swear  that  you  didn’t  close  the  Colchester  works? 
A.  The  Colchester  works  were  closed. 

Q.  And  500  workmen,  or  thereabouts,  thrown  out  of  employ- 
ment? A.  I don’t  know. 

Q.  How  many?  A.  I don’t  know. 

Q.  Were  there  as  many  as  400?  A.  I don’t  know. 

Q.  Half  as  many  as  that?  A.  I don’t  know. 

Q.  Did  you  not  have  control  over  the  Colchester  works?  A.  I 
never  have. 

Q.  Did  you  not,  through  the  agency  of  the  Manufacturers’ 
Selling  Company,  have  the  practical  control  over  the  Colchester 
works?  A.  1 did  not. 

Q.  Didn’t  you  purchase  the  Colchester  works?  A.  Well,  the 
United  States  Rubber  Company  purchased  a mortgage  ou  the 
Colchester  Company  and  the  Colchester  plant  came  under  its 
control. 

Q.  Yes — A.  It  was  an  industrial. 

Q.  Were  you  not  operative?  A.  No;  it  was  purchased  from 
the  bankers. 

Q.  Rrom  what  bankers?  A.  H.  B.  Hollins  & Company. 

Q.  Did  they  also  control  the  Rubber  Manufacturers’  Selling 
Company?  A.  That  was  included  in  the  list,  as  I have  before 
stated. 


No.  40.] 


,509 


Q.  Were  you  not  interested  in  that  company?  A.  No. 

Q.  Not  at  all?  A.  Not  at  all. 

Q.  For  advances  made?  A.  I made  advances;  I had  security. 

Q.  To  a very  large  amount,  was  it  not?  A.  Well,  it  was  con- 
siderable. 

().  And  you  were  interested  in  the  turning  of  this  Colchester 
property,  which  was  then  practically  bankrupt,  and  the  Mer- 
chants' or  Robber  Sellers  Selling  Company  which  was  then  in  a 
condition  of  financial  prostration — you  were  interested  in  both 
of  these  concerns  being  turned  over  to  the  United  States  Rubber 
Company,  were  you  not?  A.  I can’t— 

Q.  Were  you,  or  were  you  not?  A.  Under  the  impression  that 
I was  not;  made  advances,  but  I had  no  stock  in  either  of  these 
concerns. 

Q.  1 understand  that;  but  you  were  interested  in  securing  your 
advances,  were  you  not?  A.  They  were  already  secured. 

Q.  Well,  I mean  in  a general  sense,  you  wanted  to  put  them  in 
better  shape  than  they  were?  A.  No — I am  always  interested 
about  investments — 

Q.  Well,  that  is  natural;  don’t  you  know,  with- the  interest  you 
had  in  those  two  concerns,  the  number  of  workingmen  that  were 
engaged  in  the  Colchester  works,  and  that  were  discharged  as 
the  result  of  the  sale  of  the  property  to  this  rubber  combination? 
A.  I want  to  state  that  we  haven’t  reduced  the  number  of  labor- 
ing— of  wage  earners. 

Q.  I am  not  saying  that  you  did;  I ask  you  whether  in  refer- 
ence to  this  particular  matter  that  from  400  to  500  men  were  dis- 
charged? A.  I don’t  know  that  they  were;  I know  the  Colchester 
was  closed. 

Q.  Will  you  swear  that  they  were  not?  A.  I will  swear  that 
to  the  best  of  my  knowledge  they  were  not. 

Q.  You  will?  A.  Yes;  if  you  pin  me  down  accurately  to  your 
question;  the  difficulty,  Mr.  Chairman,  is  that  your  question  is 
not  accurate  in  every  particular. 

Q.  I will  make  it  so  accurate  that  you  can’t  mistake  it;  as  a 
result  of  the  closing  down  of  the  Colchester  works  were  from  400 
or  500  men  discharged?  A.  No. 


506  [Senate, 

Q.  From  those  works?  A.  If  you  want  me  to  answer  yes  or 
no,  no. 

7 I 

Q.  From  those  works?  A.  No. 

Q.  Employees?  A.  There  may  have  been;  I don’t  know. 

Q.  Were  from  400  to  500  working  men,  employees,  bookkeepers 
and  any  other  class  of  labor  employed  upon  these  works  discharged 
from  those  works?  A.  I don’t  know  as  to  the  number;  but  there 
were  considerable;  when  the  works  closed  down,  naturally  the 
laborers  and  employees  were  not  wanted. 

Q.  You  then  proceeded  to  Naugatuck  and  absorbed  the  Good- 
year Glove  Company,  did  you  not?  A.  To  be  specific,  we  did  not 
proceed  to  Naugatuck;  we  bought,  Mr.  Chairman,  the  stock  of  the 
Goodyear  Glove  Company. 

Q.  Yes,  and  absorbed  it?  A.  No;  we  did  not  absorb  it. 

Q.  Did  you  hold  a mortgage  on  the  stock  of  that  company  in 
your  treasury?  A.  We  did. 

Q.  Did  you  close  down  the  Goodyear  Glove  Company?  A.  Not 
to  my  knowledge;  the  Goodyear  Glove — not  to  my  knowledge. 

Q.  Will  you  swear  that  you  did  not?  A.  I will  swear  that  to 
my  knowledge  I do  not  know  that  we  closed  it  down. 

Q.  Is  the  Goodyear  Glove  Company  of  Naugatuck  running 
now?  A.  I don’t  know;  but  in  general  I want  to  state  that  the 
Goodyear  Glove  Company,  like  the  other  companies,  is  managed 
by  the  original  officers,  officers  originally  appointed;  it  is  a dis- 
tinct and  separate  and  independent  organization. 

Q.  Do  you  wish  to  be  understood  to  state  that  the  United 
States  Rubber  Company  is  not  accountable  for  the  companies 
that  it  absorbed  by  purchase  of  stock,  holding  the  stock  in  its 
treasury  ? A.  Yes;  not  fully. 

Q.  Not  responsible?  A.  No;  they  are  interested  as  stockhold- 
ers; these  corporations  have  independent  existence,  managed  by 
independent  officers. 

Q.  Now,  is  it  possible,  Mr.  Flint,  that  as  treasurer  of  this 
United  States  Rubber  Company  you  don’t  know  whether  your 
factory  at  Naugatuck  is  running  now  or  not?  A.  I do  not. 

Q.  You  know  that  the  Setauket  factory  of  a competitor  is  not 
running,  do  you  not?  A.  I have  understood  it  is  not. 


No.  40.] 


507 


Q.  Now,  is  it  a fact  that  the  United  States  Rubber  Company 
which  had  refused  the  president  of  the  New  Brunswick  Company 
the  right  to  manufacture  third  quality  goods  and  closed  down  in 
the  Winter  of  1S94-95,  started  to  manufacture  third  quality  goods 
so-called  in  the  Spring  of  the  next  year  for  the  purpose  of  com- 
peting with  the  Setauket  Company,  driving  down  the  price  and 
closing  the  Setauket  Company,  which  remains  closed  to-day?  A. 
Personally,  I do  not  know. 

Q.  Will  you  swear  that  was  not  the  operation?  A.  I will 
swear  that  I do  not  know  as  to  it. 

Q.  Will  you?  A.  That  is  a part  of  the  business,  Mr.  Chair- 
man. that  I have  no  knowledge  of. 

Q.  Who  has  knowledge  of  that?  A.  I think  that  in  a general 
way,  Mr.  Charles  L.  Johnson. 

Q The  same  gentleman — - A.  The  same  gentleman  who  is  in 
charge  of  the  sales. 

Q.  Can  his  attendance  be  secured  here?  A.  I think  so. 

Q.  You  say  you  have  requested  him  to  come?  A.  I asked  him 
to  come;  I told  him  that  on  these  points  that  I was  not  familiar 
with  them,  and  he  told  me  that  he  would  come,  and  I have  re- 
quested him  to  come  before  the  committee. 

Mr.  Lexow:  I would  like  to  examine  Mr.  Johnson  before  put- 
ting tnose  final  questions  to  you  that  I would  like  you  to  answer. 

Mr.  Flint:  I will  endeavor  to  arrange  to  have  him  present,  Mr. 
Chairman. 

Mr.  Lexow:  Then,  as  far  as  your  testimony  is  concerned,  I will 
discontinue  further  examination  until  I have  answers  to  these 
questions. 

By  Mr.  Warner: 

Q.  Do  you  mean  to  say  that  these  independent  companies  are 
entirely  independent  of  the  United  States  Rubber  Company?  A. 
I mean  to  say  that  they  are  under  independent  management; 
they  have  got  their  old  officers,  and  in  the  main  they  have  got 
independent  directors,  and  are  run  independently. 


508 


[Senate, 


Q.  Do  you  mean  to  be  understood  as  stating  that  they  are  inde- 
pendent of  the  United  States  Rubber  Company?  A.  I mean  to 
say  that  they  are  independent  organizations;  they  have  got  old 
control — the  United  States  Rubber  Company  holds  the  majority 
of  more  of  the  stock,  and  in  that  sense  is  the  largest  stockholder, 
but  I mean  to  say  that  the  management  is  independent;  under 
independent  management. 

Q.  Were  any  of  the  directors  of  the  United  States  Rubber 
Company  directors  in  any  of  the  subsidiary  companies?  A.  Yes, 
to  some  extent;  I am  a director  in  one  company;  I am  a director 
of  the  Glove  Company,  but  I have  only  attended  two  meetings. 

Q.  Is  it  not  a fact  that  it  has  been  the  plan  of  the  United 
States  Rubber  Company  to  have  their  directors  elected  directors 
in  these  different  companies,  so  as  to  control  the  affairs  of  those 
companies  to  a very  large  extent?  A.  There  are  members  who 
have  been  elected  also  directors  of  the  United  States  Rubber 
Company,  but  those  corporations  are  under  separate  and  inde- 
pendent management  and  control. 

Q.  But  is  it  not  a part  of  the  plan  and  purpose  of  the  United 
States  Rubber  Company  to  control  those  different  companies  by 
having  their  directors  elected  directors  of  these  different  com- 
panies; you  know  that?  A.  Not  in  the  sense  of  control;  there 
has  been  an  endeavor  to  secure  harmony  of  management  in  order 
to  secure  the  economies,  as  I have  before  stated. 

Q.  There  is  an  entire  harmony  in  management?  A.  Not  al- 
ways; no;  at  times  there  are  differences  of  view;  and  as  I under- 
stand— I am  not  familiar  with  it  in  detail — -the  parties  connected 
with  those  corporations  take  positions  that  they  hold — 

Q.  What  has  become  of  the  stock  of  these  different  companies? 
A.  The  stock  of  these  corporations  is  in  the  box  that  I have  be- 
fore referred  to  in  New  Brunswick. 

Q.  Turned  over  to  the  United  States  Rubber  Company?  A. 
The  United  States  Rubber  Company  bought  that  stock — 

Q.  Yes — A.  And  paid  for  it. 

Q.  I understand  that  you  purchased  a mortgage  on  the  prop- 
erty of  one  of  those  companies?  A.  Yes. 


No.  40.] 


509 


Q.  Was  that  mortgage  purchased  before  any  part  of  the  stock 
of  that  company  was  purchased?  A.  I think  it  was. 

Q.  Why  was  it  purchased?  A.  From  the  fact  that  it  was 
looked  upon — it  was  offered  by  the  bankers  in  connection  with  all 
the  other  properties,  and  the  Simmons  committee  recommended 
its  purchase. 

Q.  Do  you  mean  to  say  that  the  bankers  owned  that  property 
before  any  movement  was  made  to  organize  this  Trust?  A.  I 
didn’t  say  that;  but  I mean  to  say  that  the  mortgage  was  offered 
in  conjunction  with  all  the  other  stocks  by  the  bankers  to  the 
United  States  Rubber  Company,  and  it  was  purchased  under  the 
recommendation  of  the  Simmons  committee. 

Q.  It  was  purchased  by  the  bankers  for  the  United  States  Rub- 
ber Company?  A.  No;  it  was  offered  by  the  bankers  to  the 
United  States  Rubber  Company. 

Q.  Wasn’t  it  a part  of  the  plan  that  that  was  purchased  by  the 
bankers  for  the  purpose  of  offering  it  to  the  United  States  Rubber 
Company?  A.  I can’t  say  that;  what  was  done — it  was  offered 
as  part  of  the  properties  which  was  offered  to  the  United  States 
Rubber  Company  by  the  bankers,  and  the  Simmons  committee 
recommended  its  purchase  with  all  the  other  properties. 

By  Mr.  Lexow: 

Q.  Are  you  sure  of  that?  A.  Well,  I haven’t — I haven’t  any 
doubt  of  it,  Mr.  Chairman;  I might  be  mistaken. 

Q.  When  did  the  Simmons  committee  file  its  report?  A.  I 
think  in  early  September,  1892. 

Q.  Did  they  not  file  their  report  prior  to  the  12th  day  of  May, 
1893?  A.  Yes;  I think  they  did. 

Q.  You  are  certain  of  it?  A.  Yes;  I am  certain  I said  in  the 

fall  of  1892. 

Q.  Now,  isn’t  it  a fact  that  the  mortgage  and  the  stock  of  the 
Colchester  Company  and  this  Sellers’  Company  were  acquired 
about  the  18th  of  August,  1893?  A.  The — as  I have  said  be- 
fore— 

Q.  Is  that  a fact  or  not?  A.  As  I have  before  stated  the  Sell- 


510 


[Senate, 


ers’  Company  stock,  or  a majority  of  it,  was  purchased  in  the 
offer  made  by  the  bankers  and  under  the  recommendation  of  the 
Simmons  committee. 

Q.  Then  it  was  the  balance  of  the  stock  of  that  Sellers’  Com- 
pany that  was  purchased  about  August  the  12th,  1893,  was  it? 
A.  It  was  purchased  in  1893;  I don’t  remember  the  date. 

Q.  And  after  the  works  of  that  company  had  been  closed  down? 
A.  I don’t  remember  as  to  that. 

Q.  Don’t  you  know  that  the  works  of  the  company  were  closed 
down?  A.  I do  not. 

Q.  Do  you  not  know  that  the  works  of  the  company  were  closed 
down  about  simultaneously  with  the  receipt  of  the  majority  hold- 
ing in  the  stock  and  the  purchase  of  the  bonds  and  mortgage  re- 
ferred to  by  you?  A.  I don’t  think  they  were  closed  until  a long 
time  after  that. 

Q.  Were  they  not  closed  in  the  early  part  of  the  year  1893? 
A.  I don’t  think  they  were. 

Q.  Will  you  swear  that  they  were  not?  A.  Will  not;  I will  not 
swear  that  they  were  not;  but  I don’t  think  they  were;  I can  as- 
certain exactly. 

Q.  These  Colchester  works  had  been  in  operation  uninterrupt- 
edly from  1845  until  they  were  closed  immediately  after  the  ac- 
quisition of  the  property  by  the  rubber  combination?  A.  I know 
that  they  were  not. 

Q.  When  had  they  stopped?  A.  Those  works  were  formerly  in 
the  possession  of  the  Heywood  Rubber  Company,  and  the  Hey- 
wood  Rubber  Company  failed  owing  to  the  severity  of  the  com- 
petition of  the  companies  having  better  facilities,  and  then  the 
works  must  have  closed  down  for  a considerable  period. 

Q.  Are  you  now  simply  guessing,  or  do  you  know  this  as  a fact? 
A.  I am — I know  that  they  must  have  closed  down  after  the  fail- 
ure of  the  Heywood  Rubber  Company  which  owned  them. 

Q.  For  how  long?  A.  Well,  I should  think  for  a year  or  two, 
and  I — 

Q.  Do  you  know  this?  A.  I do  not;  but  I know  it  must  have 
been  for  some  period. 


No.  40.] 


511 


Q.  How  long  had  they  been  running  prior  to  the  acquisition  of 
the  works  by  the  Trust?  A.  Several  years. 

Q.  How  many?  A.  I don’t  remember. 

Q.  The  Rubber  Manufacturing  Sellers’  Company  was  organ- 
ized for  the  specific  purpose  of  floating  the  goods  made  by  your 
company,  was  it  not?  A.  I should  not  say  “ floating.” 

Q.  Dispose  of  them?  A.  It  was  a selling  company,  and  sold 
other  goods  besides  the  Colchester,  but  that  was  the  largest  pro- 
duct that  they  sold. 

By  Mr.  Warner: 

Q.  Was  not  this  mortgage  over  the  Colchester  property  turned 
over  to  the  bankers  with  the  view  to  give  the  United  States  Rub- 
ber Company  the  ultimate  control  of  that  company?  A.  I don’t 
know  with  what  view;  it  was  a large  mortgage  that  was  offered, 
as  I have  before  stated,  and  purchased  in  the  bankers’  agreement 
with  the  United  States  Rubber  Company. 

Q.  Now,  the  bankers  purchased  this  mortgage  as  the  agents  of 
the  United  States  Rubber  Company?  A.  No;  they  did  not. 

Q.  You  have  testified  that  you  gave  them  a commission  for 
their  services?  A.  I have  answered  the  question. 

Q.  All  right;  and  wasn’t  it  with  the  view  of  coercing  the  stock- 
holders in  entering  into  the  Trust  combination?  A.  No;  I do. not 
think  it  was. 

Q.  But  it  did;  it  did  result  in  a majority  of  the  stockholders 
transferring  their  stock  to  the  bankers?  A.  I do  not  think  that 
they  did. 

Q.  Did  what?  A.  Transfer  their  stock  to  the  bankers. 

Q.  To  whom  did  they  transfer  their  stock?  A.  I think  the 
stock  was  transferred  to  the  United  States  Rubber  Company. 

Q.  So  there  was  an  instance  wherein  the  bankers  did  not  pur- 
chase the  stock  for  the  company?  A.  Yes. 

Q.  Did  they  buy  the  mortgage?  A.  They  purchased  the  mort- 
gage. 

Q.  With  the  view — A.  No;  I have  not  answered  that  before; 
that  they  did  not  purchase  it  for  the  company. 


512 


[Senate, 


Q.  For  what  did  they  receive  the  $500,000  worth  or  stock  then? 
A.  They  purchased — the  bankers  had  possession  of  certain  prop- 
erties, certain  stock,  this  mortgage;  they  offered  it  to  the  United 
States  Rubber  Company  for  a certain  consideration,  and  that  of- 
fer was  accepted  by  the  United  States  Rubber  Company  and  pur- 
chased. 

Q.  And  that  consideration  was  a commission  for  their  services 
as  you  have  testified,  was  it  not?  A.  The — 

Q.  Wasn’t  it?  A.  They  were  not — they  were  not  in  any  sense 
the  agents  of  the  United  States  Rubber  Company;  it  was  an  inde- 
pendent offer  of  securities  by  the  bankers;  they  were  on  one  side 
of  that  trade  and  the  United  States  Rubber  Company  was  on  the 
other. 

Q.  Was  it  purchased  by  the  bankers  with  the  view  of  turning 
over  to  the  United  States  Rubber  Company?  A.  I do  not  know 
as  far  as  the  views  of  the  bankers  are  concerned;  that  is  a matter 
that  they  will  have  to  answer  for  themselves. 

Q.  Don’t  you. know  that  it  was  a part  of  the  scheme?  A.  I am 
they  should  buy  these  properties  with  a view  of  turning  them  over 
to  the  United  States  Rubber  Company?  A.  I think  that  they 
were. 

Q.  Don’t  you  know  that  it  was  a part  of  the  scheme?  A.  I am 
satisfied  that  they  purchased  these  properties  with  the  view  of 
disposing  of  them  to  a rubber  company  that  could  avail  of  the 
advantages  of  having  these  corporations  under  one  control  so  as 
to  avail  of  the  economies  that  result — 

Q.  Then  these  properties  were  purchased  by  them  with  the  view 
to  turn  them  over  to  the  United  States  Rubber  Company  at  a 
fixed  price  which  was  understood  at  the  time  they  purchased  the 
properties?  A.  I — 

Q.  Now,  isn’t  that  the  case? 

(Question  repeated.) 

A.  No. 

Q.  Then  there  was  an  understanding  that  the  United  States 
Rubber  Company  was  to  purchase  these  properties  of  the  bankers 
at  the  time  they  purchased  the  properties  of  these  different  cor- 
porations? A.  That  was  expected. 


No.  40.] 


513 


Q.  There  was  an  understanding?  A.  It  was  anticipated  that 
they  would. 

By  Mr.  Bedell: 

Q.  Wasn’t  there  an  agreement  that  they  would?  A.  No;  there 
was  no  agreement  entered  into  by  the  United  States  Rubber 
Company  until  the  Fall  of  1892,  when  the  United  States  Rubber 
Company  appointed  a committee,  the  Simmons  Committee,  and 
under  its  recommendation  bought  these  properties;  but  there  was 
no  agreement  of  any  kind  or  nature  whatsoever  on  the  part  of 
the  United  States  Rubber  Company  to  buy  any  properties  prior 
to  that. 

By  Mr.  Warner: 

Q.  But  there  was  an  agreement,  was  there  not,  on  the  part  of 
the  promoters  of  this  Trust,  with  a company  to  be  formed  called 
the  United  States  Rubber  Company,  that  a company  be  formed 
for  the  purchase  of  these  properties  of  the  bankers  at  a fixed  price 
which  was  understood?  A.  No;  not  that  I know  of. 

Q.  Or  at  the  price  which  was  to  be  fixed  by  the  appraisers?  A. 
Not  that  I know  of. 

a 

Q.  Now,  why  was  it  that  they  went  around  in  this  roundabout 
way  of  transferring  the  property  to  the  bankers  first  before  it 
was  turned  over  to  the  Trust?  A.  That  is  a matter  that  the  bank- 
ers are  the  best  judges  of;  but  they  were  in  the  banking  business; 
they  saw  an  opportunity  of  securing  certain  securities  and  certain 
property;  they  saw  an  opportunity  of  making  a legitimate  bank- 
ing profit;  they  obtained  these  properties  and  offered  them  to  the 
United  States  Rubber  Company  in  the  way  in  which  I have 
stated. 

Q.  Then  you  will  swear  now  that  there  was  no  understanding? 
A.  There  was  no  understanding  with  the  United  States  Rubber 
Company. 

Q.  Between  them  and  the  promoters  of  the  United  States  Rub- 
ber Company  that  the  company  would  take  these  properties  of 
33 


514  [Senate, 

the  bankers  at  the  time  they  purchased  the  properties  from  the 
different  corporations?  A.  Not  that  I know  of. 

By  Mr.  Bedell: 

Q.  You  say,  Mr.  Flint,  that  there  was  no'  understanding  with 
the  United  States  Rubber  Company;  now,  who  was  the  under- 
standing with?  You  don’t  mean  to  have  this  understood;  that 
those  bankers  entered  into  a purchase  of  all  these  respective  sub- 
sidiary companies,  took  their  stock,  without  having  a full  knowl- 
edge upon  their  part  that  that  stock  was  to  be  taken  off  of  their 
hands  by  some  one;  now,  who  was  that  some  one?  A.  Naturally, 
when  the  bankers — ; 

Q.  Answer  my  question;  who  was  that  some  one?  Don’t  you 
know?  A.  I know  that  there  was  no  agreement  with  the  United 
States  Rubber  Company. 

Q.  Well  who  was  the  agreement  with?  A.  There  was  no 
agreement* 

(Question  repeated.) 

A.  There  was  no  agreement ; I know  that  they  expected  to  dis- 
pose of  these  securities  to  the  United  States  Rubber  Company. 

Q.  What  reason  had  they  to  expect  that?  A.  That  you  will 
have  to  ask  them. 

Q.  You  say  that  they  had  reason  to  expect  it?  A.  I think  they 

did. 

Q.  How  did  you  know  they  had  reason  to  expect?  You  must 
have  had  something  upon  which  to  base  your  ideas?  A.  From 
the  fact  that  it  would  be  natural  for  a corporation  engaged  in — 

Q.  I don’t  want  you  to  tell  me  what  would  be  natural;  you  base 
your  statement  upon  some  fact;  what  is  that  fact?  A.  The  fact 
is  the  general  fact  that  the  United  States  wanted  to  buy  rubber 
shoe  plants,  rubber  manufacturing  plants,  and  the  bankers  were 
naturally  aware  of  that  fact. 

Q.  They  were  aware  of  it,  but  still — A.  (Interrupting)  Or  an- 
ticipated— 

Q.  (Continuing)  Simply  from  the  fact  that  they  knew  that  the 
United  States  Rubber  Company  wanted  to  purchase,  they  pur- 


Ko.  40.] 


515 


chased,  reiving  upon  the  very  fact  that  because  the  United  States 
Rubber  Company  wanted  it  that  they  would  take  it.  A.  They 
anticipated — 

(Question  repeated.) 

A.  I mean  to  say  they  anticipated  they  would  take  it;  there 
was  no  agreement. 

Q.  What  was  their  foundation  for  anticipation?  A.  You  will 
have  to  ask  them. 

Q.  You  state  that  you  knew  they  anticipated  it;  where  did  you 
reach  that  conclusion;  upon  what  facts?  A.  By  the  develop- 
ments as  they  have  been  brought  out  here  by  the  testimony. 

Q.  Here?  A.  Well,  by  the  developments  that  I have  already 
stated. 

Mr.  Lexow:  We  have  no  testimony  but  yours.  A.  Well, 
you  have  my  testimony  that  these  properties  were  offered  and 
that  they  were  accepted. 

Mr.  Bedell.  I would  like  to  ask  you,  Mr.  Flint,  if  you  are 
willing  to  swear  positively  that  you  have  no  knowledge  on  your 
part  of  any  existing  agreement,  either  verbal  or  in  writing,  be- 
tween the  bankers  and  the  United  States  Rubber  Company,  or 
any  officer  of  that  company,  or  any  person  who  proposed  to  be- 
come an  officer  or  director  of  that  company,  to  the  effect  that  the 
stock  purchased  of  these  subsidiary  companies  was  not  to  be 
taken  by  the  United  State  Rubber  Company,  or  a person  inter- 
ested therein,  or  for  the  benefit  of  the  rubber  company  at  a fixed 
price?  A.  I have  no  knowledge  of  any  agreement. 

By  Mr.  Warner:  j 

Q.  Any  understanding — A.  I have  no  knowledge. 

By  Mr.  Bedell: 

Q.  Written  or  oral?  A.  I have  no  knowledge  of  any  agree- 
ment, no  knowledge  of  any  understanding  until  the  purchase  was 
made;  naturally,  it  was  anticipated,  but  I know  of  no  agree- 
ment; I don’t  see  how — 

Q.  All  done  on  conjecture?  A.  All  done  on  conjecture. 


516 


[Senate, 


By  Mr.  Warner: 

Q.  With  no  idea  that  these  properties  should  be  turned  event- 
ually into  this — A.  The  idea,  as  I have  stated,  probably  was 
in  the  minds  of  the  bankers — 

Q.  And  they  are  the  promoters  of  this  Trust,  then?  A.  I 
don’t — no,  I don’t  think  you  can  say  that;  you  have  got  before 
you — the  document  I have  furnished  the  committee- — the  incor- 
porators of  this  company. 

Q.  Now,  as  I understand,  they  purchased  these  properties  at  a 
given  price,  which  was  much  less  than  the  capitalization,  the 
aggregate  capitalization,  that  is  the  aggregate  price  of  these  dif- 
ferent properties — much  less  than  the  capitalization  of  the  Trust 
— and  still  they  turned  these  properties  over  to  the  United  States 
Rubber  Company,  and  only  received  $500,000  in  stock  of  the  com- 
pany? A.  I have  already  explained  the  capitalization;  that  they 
didn’t  represent  the  value;  these  properties  were  appraised,  the 
value  was  appraised,  and  it  was  appraised  at  a certain  figure. 

Q.  This  stock  was  turned  over  to  the  United  States  Rubber 
Company  by  the  bankers,  was  transferred  to  them  with  the  view 
of  having  them  turn  it  over  to  the  individual  stockholders  of 
these  several  corporations,  was  it  not?  A.  I don’t  think  there 
was  any  view’  with  regard  to  it — 

Q.  Did  they  turn  it  over;  didn’t  they?  A.  The  bankers  offered 
stocks  and  properties;  they  received  a certain  amount  from  the 
United  States  Rubber  Company;  that  stock,  to  a very  large  ex- 
tent, they  turned  over,  so  I am  informed,  and  believe,  to  the 
stockholders  of  the  different  companies  mentioned. 

Q.  Now,  Mr.  Flint,  you  don’t  mean  to  have  this  committee  be- 
lieve that  the  bankers  had  no  understanding  with  the  people  who 
were  to  take  the  property  ultimately  that  they  were  not  acting 
as  agents  for  this  Trust  Company;  either  you  don’t  want  us  to 
believe  there  wras  any  understanding  with  the  view  of  turning 
this  property  over  before  they  purchased  the  different  proper- 
ties— A.  They  were  acting  as  vendors,  and  the  offer  was  very 
clearly  defined  in  the  offer  of  the  bankers  and  the  report  of  the 
committee  and  acceptance  of  it  by  the  United  States  Rubber 
Company. 


No.  40.] 


517 


Q.  That  is  so  understood—  A.  I have  explained  that  fully  and 
plainly;  there  was  no  understanding;  the  transaction  was  con- 
ducted regularly  in  the  way  I have  stated;  I think  I have  covered 
that  point. 

Q.  At  the  time  of  the  formation  of  this  Trust  in  how  many 
companies  did  you  own  stock?  A.  I didn't  have  a direct  inter- 
est in  any;  but  through  a crude  rubber  company  in  which  I was 
interested,  I did  have  some  small  interest,  but  that  was  exceed- 
ingly small. 

Q.  You  were  not  a director  in  any  of  the  companies?  A.  I 
was  not  a director  in  any  of  the  shoe  companies;  was  never  con- 
nected with  any  of  them;  I was  not  in  the  manufacture  of  rubber 
boots  and  shoes;  I was  a crude  rubber  merchant  importing  crude 
rubber,  and  I was  selling  crude  rubber  to  these  concerns;  that  is 
the  way  I made  their  acquaintance. 

Q.  How  long  after  the  acquisition  of  this  mortgage  by  the 
bankers  was  it  that  they  obtained  a control  of  the  major  part  of 
the  stock  of  the  Colchester  Company?  A.  I don't  know  how 
long,  but  I should  suppose  it  was  quite  a number  of  months;  1 
could  not  give  the  date;  I will  be  glad  to  look  it  up  for  you. 

Q.  And  did  it  not  result  in  forcing  the  stockholders  of  that 
company  to  transfer  that  stock  to  the  bankers?  A.  I think  they 
did  it  voluntarily;  but  the  man  who  did  that  was  George  Wat- 
kinson;  he  is  a manufacturer  of  rubber  boots  and  shoes;  he  can 
answer  that  question;  but  I know  of  no  coercion. 

Q.  It  did  result  in  the  stockholders  holding  a majority  of  the 
stock,  disposing  of  their  holdings  eventually  or  subsequently? 
A.  The  stock  of  the  Colchester  Rubber  Company  was  purchased; 
all  of  the  stock  there  was  purchased  by  the  United  States  Rubber 
Company. 

Q.  That  is  eventually?  A.  Eventually. 

Q.  But  in  the  first  instance  they  purchased  a major  part  of  it 
as  you  have  testified  now?  A.  I don't  remember  of  testifying 
that  they  did., 

Q.  Well,  that  is  a fact,  isn’t  it?  A.  No. 

Well,  you  did  testify  to  it.  A.  That  is  a matter  of  record? 


518 


[Senate, 


Q.  Yes.  A.  I don’t  think  I did;  in  fact,  I am  satisfied  I did  not. 

Q.  Well,  you  mean  to  say  that  all  the  stock  of  the  Colchester 
Company  was  turned  over  at  one  time?  A.  I think  it  was. 

Q.  To  whom?  A.  To  the  United  States  Rubber  Company. 

By  Mr.  Bedell  r 

Q.  Didn’t  the  bankers  acquire  a majority  of  the  stock  first  and 
afterward  acquire  the  minority  part?  A.  I don’t  think  they  did. 

Q.  They  acquired  it  all  at  once?  A.  I think  the  United  States 
Rubber  Company  purchased  all. 

Q.  I am  not  speaking  of  when  the  United  States  Rubber  Com- 
pany purchased  that;  I am  speaking  of  when  the  bankers  took  it; 
did  the  bankers  acquire  all  this  stock  at  one  time?  A.  I don’t 
think  that  the  bankers — they  may  have  been  a party  to  the  trans- 
action. 

Q.  Don’t  you  know  it  as  a fact  whether  or  not  they  did?  A.  I 
don’t  remember;  but  I remember  this,  that  the  United  States 
Rubber  Company  purchased,  I think,  all  of  the  stock — - 

Q.  I would  like  to  have  an  answer  to  my  question.  The  ques- 
tion that  I ask  you  is  whether  the  bankers  did  not  first  purchase 
a majority  of  the  stock,  not  the  entire  amount  of  the  stock;  do 
you  know?  A.  I don’t  think  they  did — I don’t  know;  I don’t 
think  they  did. 

Q.  Are  you  willing  to  swear  that  they  did  not?  A.  No;  I will 
get  the  facts. 

Q.  I repeat;  are  you  willing  to  swear  that  they  did  not?  A.  I 
will  get  the  facts. 

Q.  We  would  like  to  be  furnished  with  the  facts  with  respect 
to  it.  A.  I will  get  the  facts  on  that  point. 

By  Mr.  Lexow : 

Q.  The  facts  were,  were  they  not,  that  on  the  18th  of  August, 
1893,  $323,400  of  common  stock  and  $149,000  of  preferred  stock 
of  the  United  States  Rubber  Company  were  exchanged  for  the 
whole  capital  stock  of  the  Colchester  Company,  amounting  to 
$400,000;  is  that  the  fact  or  isn’t  it? 

(Question  repeated.) 


No.  40.] 


519 


A.  To  give  a specific  answer  I should  say  no;  I will  explain  it. 

Q.  Didn't  you  make  a declaration  to  the  New  York  Stock  Ex- 
change in  the  following  words,  you  and  Mr.  Evans — you  as  treas- 
urer and  Mr.  Evans  as  president:  “These  shares  have  been  is- 
sued in  payment  of  $400,000  of  stock,  the  total  capital  stock  of 
“the  Colchester  Rubber  Company  of  Colchester,  Connecticut,  and 
“for  $149,000  of  the  stock  of  the  Rubber  Manufacturers’  Sellers’ 
“Company  of  Colchester,  Connecticut,  being  the  balance  not  pre- 
“viously  purchased  by  us,  making,  with  the  $151,000  formerly  pur- 
chased its  entire  capital  stock  of  $300,000.” 

Witness : That  statement  does  not  agree  with  your  first  ques- 
tion. 

Mr.  Lexow:  I see  it  does  not. 

Witness:  I think  the  latter  statement  is  — 

By  Mr.  Lexow: 

. Q.  That  is  the  statement  you  made  to  the  stock  exchange?  A. 
I don’t  remember  specifically,  but  in  general  I think  it  is  cor- 
rect, and  if  desired,  I can  ascertain  the  facts. 

Q.  Now,  didn’t  you  file  in  your  official  capacity  as  treasurer 
with  the  New  York  Stock  Exchange  for  the  purpose  of  listing 
these  securities  this  statement  which  I have  now  repeated,  signed 
by  Mr.  Evans  and  vice-president  of  the  company,  and  by  Mr. 
Flint  as  treasurer?  A.  I think — I do  not  recollect. 

Q.  Don’t  you  know?  A.  I don’t  remember. 

Q.  Is  it  possible,  Mr.  Flint,  that  you  issued  $500,000  worth  of 
stock  without  knowing  wdiether  you  made  a statement  in  connec- 
tion wdth  it  or  not?  A.  I might  not  be  able  to  remember  all  the 
facts;  I am  engaged  in  other  business,  but  I will  be  very  glad  to 
verify  it,  and  I think  your  statement  is  correct. 

Q.  That  implies,  or  does  it  not,  that  you  bought  all  the  stock 
of  the  Colchester  Rubber  Company  at  once;  that  you  had  acquired 
previously  the  mortgage  on  the  Colchester  works;  that  you  had 
acquired  previously  $151,000  worth  of  capital  stock  of  the  Sellers 
Company,  so  that  with  this  transaction  added  you  acquired  full 
control  of  both  the  Colchester  Rubber  Company  and  the  Sellers 


520  [Senate, 

Company?  A.  My  testimony  already  in  general  confirms  those 
views. 

Q.  Well,  that  is  a fact,  is  it  not?  A.  I think  so. 

Q.  I don’t  know  whether  your  testimony  confirms  that  or  not? 
A.  I think  that  is  correct. 

Q.  Well,  it  would  be  a natural  inquiry,  when  you  understood 
that  the  Colchester  Company  was  in  straits,  bankrupt  practically, 
why  so  much  capital  stock  of  the  United  States  Rubber  Company 
was  issued  in  purchase  of  the  shares  of  that  company  of  which 
you  then  owned  the  first  mortgage;  why  did  you  issue  stock  of 
the  United  States  Rubber  Company  in  purchase  of  worthless 
shares  of  the  Colchester  Company  when  you  already  owned  a 
mortgage  of  $149,000  upon  the  Colchester  works?  A.  They  were 
not  considered  as  worthless  shares;  they  were  considered  valu- 
able, and  the  best  evidence  that  they  were  so  considered  was  in 
the  fact  that  the  parties  representing  the  United  States  Rubber 
Company  in  making  that  purchase,  had  no  interest  directly  or  in- 
directly, of  any  kind  whatsoever,  in  the  Colchester  Company,  or 
the  Rubber  Manufacturers’  Sellers  Company,  except  in  the  owner- 
ship of  interest  in  the  mortgage  and  in  the  1501  shares  as  before 
stated;  a committee  was  appointed,  of  which  Mr.  Robert  D.  Evans 
was  the  chairman,  a man  thoroughly  well  informed  as  to  values, 
and  Robert  D.  Evans  made  that  purchase  representing  the  United 
States  Rubber  Company. 

Q.  Don’t  you  know  that  at  the  time  of  the  issue  of  that  stock, 
that  is  to  say,  that  previous  to  the  18th  of  August,  1893,  this  Col- 
chester factory  had  been  closed?  A.  I don’t  know  it;  I can  as- 
certain. 

Q.  Will  you  say  that  it  was  not?  A.  I can  say  positively  that 
I don’t  know. 

r 

Q.  Now,  will  you  state  to  the  committee  what  element  of  value 
there  was  to  the  United  States  Rubber  Company  in  a property  in 
which  was  either  closed  down,  or  intended  to  be  closed  down  by 
the  United  States  Rubber  Company  upon  acquisition?  A.  These 
companies  were  doing  a very  large  business;  they  had  a great 
many  customers;  they  had  trade-marks;  they  had  processes  that 


No.  40.] 


521 


were  of  value  to  the  United  States  Rubber  Company;  the  machin- 
ery cf  the  United  States  Rubber  Company  was  desired — the  ma- 
chinery that  was  in  the  Colchester  Company’s  plant  was  desired 
by  the  United  States  Rubber  Company  or  used  later  in  order  to 
increase  the  capacity  of  other  plants,  as  I have  before  explained. 

Q.  What  possible  element  of  value  for  the  United  States  Rub- 
ber Company  was  there  in  the  acquisition  of  the  stock  of  the 
Manufacturers’  Sellers  Company,  which,  as  you  have  stated,  was 
simply  a company  to  sell  rubber  goods  of  the  Colchester  make?  A. 
I have  stated  that  they  sold  other  goods;  but  the  Manufacturers’ 
Selling  Company  had  a great  many  correspondents,  was  doing  a 
large  business;  there  was  also — Mr.  George  Watkinson  wras  an 
officer  of  the  Rubber  Manufacturers’  Selling  Company,  and  he 
was  appointed  the  assistant  general  manager  of  the  United 
States  Rubber  Company,  under  a service  contract,  whereby  at 
that  time  he  agreed  to  give  his  services  and  facilities  to  the 
United  States  Rubber  Company;  he  was  one  of  the  best  known 
men  in  the  rubber  business;  and  the  committee,  of  which  Mr. 
Evans  was  chairman,  determined  that  it  was  to  the  interests  of 
the  United  States  Rubber  Company  to  buy  this  property. 

Q.  Is  that  your  complete  answer?  A.  As  far  as  I can — 

Q.  Will  you  please  explain  what  element  of  value  there  is  in 
a factory  that  you  propose  to  close,  except  as  it  may  arise  from 
the  desire  to  destroy  its  competition  as  a free  factory?  A.  The 
consideration  as  to  the  value  of  that  property  was  one  that  only 
an  expert  in  manufacturing  and  in  the  rubber  shoe  business 
could  base  a proper  opinion  on;  Mr.  Evans,  one  of  the  most  suc- 
cessful men  in  the  rubber  industry,  was  the  chairman  of  a com- 
mittee that  passed  on  that  question;  and  he  evidently  saw  and 
recognized  the  value,  and  he  had  no  interest  of  any  kind  or 
nature  in  the  Colchester,  or  the  Selling  Company,  and  he  deemed 
it  to  his  advantage,  and  on  the  lines  of  enlightened  selfishness, 
he  recommended  or  brought  about  the  purchase  of  those  proper- 
ties. 


522 


[Senate, 


By  Mr.  Warner : 

Q.  How  large  was  this  mortgage  on  the  Colchester  property? 
A.  It  was  over  $100,000. 

By  Mr.  Lexow: 

Q.  Was  it  not  $149,000?  A.  I don’t  remember  the  exact  sum. 

By  Mr.  Warner: 

Q.  Was  any  suit  ever  brought  to  foreclose  that  mortgage?  A. 
I don’t  think  there  was;  I don’t  think  any  foreclosure  suit  was 
ever  brought. 

By  Mr.  Warner: 

Q.  Now,  as  I understand  it,  this  appraisal  committee  made  the 
appraisal  attthe  instance  of  the  United  States  Rubber  Company? 
A.  They  were  regularly  appointed  by  the  directors  of  the  United 
States  Rubber  Company. 

Q.  And  the  understanding  was  that  the  company  was  to  be 
bound  by  their  appraisals?  A.  No;  the  understanding  was  that 
they  should  make  an  investigation  of  the  affairs  of  these  corpo- 
rations, and  that  they  should  make  a report  to  the  directors  of 
the  United  States  Rubber  Company  as  to  values;  they  made  that 
recommendation  which  the  directors  of  the  United  States  Rub- 
ber Company  acted  on. 

Q.  Yes;  and  there  was  an  understanding  that  the  bankers 
were  also  to  act  on  their  report  and  on  their  appraisal,  was  there 
not?  A.  The  bankers  made  the  offer;  the  bankers  were  the  ven- 
ders; there  was  no — 

Q.  Yes,  I know;  but  the  appraisal  was  made,  was  it  not,  be- 
fore the  bankers  purchased  the  property?  A.  No,  sir. 

Q.  Was  not  the  appraisal  made  by  the  appraisal  committee  be- 
fore the  bankers  acquired  this  property?  A.  I don’t  think  it  was; 
I think  the  properties  were  offered  by  the  bankers  in  the  early 
part  of  September;  and  the  bankers  were  the  venders  and  the 
vendees  purchased  under  the  recommendation  by  their  commit- 
tee. 


No.  40.] 


523 


Q.  Yes;  it  so  happened,  did  it  not,  that  the  bankers  purchased 
at  the  figures  suggested  by  the  appraisal  committee,  that  were  to 
be  given — A.  The  directors  of  the  United  States  Rubber  Com- 
pany— 

Q.  Isn’t  that  the  case;  didn't  the  bankers  purchase  at  the  fig- 
ures that  were  given  by  the  appraisers  as  to  the  values  of  these 
different  properties? 

(Question  repeated). 

A.  I can’t  answer  as  to  that. 

Q.  Wasn’t  it  a fact  that  that  appraisal  was  made  before  the 
bankers  had  purchased  these  properties?  A.  I can’t  answer  on 
that  point. 

Q.  You  ai’e  one  of  the  promoters  of  the  whole  undertaking, 
were  you  not?  A.  I don’t  know  what  you  call  a “promoter”;  I 
was  interested  in  the  organization;  I had  an  interest  in  it;  but  I 
don’t  style  myself  a promoter;  I am  a merchant  having  an  inter- 
est in  this  class  of  business,  or  in  this  specific  business. 

Q.  The  bankers  were  in  the  rubber  business,  I take  it?  A.  The 
bankers  were  not;  the  bankers  were  in  the  banking  business,  do- 
ing a regular  banking  business,  and  they  took  an  interest  in  this 
organization,  as  has  been  done  by  many  other  bankers  in  a simi- 
lar way. 

Q.  And  they  went  out  and  purchased  all  these  different  prop- 
erties at  sums  fixed  by  themselves,  and  turned  them  over  to  the 
Trust  without  any  understanding  between  them  and  the  promot- 
ers of  the  Trust?  A.  I know  of  no  understanding;  they  secured 
these  properties;  offered  them — they  made  a regular  offer  of 
them;  the  Simmons  Committee  recommended  the  purchase  at  a 
certain  price  and  the  directors  of  the  United  States  Rubber  Com- 
pany— 

Mr.  Lexow:  We  all  know  about  that. 

Witness:  Well,  I think  I have  testified  as  fully  as  I can  on 
that  point  and  that  it  has  been  covered — 

Mr.  Lexow:  I think  you  have  covered  that  twenty  times;  the 
only  question  that  you  have  not  covered  is  one  that  arises  as  a 
natural  inference  from  the  transaction;  that  there  was  an  under- 


524 


[Senate, 


lying  agreement  of  some  kind  that  operated  upon  the  bankers  on 
the  one  hand  and  the  purchasing  committee  of  the  company  on 
the  other  hand;  that  it  was  not  simply  a coincidence  that  this 
stock  had  been  accumulated  together  for  the  purpose  of  its  trans- 
fer to  your  company.  Now,  you  don’t  dispute  the  proposition 
that  there  was  an  underlying  agreement?  A.  I have  stated  the 
facts;  I don’t  know  of  any  underlying  agreement;  I have  stated 
the  position,  but  of  course  every  one  is  free  to  draw  such  infer- 
ences as  they  choose. 

Q.  And  although  you  were  active  in  every  stage  of  the  organi- 
zation of  that  company  you  don’t  know  whether  there  was  or  not 
personally?  A.  You  can  understand — 

Q.  Do  you,  Mr.  Flint?  A.  I don’t  know  of  any  such  agreement, 
but  a great  deal  was  left  to  counsel;  this  was  a business  with 
which  I was  not  particularly  familiar — in  this  class  of  business; 
I am  a merchant — an  exporter  of  American  manufactured  goods. 

Q.  Well,  who  authorized  the  collection  of  these  various  stock 
interests  which  were  afterward  appraised  and  for  which  the  capi- 
tal stock  of  the  United  States  Company  was  issued?  Who  au- 
thorized that?  A.  The  stockholders  themselves. 

Q.  Didn’t  you?  A.  I didn’t  authorize — 

Q.  You  were  not  a party  to  it?  A.  I made  no  authorization 

of  it. 

Q.  Were  you  not  a party  to  it — don’t  split  hairs — you  must 
have  been  a party  or  not?  A.  You  want  me  to  answer  specifi- 
cally, and — 

(Question  repeated.) 

A.  There  was  no  authorization;  the  Hollins  Company  received 
the  stock;  they  received  the  stock  from  the  United  States  Rubber 
Company;  then  they  settled  with  the  stockholders  of  these  re- 
spective companies,  and  as  to  the  details  of  that  you  will  have  to 
ask  the  bankers. 

Q.  Was  it  simply  a coincidence  that  all  the  stockholdings  of 
these  various  companies  found  their  lodgment  into  one  hand  for 
the  purpose  of  its  offer  to  you?  A.  I think  the  bankers — I don’t 
think  it  was  a coincidence,  that  effort  on  the  part  of  the  bankers 


Ko.  40.] 


525 


to  secure  such  securities — I think  it  was  a work  that  they  took 
up;  they  saw  an  opportunity — 

Q.  In  conjunction  with  the  United  States  Rubber  Company? 
A.  No;  not  in  conjunction  with  the  United  States  Rubber  Com- 
pany. 

Q.  Isn't  it  a fact  that  the  presidents  of  the  sub-companies  are 
all  directors  in  the  United  States  Rubber  Company?  A.  No. 

Q.  What  exception  is  there  to  that — is  it  a rule?  A.  No. 

Q.  You  state  that  positively?  A.  State  it  positively;  that 
Is  to  say,  when  you  speak  of  a rule— there  are  many  of  them  that 
are. 

Q.  Isn’t  it  a fact  that  almost  every  president  of  every  sub-com- 
pany is  a director  in  the  United  States  Rubber  Company?  A.  I 
can  think  of  cases  where  they  are  not  in  my  own  company. 

Q.  They  are  the  exception  not  the  rule?  A.  I can  take  the 
time  to  go  over  the  list  and  give  you  the  facts. 

Q.  Those  factories  that  are  closed  have  no  representatives 
through  their  respective  presidents  on  the  board  of  the  United 
States  Rubber  Company,  but  those  factories  that  are  operative 
have  that  representation,  do  they  not?  A.  No;  not  all;  some  of 
them  have. 

Q.  Is  not  the  president  of  the  National  India  Rubber  Company 
a member  of  the  board?  A.  Yes. 

Q.  The  secretary  of  the  New  Jersey  Company?  A.  No. 

Q.  Julius  Heslen?  A.  No. 

Q.  Is  not?  A.  No. 

Q.  Has  there  been  lately  a change  in  the  directorate?  A.  Not 
lately. 

Q.  Was  Mr.  Evans  president  of  the  American  Rubber  Com- 
pany when  he  was  a director  on  your  board  or  not?  A.  Yes. 

Q.  Mr.  J.  Hobbs  Ford,  president  of  the  Mutual  Rubber  Com- 
pany? A.  Yes. 

Q.  Mr.  Henry  L.  Hotchkiss,  president  the  L.  Candee  Company? 
A.  Yes. 

Q.  Mr.  George  H.  Hood,  president  of  the  Boston  Rubber  Com- 
pany? A.  No. 


520 


[Senate, 


Q.  Has  be  left  the  board?  A.  He  is  not  in  the  board. 

Q.  Has  he  left  the  board?  A.  He  was  not  elected. 

Q.  Never  was?  A.  Not  at  the  last  meeting. 

Q.  Who  took  his  place  on  the  board?  A.  I don’t  know;  there 
was  no  special  place;  there  was  a re-election  of  directors. 

Q.  Any  representative  of  the  Boston  Rubber  Company?  A. 
No. 

Q.  Or  of  the  L.  Candee  Company?  A.  I don’t  think  they  acted 
as  representatives. 

Q.  I am  not  asking  that?  A.  They  were  individuals;  you  asked 
if  there  was  any  representative  of  L.  Candee  Company. 

Q.  Yes?  A.  Why,  these  men  are  individuals,  elected  as  direc- 
tors of  the  United  States  Rubber  Company. 

Q.  I understand;  that  a gentleman  serving  in  that  capacity  in 
the  sub-company  serves  as  director  upon  your  board  in  the  United 
States  Rubber  Company?  A.  In  what  capacity? 

Q.  As  director?  A.  A gentleman — well,  to  be  specific,  Mr. 
Henry  L.  Hotchkiss,  who  is  director  of  the  U Candee  Company, 
is  also  a director  of  the  United  States  Rubber  Company. 

Q.  Isn’t  he  president  of  the  L.  Candee  Company?  A.  I think 
he  is;  in  fact,  I know  he  is. 

Q.  Mr.  Hood,  president  of  the  Boston  Rubber  Company?  A. 
Is  not  a director  of  the  United  States  Rubber  Company. 

Q.  Who  has  taken  his  place?  A.  He  was  not  re-elected;  there 
was  no  special  place;  there  was  a re-election  of  directors — 

Q.  Has  not  a director  of  the  Boston  Rubber  Company  been 
elected  director  upon  the  board  of  the  United  States  Rubber 
Company?  A.  I think  so. 

Q.  James  P.  Langdon,  president  of  the  New  Brunswick  Com- 
pany ; is  he  a member  of  the  board?  A.  No. 

Q.  Is  any  director  of  the  New  Brunswick  Rubber  Company 
now  a member  of  your  board?  A.  I don’t  know;  but  I think 
there  may  be. 

Q.  George  A.  Lewis,  president  of  the  Goodyear  Metallic  Rub- 
ber Shoe  Company,  is  he  a member  of  your  board?  A.  I think 

not. 


No.  40.] 


527 


Q.  Any  director  of  tlie  Goodyear  Metallic  Rubber  Shoe  Com- 
pany a member  of  your  board  at  present?  A.  I think  so. 

Q.  M.  C.  Martin,  president  of  the  New  Jersey  Rubber  Shoe 
Company,  is  he  a member  of  your  board?  A.  M.  C.  Martin  is  a 
member  of  the  board,  but  I don’t  think  he  is  an  officer  of  the 
New  Jersey  Rubber  Shoe  Company. 

Q.  President  or  treasurer?  A.  I think  not. 

Q.  Well,  are  you  positive  about  that?  A.  Not  positive;  but 
that  is  my  opinion. 

Q.  Director  of  the  New  Jersey  Rubber  Shoe  Company?  A.  I 
don’t  think  he  is. 

By  Mr.  Bedell: 

Q.  When  did  he  cease  so  to  be?  A.  I don’t  know — 

Q.  He  was?  A.  Yes;  he  was  a director. 

By  Mr.  Lexow: 

Q.  Frederick  L.  Shepard,  president  of  the  Goodyear  Rubber 
Company  and  Rubber  Clothing  Company?  A.  Frederick  L. 
Shepard  is  a member  of  the  Board  of  Directors,  but  the  United 
States  Rubber  Company  has  no  interest  whatsoever  in  the  Good- 
year Rubber  Company,  or  the  Union  Company,  or  the  Lambert- 
ville  Company  in  which  Mr.  Shepard  is  largely  interested. 

Q.  Are  they  competing  companies?  A.  They  are  competing 
companies. 

Q.  Are  there  essentially  any  competing  companies?  Or  is  it 
not  the  fact  that  the  price  of  goods  by  an  agreement  between  the 
companies  is  definitely  fixed  at  the  same  rate?  A.  There  is  no 
agreement  between  the  companies. 

Q.  Does  the  fact  remain  that  the  goods  offered  by  the  various 
companies  competing,  ostensibly  competing  with  your  company 
have  the  same  price  in  the  market  for  the  same  grade?  A.  There 
are  certain  standard  grades  that  are  alike;  on  the  general  eco- 
nomic principle  that  the  lowest  price  fixes  the  price  of  a market, 
but  in  no  other  way. 


528  [Senate, 

Q.  Samuel  L.  Williams,  president  of  tlie  Lycoming  Rubber 
Company,  is  he  a member  of  the  board?  A.  He  is. 

Q.  What  company  is  there,  then,  that  is  active — that  is  not 
closed — that  has  not  a representative  on  the  board  of  the  United 
States  Rubber  Company  who  is  a director  in  the  active  company 
which  forms  a constituent  of  your  consolidation?  A.  Mr.  Chair- 
man— i l 

(Question  repeated.) 

A.  They  are  not  as  representatives. 

Q.  I understand  that?  A.  Well,  there  ape  no  representatives 
of  these  companies  in  that  sense  that  are  members  of  the  board 
of  the  United  States  Rubber  Company;  I have  answered  your  in- 
quiries as  to  each  corporation  except  that  you  didn’t  ask  me  in 
regard  to  the  Goodyear  India  Rubber  Glove  Company;  Mr.  Ver- 
meule  is  president  of  that  company  and  Mr.  Van  Yleet  treasurer, 
and  neither  one  of  them  is  in  the  board  of  the  United  States  Rub- 
ber Company. 

Q.  Is  that  the  only  active  company — A.  No. 

Q.  Is  no  director  of  that  company  a member  of  the  board?  A. 
Yes;  there  are  directors. 

Q.  Is  there  any  active  company  in  the  consolidation  a director 
of  which  is  not  upon  your  Board  of  Directors?  A.  I think  that — 
at  present  I do  not  recollect  any  companies  where  there  is  not 
some  member  of  the  Board  of  Directors  of  the  United  States  Rub- 
ber Company;  we  have  to  get  men  who  understand  the  rubber 
business  to  be  in  these  concerns., 

Q.  And  do  you  still  maintain  the  position  that  the  United 
States  Rubber  Company,  although  its  Board  of  Directors  is  com- 
posed of  directors  of  the  constituent  companies,  does  not  control 
the  policy  and  the  business  of  those  constituent  companies?  A.  I 
do  know  that  there  is  an  independent  management,  and  that 
there  are  many  directors  in  the  United  States  Rubber  Company 
who  have  no  connection  with  any  of  these  sub-companies. 

Q.  Was  there  not,  prior  to  the  1st  day  of  April,  1893,  an  ar- 
rangement or  understanding  reached  between  you  and  the  various 
companies  ostensibly  competing  against  the  United  States  Rub- 


No.  40.] 


529 


ber  Company  for  uniformity  and  equality  of  price  of  the  goods 
sold?  A.  No;  there  has  always  been,  as  long  as  I have  been  in 
the  business,  some  nineteen  years,  a certain  uniformity  that  re- 
sults from  the  fact  that  the  consumer  buys  at  the  lowest  figure 
the  standard  goods ; there  has  been  for  twenty  odd  years  a certain 
uniformity  of  price;  it  has  been  necessary;  the  rubber  shoe  busi- 
ness is  one  where  quality  depends  on  trade  mark;  rubber  shoes 
can  be  made  for  any  price;  there  are  from  half  a dozen  to  twelve 
compounds  in  every  shoe,  and  those  compounds  are  made  up  of 
twenty  or  thirty  different  kinds  of  rubber,  whiting,  lampblack, 
litharge,  rosin  and  sulphur  in  varying  quantities;  you  can’t  tell 
as  to  the  quality,  you  can’t  analyze  the  component  parts,  and  for 
the  purpose  of  sustaining  the  quality  of  rubber  boots  and  shoes; 
for  that  purpose  there  has  been  a certain  understanding  in  order 
that  a rubber  shoe  can  be  given  to  the  public  of  a proper  qual- 
ity— this  is  coincidence — I won’t  say  there  was  an  understanding. 

Mr.  Lexow:  You  understand  that  we  are  not  through  with 
your  examination;  that  we  would  like  to  examine  you  after  the 
production  of  the  information  that  we  have  requested.  A.  I un- 
derstand that,  sir. 

By  Mr.  Warner: 

Q.  As  I understand  the  report  of  this  appraisal  committee 
shows  the  values  of  these  different  properties?  A.  I have  never 
•seen  it. 

Q.  As  appraised  by  them?  A.  I have  never  seen  it;  I have  al- 
ready explained  that  I think  fully  that  these  properties  were 
offered  by  the  bankers  in  lump,  passed  on  by  the  Simmons  com- 
mittee, and  bought  for  a lump  sum  from  the  bankers. 

Q.  And  also  in  arriving  at  this  lump  sum  they  estimated  the 
value  of  these  properties?  A.  That  was  the  work  of  the  Sim- 
mons committee;  they  had  full  and  complete  reports,  as  I hare 
stated,  amounting  to  some  3,000  pages  of  data  on  which  they  based 
their  opinion;  that  data  as  far  as  I am  concerned,  I would  be 
very  glad  to  have  the  committee  see  it — I don't  think  there  i3 
•any  reason  why  it  should  not  be  seen. 

34 


530 


[Senate, 


Q.  Will  you  produce  that?  A.  It  is  not  in  my  possession;  it  is 
not  in  the  possession  of  the  United  States  Rubber  Company,  and 
never  has  been  in  the  possession  of  the  United  States  Rubber 
Company,  and  never  has  been  in  my  possession. 

By  Mr.  Lexow: 

Q.  I understood  that  it  was  in  New  Jersey,  in  the  safe  deposit 
vault  of  the  company;  that  was  3Tour  testimony  before?  A. 
What  do  you  mean  by  “that?” 

Q.  The  report  of  the  Simmons  committee?  A.  The  report  of 
the  Simmons  committee,  I have  already  stated,  is  in  the  archives 
of  the  United  States  Rubber  Company;  it  is  with  the  important 
documents;  but  it  was  and  is  in  the  possession  of  the  United 
States  Company. 

By  Mr.  Bedell: 

Q.  What  did  you  mean  by  saying,  what  did  you  refer  to  when 
you  stated  the  United  States  Rubber  Company  did  not  have  the 
possession  of  it?  A.  I understood  that  you  referred  to  certain 
expert  data  on  which  that  report  was  based;  there  are  some 
three  thousand  pages  of  expert  data  on  which  this  committee 
based  their  report. 

Q.  We  understand  that;  you  have  the  report,  but  not  the  data? 
A . I have  the  report  but  not  the  data. 

By  Mr.  McCarren: 

Q.  I understand  you  to  say  that  prior  to  the  purchase  or  the 
absorption  of  some  of  the  companies  purchased  or  absorbed  by 
the  United  States  Rubber  Company  that  they  were  in  a condition 
of  bankruptcy?  A.  They  were;  the  Para  Rubber  Shoe  Company 
to  which  I referred  yesterday, — I think  the  investment  there  was 
one  million  dollars;  in  their  endeavor  to  establish  new  trade 
marks  I think  they  lost,  say  about  three-quarters  of  a million  of 
dollars,  and  that  company  was — had  lost  the  greater  part  of 
their  capital,  and  it  was  closed  down  before  the  United  States 
Rubber  Company  was  organized. 


No.  40.] 


531 


Q.  What  was  the  name  of  that  company?  A.  The  Para  Rub- 
ber Shoe  Company  of  South  Framingham. 

Q.  Well,  was  there  any  other  company  in  a condition  of  in- 
solvency or  bankruptcy  at  the  time  of  the  organization  of  the 
United  States  Rubber  Company?  A.  I have  not  any  in  mind  at 
the  present  time — but  I know  that  in  the  attempt  to  establish 
new  trade-marks,  to  create  organizations,  that  companies — cer- 
tain companies,  new  companies,  were  at  a disadvantage  in  com- 
peting with  these  companies  that  I have  stated,  that  were  organ- 
ized from  1S42  to  1S49 — these  older  companies  had  advantages, 
and  in  that  competition,  as  I have  stated,  the  Para  Rubber  Shoe 
Company  lost  three-quarters  of  a million  dollars,  and  other  com- 
panies suffered  in  that  extreme  competition,  and  the  result  was 
that  those  companies  were  not  only  forced  to  reduce  the  wages  of 
laborers,  wages  of  workmen,  but  in  addition  to  that,  many  of 
those  companies  made  what  I would  call  counterfeit  goods;  they 
could  not  get  a profit  making  honest  goods,  and  they  turned  out 
counterfeits. 

Q.  What  was  the  financial  condition,  if  you  know,  of  the  Col- 
chester Company,  when  purchased  by  the  United  States  Rubber 
Company?  A.  I don't  know  as  to  its  financial  condition,  but  the 
men  familiar  with  the  boot  and  shoe  business,  who  knew  as  to 
valuing  properties,  and  who  understood  this  business,  went  there 
with  expert  accountants,  made  an  examination, went  through  and 
looked  into  the  affairs;  but  personally,  I don’t  have  the  detailed 
knowledge  that  would  enable  me  to  form  an  opinion. 

Q.  How  long  had  the  Para  Company  been  in  existence  at  the 
time  of  its  suspension;  at  the  time  of  its  purchase  by  the  United 
States  Rubber  Company?  A.  I think  it  had  been  in  existence 
then  five  or  six  years,  and  during  which  period  it  lost  this  money, 
as  1 have  stated. 

Q.  Had  it  been  a competitor  with  the  United  States  Rubber 
Company?  A.  Well,  it  had  competed  with  these  older  concerns, 
some  of  which  went  into  the  United  States  Rubber  Company,  and 
in  that  competition  they  lost  three-quarters  of  their  capital. 

Q.  Well,  was  the  United  States  Rubber  Company  in  any  way 


532 


[Senate, 


responsible  for  the  insolvency  of  this  Para  Company  or  its  losses? 
A.  The  United  States  Rubber  Company  did  not  exist  until  after 
the  Para  Rubber  Shoe  Company  lost  about  three-quarters  of  a 
million  dollars. 

Q.  It  came  into  existence  subsequent  to  that  time?  A.  It  came 
into  existence  subsequent  to  that  time. 

Q.  Are  you  very  largely  interested  in  the  export  trade?  A. 
That  is  my  business;  I can  give  full  information  on  that  subject; 
I think  I am  one  of  the  largest  buyers  of  manufactured  goods  for 
export  in  the  United  States;  I am  dealing  in  every  line  of  manu 
factured  products,  and  marketing  them  in  Africa,  South  America 
and  in  all  parts  of  the  world. 

Q.  What  is  the  effect  on  the  various  companies  of  the  export 
trade?  A.  The  effect  is  that  in  times  of  depression  such  as  we 
have  had  during  this  period  of  uncertainty  as  to  legislation  on 
financial  and  other  subjects  during  those  periods  of  depression, 
the  export  trade  takes  a considerable,  a large  amount  of  manu- 
factured goods,  so  that  many  factories  were  running  during  the 
past  year  that  would  otherwise  have  been  closed;  and  further- 
more I want  to  make  this  point:  that  being  thoroughly  familiar 
with  the  export  trade — I want  to  make  the  point  that  of  our  two 
hundred  and  twenty-eight  millions  of  exports  of  manufactured 
goods,  that  the  greater  part  of  those  goods  are  produced  by  these 
large  manufacturing  organizations;  they  are  enabled  to  compete 
with  the  pauper  labor  of  the  densely  populated  countries,  owing 
to  the  fact  that  they  utilize  labor  saving  machinery;  while  the 
articles  that — where  there  has  not  been  this  centralization  of 
manufacture  and  the  consequent  ‘improvement  of  organization, 
that  are  produced  by  hand,  are  almost  altogether  produced  in 
the  cheap  labor  countries  and  we  are  not  able  to  compete;  to-day 
the  American  wage  earner  in  this  country  is  enabled  to  sustain 
his  rate  of  wages  so  that — owing  to  the  existence  of  these  su- 
perior organizations  of  manufacture — 

Q.  Well,  then,  you  mean  to  say  that  the  question  of  quantity 
produced  has  considerable  to  do  with  the  cost  of  the  merchandise? 
A.  I mean  to  say  that  through  large  production  and  the  centrali- 


No.  40.] 


533 


zation  of  manufacture  which  is  going  on  in  every  industry — I 
mean  to  say  that  we  are  thus  enabled  to  pay  the  American  wage 
earner  full  rates  of  wages  and  at  the  same  time  compete  with  the 
cheaplabor  countries  of  Europe,  of  Asia  and  of  Japan, audin  those 
branches  of  industry  where  that  benefit,  that  advantage — where 
the  articles  are  produced  by  hand  labor  without  the  utilization  of 
labor  saving  machinery — in  those  cases  the  principal  trade  is 
done  by  the  cheap  labor  countries  of  Europe  and  Asia. 

Q.  What  in  your  opinion  is  the  effect  of  combinations  on  labor? 
A.  I think  that  the  only  way  in  which  the  wages  of  the  American 
wage  earner  can  be  sustained  is  by  the  centralization  of  manu- 
facture and  the  economies  that  result  from  superior  organization 
in  connection  with  the  utilization  of  labor  saving  machinery  and 
devices  and  methods. 

By  Mr.  Lexow : 

Q.  That  means  the  saving  of  labor  and  the  displacement  of 
labor  instead  of  the  additional  employment  of  labor,  does  it  not? 
A.  I mean  to  say  that  the  drudgery  performed  by  the  Chinaman 
and  the  Japanese  and  the  poor  people  of  Europe  is  performed  by 
labor  saving  machines  ; I mean  to  say  that  this  country  has  prac- 
tically unlimited  resources  for  development  for  the  present  and 
for  many  years  to  come;  that  there  is  ample  opportunity  in  the 
United  States  for  laborers,  and  if  we  can  get  labor  saving  machin- 
ery to  do  the  drudgery  and  the  laborer  can  boss  that,  those  ma- 
chines— I mean  to  say  that  that  is  in  the  interest  of  the  American 
workman. 

By  Mr.  McCarren: 

Q.  Mr.  Flint,  you  stated  yesterday,  as  I remember,  that  in  the 
assets  of  these  companies  absorbed  or  purchased  by  the  United 
States  Rubber  Company,  that  the  trade-mark  was  of  considerable 
value;  what  do  you  mean  by  that,  explain  that?  A.  I mean  to 
say  that  in  this  business  the  consumer  is  dependent  upon  the 
trade-mark;  the  trade  mark  represents  the  integrity  of  the  manu- 


534 


[Senate, 


facturer,  or  it  represents  the  reverse;  the  successful  manufactur- 
ers— these  manufacturers  that  have  stood  the  test  of  time  over 
the  forty  years  down  to  the  present  day,  have  made  honest  goods 
for  a period  of  over  fifty  years ; I mean  to  say  that  that  trade-mark 
is,  that  the  public  are  dependent  on  that  trade-mark  for  a satis- 
factory quality  of  rubbers;  there  is  no  man  living  that  can  ana- 
lyze the  component  parts  of  rubber;  most  every  other  product,  the 
productions  of  these  other  industries  that  you  are  investigating, 
can  be  analyzed  by  a chemist;  but  in  the  case  of  rubber  shoes 
there  is  a case  where  the  quality  cannot  be  judged  of  by  a con- 
sumer, and  the  trade-mark  that  has  stood  the  test  of  half  a cen- 
tury is  of  immense  value,  and  when  I tell  you  that  three-quarters 
of  a million  was  lost  by  the  Para  Rubber  Company;  it  was  owing 
to  the  fact  that  they  could  not  establish  that  standing,  a position 
that  would  enable  them  to  compete  with  these  concerns  who  had 
turned  out  honest  goods  for  such  a long  period  of  time;  and  dur- 
ing the  past — I will  say  this:  During  the  past,  say  five  years 
prior  to  the  organization  of  the  United  States  Rubber  Company 
the  greater  part  of  the  capital  which  was  used  in  an  endeavor  to 
establish  new  trade-marks  was  lost. 

Q.  lias  not  the  closing  of  some  of  these  factories  by  the  com- 
bination resulted  in  driving  out  of  employment  a large  amount 
of  labor?  A.  It  is  in  the  interest  of  every  one — the  United  States 
Rubber  Company — to  employ  just  as  many  laborers  as  possible; 
that  is  to  say  they  don't  want  to  employ  labor  as  useless  labor, 
and  the  American  wage-earner  don’t  want  to  be  employed  unless 
he  can  render  a proper  service,  and  we  make,  not  only  have  we 
made  all  the  goods  which  the  country  will  take,  but  owing  to  the 
periods  of  depression  through  which  we  have  been  passing  we 
have  found  it  impossible  to  market  all  the  goods  we  could  make; 
we  have  had  to  carry  big  stocks  and  we  have  kept  our  factories 
running  in  order  to  keep  our  labor  employed;  I do  not  mean  to 
say  when  I say  that,  but  what  it  has  been  in  the  interest 
of  the  corporation,  because  it  takes  seven  years  to  educate  a 
workman  to  manufacture  rubber  shoes,  and  it  has  been  our  inter- 
est to  take  care  of  those  workmen;  we  have  not  reduced  the 


No.  40.] 


535 


wages  although  during  this  period — we  have  kept  our  wages — 
and  we  have  given  them  more  work  than  the  market  would  take 
the  product  for,  hoping  for  better  times,  and  realizing  the  neces- 
sity of  taking  care  of  our  experienced  laborers. 

By  Mr.  Lexow : 

Q.  Isn’t  it  a fact  that  you  have  increased  the  price  of  that  pro- 
duct, and  that  may  have  something  to  do  with  the  diminished  de- 
mand? A.  I think— the  fact  of  it  is  that  you  can’t  consider  price 
unless  you  consider  quality;  there  never  has  been  a time  in  the 
history  of  the  rubber  business  when  so  large  an  amount  of  rubber 
boots  and  shoes  have  been  sold  as  cheap  as  they  have  been  sold 
by  the  United  States  Rubber  Company. 

Q.  Do  you  state  that  as  a fact,  Mr.  Flint,  of  your  own  knowl- 
edge.? A.  I state  it — no;  not  from  my  own  knowledge,  but  Mr. 
Johnson  will  verify  it  I am  satisfied,  but  I state  it  on  what  I hear; 
but  on  the  other  hand  the  public  want  quality. 

Q.  Is  it  not  a fact  that  you  have  advanced  the  price  of  rubber 
boots  in  1893,  above  what  they  ruled  before  from  $1.90  to  $2.00 
and  $2.60,  and  isn’t  the  price  of  rubber  boots  to-day  $2.55?  A. 
Now,  in  general,  Mr.  Chairman — 

Q.  Is  not  that  a fact?  A.  I don’t  know;  I know  that  the  price 
is  generally. 

Q.  Now,  when  you  say  that  you  have  made  more  goods  than 
the  market  will  buy  isn’t  it  possible  that  the  element  of  demand 
may  be  lacking  because  you  have  advanced  the  price  of  your 
goods  to  the  consumer?  A.  No,  sir;  on  the  contrary — as  far  as — 
for  an  intelligent  management  of  any  industrial  no  man  can  be  a 
successful  manager  who  does  not  consider  the  interest  of  the  con- 
sumer; I would  predict  that  any  organization  that  did  not  take 
that  into  consideration  and  make  that  his  principal  aim,  that  any 
such  organization  is  bound  to  fail — it  is  only  a question  of  time. 

Q.  Isn’t  the  principle  upon  w7hich  the  organization  is  conducted 
the  making  of  a dividend  upon  the  stock  issue,  and  are  not  prices 
fixed  with  reference  to  that  fact?  A.  No;  we  make  all  the  money 
for  our  6,000  stockholders  that  we  lawfully  can,  and  in  order  to 


536 


[Senate, 


make  the  most  money  for  tliem  we  have  got  to  consider  the  in- 
terest of  the  consumer,  and  that  we  have  done,  and  every  one 
knows  it  who  wears  shoes,  knows  that  since  the  organization  of 
the  United  States  Rubber  Company  that  we  have  very  substan- 
tially improved  the  quality. 

Q.  The  fact  is,  is  it  not,  that  you  desire  to  operate  in  combina- 
tion a number  of  otherwise  free  and  independent  concerns  com- 
peting against  each  other  so  that  you  will  not  produce  more  than 
the  public  will  buy  at  the  prices  that  you  fix?  A.  That  is  not  the 
desire. 

Q.  Isn’t  that  the  whole  system  upon  which  the  concentration 
of  these  industrials  is  based?  A.  That  is  not  the  controlling 
idea  of  an  industrial  that  is  properly  managed;  the  idea  of  an 
industrial  properly  managed,  and  it  is  in  their  interest  and  they 
are  dependent  upon  the  consumer,  they  are  dependent  upon  him, 
and  the  ultimate  idea  is  to  create  manufacturing  facilities  to 
manufacture  goods  lower  than  they  could  be  manufactured  in  any 
other  way. 

Q.  If  the  object  is  to  create  manufacturing  facilities  why  is  it 
that  you  have  destroyed  them?  A.  We  have  not  destroyed 
them;  on  the  contrary  the  plant,  the  machinery  of  the  Colchester 
Rubber  Company  is  taken  to  another  factory;  we  have  enlarged 
that  factory;  we  have  spent  a large  amount  of  money  on  several 
factories,  increasing  their  capacity,  for  the  purpose  of  centraliz- 
ing the  manufacture  and  realizing  economies;  now,  I will  admit, 
Mr.  Chairman,  that  the  rubber  shoe  business,  owing  to  the  great 
variety,  30,000  kinds,  or  30,000  different  shoes  in  one  factory,  I 
will  admit  that  it  is  more  difficult  to  bring  about  these  economies 
than  in  the  case  of  industrials  producing  one  article;  it  is  a more 
complex  problem;  we  are  having  more  difficulty  in  dealing  with 
it,  but  ultimately  that  is  our  endeavor. 

Q.  Is  it  any  more  complex  than  the  leather  shoe  business, 
where  there  is  no  combination  and  where  shoes  have  never  beeD 
sold  to  the  American  public  as  cheaply  as  they  are  to-day?  A. 
Infinitely  more  complex;  the  products  of  the  United  States  Rub- 
ber Company  will  far  outnumber — and  the  conditions  are  more 


No.  40.] 


537 


complex,  as  I have  stated;  in  some  shoes  there  are  twelve  com- 
binations, composed  of  ten  different  elements  and  many  different 
kinds  of  those  elements. 

Q.  Just  as  there  are  many  different  kinds  of  leather.  When 
you  speak  of  30,000  different  kinds  of  shoes  you  mean  that  you 
have  30,000  different  lasts  practically  upon  which  you  make  those 
shoes,  isn’t  it?  A.  Well,  that  is  an  element. 

Q.  And  isn’t  that  exactly  the  reproduction  of  the  leather  shoe 
situation?  A.  In  the  rubber  shoe  there  are  from  half  a dozen  to 
a dozen  compounds;  there  are  from  20  to  30  different  kinds  of 
rubber;  there  is  whiting,  litharge,  lampblack,  rosin,  and  all  in 
varying  quantities  in  each  combination. 

Mr.  Lexow:  We  will  ask  you  to  produce  to-morrow  statistics 
of  the  labor  employed  under  the  independent  factories  system 
and  the  amount  of  labor  employed  under  the  consolidation  sys- 
tem1. 

Mr.  Flint:  I will  endeavor  to  obtain  that. 

Recess  until  2 o’clock. 


AFTERNOON  SESSION.  WEDNESDAY,  FEB.  17,  1897. 

Mr.  Lexow:  A quorum  being  present,  the  committee  will  come 
to  order. 

William  I.  Walker,  having  been  duly  sworn,  testified  as  fol- 
lows: 

Examined  by  Mr.  Bedell: 

Q.  Are  you  connected  with  the  company  known  as  the  Church, 
Dwight  Company?  A.  Yes,  sir. 

Q.  What  is  your  official  position?  A.  Treasurer. 

Q.  Did  I get  the  correct  name,  the  Church  & Dwight  Company? 
A.  Yes,  sir. 

Q.  Is  that  a corporation  formed  under  the  laws  of  the  State 
of  New  York?  A.  Yes,  sir. 

Q.  And  doing  business  where?  A.  At  63  and  65  Wall  street. 

Q.  That  is  the  principal  place  of  business  for  the  transaction 


538  [Senate, 

of  business  matters,  but  you  have  some  establishments  in  the 
State,  have  you  not?  A.  Yes,  sir. 

Q.  Will  you  please  locate  them?  A.  We  have  a — what  do 
you  mean  by  “establishments?” 

Q.  I mean  manufacturing  concerns?  A.  Yes,  sir;  we  are  at 
present  running  one  corner  of  112th  street  and  1st  avenue;  also 
one  at  Greenpoint;  also  one,  partially — we  are  not  really  running 
it — it  is — we  are  intending  to  run  it  when  it  is  finished,  at  Syia- 
cuse;  also,  in  a small  way,  one  at  Trenton — or,  at  Trenton,  Mich- 
igan. 

Q.  Trenton,  Michigan?  A.  Yes,  sir. 

Q.  What  are  you  producing  at  these  factories’  A.  We  are 
producing  soda. 

Q.  Well,  please  designate  the  kind  of  soda.  A.  We  are  produc- 
ing bicarbonate  of  soda  and  salaratus,  sal  soda,  concentrated 
sal  soda.  I think  that  is  all. 

Q.  At  which  of  these  factories  are  you  producing  bi-carbonate 
C'f  soda?  Well,  we  have  been  producing  in  a small  way  at 
Harlem,  and  a’so  at  Greenpoint. 

Q.  In  a small  wav  ' A.  Yes,  sir. 

Q.  Where  do  you  get  the  bulk  of  your  supply?  A.  You  are 
speaking  now  of  the  Church  & Dwight  Company? 

Q.  Yes?  A.  We  get  the  bulk  of  it  at  Syracuse. 

Q.  From  the  Solvay  Company?  A.  Yes,  sir. 

Q.  What  is  the  name  of  that  company?  A.  The  Solvay  Pro- 
cess Company. 

Q.  Is  that  company  under  contract  with  you  for  the  supply  of 
bi  carbonate  of  soda?  A.  Well,  just  what  do  you  mean  by  a con- 
tract. 

Q.  I mean,  by  which  you  are  to  take  their  product,  and  they 
are  to  supply  it  to  you?  A.  Yes,  sir;  we  do,  I think. 

Q.  Howt  much  of  their  production?  A.  All  of  it. 

Q.  Will  you  speak  a little  louder?  You  take  the  entire  produc- 
tion of  that  Solvay  Company?  A.  We  take  the  entire  produc- 
tion. 

Q.  Of  the  bicarbonate?  A.  Of  the  bicarbonate. 


No.  40.] 


530 


Q.  They  produce  something  else  besides  bicarbonate,  do  they 
not?  A.  I suppose  they  do,  but  I do  not — 

Q.  Haven’t  you  ever  been  there?  A.  No,  sir. 

Q.  What  is  your  best  knowledge  on  the  subject?  A.  I un- 
derstand they  produce  soda-ash  and  other  articles,  but  I am  not 
familiar  with  all  they  produce. 

Q.  They  have  what  would  be  termed  a bi-product;  is  that  true? 
A.  I suppose  so,  but  I do  not  know;  really  I could  not  answer;  I 
know  nothing  about  the  rest  of  their  business. 

Q.  Now,  Mr.  Walker,  please  name  the  corporations  or  the  com- 
panies consolidated  into  the  Church  & Dwight  Company?  A. 
There  was  no  consolidation,  as  I understand  it. 

Q.  Well,  the  firm  or  the  corporation?  A.  There  were  three 
members  of  the  firm  of  John  Dwight  & Co.;  the  old  Church  & Co. 
firm,  with  two  others;  individuals. 

Q.  Two  other  individuals?  A.  Yes,  sir. 

Q.  Were  they  engaged  in  the  manufacture  of  bicarbonate  of 
soda?  A.  They  were — one  was  a son  of  James  Church  that  died 
a year  ago;  and  one  is  a son  of  E.  Dwight  Church;  that  is  the  sur- 
viving member  of  Church  & Co. 

Q.  When  was  the  incorporation  of  the  company?  A.  The  in- 
corporation was  about  the  1st  of  July,  1896. 

Q.  What  is  the  capital  stock  of  that  corporation?  A.  Two 
millions. 

Q.  How  much  of  it  is  paid  in?  A.  It  is  all  paid  in. 

Q.  In  cash?  A.  In  cash,  and  in — 

Q.  Well,  how  much  cash?  A.  Well,  I can’t  tell  yet. 

Q.  You  can’t  tell  yet?  A.  No,  sir. 

Q.  Why?  A.  Because  we  are  not — haven’t  the — we  have  not 
finished  the  factory,  and  there  are  other  expenses  that  are  to 
come  yet;  it  is  supposed  to  be  full  paid  stock. 

Q.  How  many  stockholders  are  there  in  that  corporation  and; 
who  are  they?  And  give  their  connection?  A.  John  Dwight, 
president. 

Q.  What  is  his  place  of  residence?  A.  He  lives  at  No.  31  Mt. 
Morris  Park,  West;  E.  Dwight  Church,  first  vice-president;  resi- 


540 


[Senate, 


deuce,  Greenpoint,  L.  I.;  John  E.  Dwight,  second  vice-president, 
No.  32  Mt.  Morris  Park,  West;  myself,  treasurer,  No.  32  West 
One  Hundred  and  Thirtieth  street;  E.  Dwight,  Jr.;  I am  not  sure 
where  he  lives;  he  has  just  moved,  in  Brooklyn;  I can’t  say. 

Q.  In  Brooklyn,  however?  A.  Yes,  sir;  James  A.  Church,  Or- 
ange, N.  J.,  I think  it  is;  South  Orange  or  Orange;  I am  not  cer- 
tain which. 

Q.  Now,  Mr.  Walker,  won’t  you  please  explain  just  what  pro- 
ducts your  corporation  company  puts  out  on  the  market?  A. 
Bicarbonate  of  soda,  saleratus,  which  is  the  same  thing;  sal- 
soda;  concentrated  sal-soda. 

Q.  And  then  you  have  particular  brands  or  trade-marks  under 
which  you  put  those  goods  out  on  the  market,  particularly,  the 
bicarbonate  of  soda?  A.  Yes,  sir. 

Q.  What  are  those  trade-marks  known  as  in  the  general  trade? 
A.  They  are  known  as  Arm  and  Hammer  Brand,  and  Cow-Brand. 

Q.  And  you  have  a large  sale  of  those  two  brands  of  bi-carbon- 
ate of  soda,  both  in  the  States  of  New  York  and  New  Jersey,  and 
in  the  other  States  of  the  Union,  have  you  not?  A.  Yes,  sir. 

Q.  Can  you  inform  us  what  your  sales  amount  to  in  round 
numbers  or  in  tons?  A.  Well,  I can’t  recollect;  I don't  know; 
we  have  been  going  under  the  new  concern  only  about  four 
months,  and  we  have  not  yet  any  figures  and  really  do  not  know. 

Q.  What  company  were  you  associated  with  before  the  forma- 
tion of  the  new  company?  A.  John  Dwight  Company. 

Q.  What  was  their  output?  A.  You  mean  everything,  or  rnere- 

i 

Q.  I mean  the  bicarbonate  of  soda  particularly  now?  A.  Any 
brand? 

Q.  What  brand  did  they  have?  A.  Cow-brand. 

Q.  Well,  we  will  take  the  Cow-Brand?  A.  Well,  I can’t  re- 
member on  that. 

Q.  Well,  approximately?  A.  I do  not  think  I could  tell  any- 
where near  it. 

Q.  Is  it  within  your  power  to  furnish  us  the  figures  of  their 
product  for  the  last  two  or  three  years,  in  round  numbers?  A. 
Now  you  are  speaking  of  John  Dwight  & Co.? 


No.  40.] 


541 


Q.  Yes?  A.  I presume  I could. 

Q.  Will  you  do  so  for  tlie  benefit  of  tlie  committee?  A.  If  you 

ask  it. 

Q.  Now,  Mr.  Walker,  in  wliat  way  do  you  get  your  goods  on  the 
market  to  the  retailer;  I wish  you  would  explain  that  in  detail. 
A.  We  sell  them  to  the  wholesaler  and  he  sells  them  to  the  re- 
tailer. 

Q.  The  wholesaler — -you  mean  the  jobber?  A.  Yes,  sir. 

Q.  Well,  under  what  circumstances  do  you  sell  to  the  whole- 
saler? A.  I don’t  know  exactly  what  you — 

Q.  Do  you  have  special  agreements;  what  is  known  in  common 
parlance  now  as  a factors’  agreement?  A.  Oh,  we  have  no  agree- 
ments except  in  New  York  and  New  Jersey. 

Q.  You  do  have  agreements  in  the  States  of  New  York  and 
New  Jersey?  A.  Yes,  sir. 

Q.  Have  you  a copy  of  one  of  those  agreements  with  you?  A. 
I ha  Ye  not  with  me;  I could  get  it. 

Q.  Are  they  substantially  the  same  for  the  new  corporation  as 
those  that  were  in  existence  and  used  by  the  respective  companies 
John  Dwight  & Co.  and  Church  & Co.?  A.  The  new  corporation 
have  never  signed  any  contracts. 

Q.  The  new  corporations  have  never  signed  any?  A.  No,  sir. 
Q.  But  have  the  wholesale  grocers  signed  contracts  with  you? 
A.  No,  sir. 

Q.  Then,  you  are  still  operating  under  the  contracts  of  the  old 
corporations  or  the  old  company;  is  that  so?  A.  I don’t  know, 
I am  sure,  whether  we  are  or  not;  the  new  concern  has  made  no 

contracts. 

Q.  Well,  are  you  operating  under  the  old  contracts?  A.  I 
don’t  know  whether  we  are  or  not. 

Q.  You  know  wdiether  the  general  line  of  business  is  the  same 
that  is  being  carried  on  now  by  your  new  corporation  as  was  car- 
ried on  by  those  two  companies  before  they  consolidated  in  this 
one  company;  don’t  you  know  the  fact?  A.  I do  not  really  know 
how  to  express  it. 

Q.  Well,  you  ship  to  the  wholesale  grocer  or  to  the  jobber?  A, 

Yes,  sir. 


542 


[Senate, 


Q.  On  what  conditions?  A.  On  what  conditions? 

Q.  Yes;  under  what  conditions;  under  some  agreement;  under 
some  contract?  A.  No,  sir;  not  any  agreement. 

Q.  Are  you  shipping  the  same  as  you  were  before  the  consoli- 
dation of  the  two  companies?  A.  Yes,  sir. 

Q.  And  there  has  been  no  agreement  made  with  these  respec- 
tive parties?  A.  No,  sir. 

Q.  You  were  with  John  Dwdght  & Co.?  A.  Yes,  sir. 

Q.  I wish  you  would  look  at  this  paper  and  inform  me  if  that 
is  a copy  of  the  factors’  agreement  which  you  require  from  the 
jobber?  (Showing  witness  paper).  A.  That — can  I explain  re- 
garding this — this  is  the  agreement  that  was  used;  but  you  said 
to  me  that  we  “require”  from  the  jobber. 

Q.  Well,  I mean  that  was  used  in  your  business  transactions 
with  the  jobbers;  is  that  the  agreement?  A.  That  is  the  agree- 
ment that  the  wholesale  grocers  requested  us  to  make  with  them. 

Q.  But  that  is  the  agreement  that  you  did  make  with  them, 
isn’t  it?  A.  Yes,  sir;  that  is  the  agreement. 

FOLLOWING  FORM  WAS  MARKED  “FEB.  17, 
EXHIBIT  B.” 

Signed  copy  to  be  returned  immediately  to  John  Dwight  & Co., 
No.  11  Old  Slip,  New  York  city. 

In  consideration  of  one-half  cent  per  pound  rebate,  to  be  paid 
us  by  John  Dwight  & Co.  on  each  pound  of  their  Cow-Brand  Soda 
and  Saleratus  we  purchase  from  them,  the  undersigned  faithfully 
promise  not  to  sell,  or  to  allow  any  person  connected  with  our  es- 
tablishment to  sell  Dwight’s  Cow-Brand  Soda  or  Saleratus  in 
boxes  to  the  trade  of  New  York  State  or  New  Jersey  at  less  than 
basis  of  54  cents  per  pound  for  pound  packages,  or  4 cents  per 
pound  basis  for  bulk  in  kegs  at  jobbing  points  in  the  States  of 
New  York  and  New  Jersey;  neither  will  we  allow  or  countenance 
any  indirect  evasion  of  above  agreement. 

The  price  for  Cow-Brand  Soda  or  Saleratus  to  us  is  to  be  on  net 
basis  of  5 cents  per  pound  for  pound  packages,  and  3J  cents  per 
pound  for  kegs  bulk,  F.  O.  B.,  in  New  York  city;  terms  6 days,  or 
less  1|  per  cent,  for  cash.  Goods  will  be  billed  by  John  Dwight 


No.  40.] 


543 


& Co.,  basis  of  54  cents  per  pound  for  pound  packages  and  4 cents 
per  pound  for  kegs  bulk,  F.  O.  B.,  in  New  York,  and  a rebate  of  \ 
cent  per  pound  to  be  paid  on  the  first  of  the  following  months- 
January,  April,  July  and  October.  It  is  also  understood  that  we 
are  not  to  sell  any  soda  or  saleratus  in  boxes  under  our  private 
or  other  brands  at  less  price  than  Cow-Brand. 

If  we  are  compelled  to  purchase  cheap  bulk  soda  in  kegs,  bar- 
rels or  casks  we  agree  not  to  push  the  sale  of  such  goods,  but  to 
sell  as  limited  a quantity  as  possible,  and  only  such  limited  quan- 
tity as  is  absolutely  demanded  by  our  trade. 

It  is  also  understood  that  if  we  fail  to  maintain  the  above  agree- 
ment we  are  to  forfeit  any  and  all  rebates  coming  to  us  from  John 
Dwight  & Co.  We  would  also  say  that  we  realize  that  the  above 
agreement  is  intended  by  John  Dwight  & Co.  to  be  for  our  best 
interest,  and  to  secure  for  us  a moderate  profit,  therefore  we 
cheerfully  enter  into  it  and  pledge  ourselves  to  use  every  effort 
to  see  that  it  is  maintained. 

Date • 

Extra  blanks  of  this  agreement  furnished  upon  application  to 

JOHN  DWIGHT  & CO., 

No.  11  Old  Slip,  New  York  city. 

Q.  Now,  that  agreement  applied  to  the  States  of  New  York 
and  New  Jersey,  did  it  not?  A.  Yes,  sir;  by  the  request  of  the 
wholesale  grocers,  who — 

Q.  Is  that  another  copy  of  the  agreement  which  you  used? 
(Showing  witness  paper).  A.  Yes,  sir;  I think  this  is  a former 
one,  which  was  first  used,  I think,  in  about  1889;  and  this  was 
merely  a renewal. 

FOLLOWING  FORM  WAS  MARKED  “FEB.  17, 
EXHIBIT  C.” 

Signed  copy  to  be  returned  immediately  to  John  Dwight  & Co., 
No.  11  Old  Slip,  New  York  city. 

March,  1889. 

In  consideration  of  one-half  cent  per  pound  rebate  to  be  paid 
us  quarterly  by  John  Dw:ght  & Co.  on  our  purchases  from  them 


544 


[Sex  ate. 


of  Cow-Brand  Saleratus,  also  Soda,  we  faithfully  promise  nn1:  to 
sell,  nor  allow  any  person  connected  with  our  establishment  or 
under  our  control,  to  sell  D vi  gilt’s  Cow-Bran4  Saleratus  or  Soda 
to  the  trade  of  New  York  city  and  vicinity,  New  York  State  or 
New  Jersey  at  less  than  the  basis  of  5 cents  per  pound  in  one 
pound  packages  in  boxes,  or  4 cents  per  pound  bulk  in  kegs,  F.  0. 
B.,  in  New  York  city;  other  packages  in  proportion  (jobbers  out- 
side of  New  York  city  will  add  one-eighth  (•£)  of  a cent  per  pound  to 
ihe  invoice  prices  for  freight).  Neither  will  we  allow  or  counte- 
nance any  evasion  directly  or  indirectly  of  this  agreement.  The 
net  price  to  us  of  the  Cow-Brand  Saleratus  and  Soda  is  to  be  on 
the  basis  of  44  cents  per  pound  for  one  pound  packages  in  boxes, 
and  3|  cents  per  pound  for  bulk  in  kegs;  other  packages  in  pro- 
portion. Terms,  60  days  or  less,  one  and  one-half  (1£)  per  cent 
for  prompt  cash.  Cow-Brand  goods  will  be  billed  to  us  by  John 
Dwight  & Co.  on  basis  of  5 cents  per  pound  for  one  pound  pack- 
ages in  boxes  and  4 cents  per  pound  for  bulk  in  kegs,  and  the  re- 
bate of  one-half  cent  per  pound  to  be  paid  us  on  the  first  of  the 
following  months:  January,  April,  July  and  October. 

It  is  also  understood  that  we  are  not  to  sell  any  saleratus  or 
soda  in  bulk  or  in  boxes  under  our  private  brands  at  less  price 
than  Dwight’s  Cow-Brand.  If  we  are  compelled  to  purchase 
cheap  bulk  soda  in  kegs,  barrels  or  casks,  we  agree  not  to  push 
the  sales  of  such  cheap  goods,  but  to  sell  as  limited  a quantity  as 
possible,  and  only  such  limited  quantity  as  is  absolutely  de- 
manded by  our  trade.  It°is  also  understood  that  if  we  fail  to 
maintain  the  above  agreement  we  are  to  forfeit  any  and  all  re- 
bates due  us  from  John  Dwight  & Co. 

We  are  convinced  that  this  agreement  is  for  our  interest,  as  it 
will  secure  for  us  a moderate  profit;  for  this  reason  we  heartily 
enter  into  it,  and  hereby  pledge  ourselves  and  our  representatives- 
to  use  every  effort  to  see  that  it  is  maintained. 

(Signed) 

Extra  blanks  of  this  agreement  furnished  upon  application  to 
, JOHN  DWIGHT  & CO.. 

No.  11  Old  Slip,  New  York  city.. 


No.  40.] 


545 


FOLLOWING  FORM  WAS  MARKED  “FEB.  17, 
EXHIBIT  D.” 

Arm  and  Hammer  Brand  (symbol  of  uplifted  hammer  in  arm, 
surrounded  by  words  “Church  & Co.’s  Soda”).  Church  & Co., 
Soda  Manufacturers,  129  Pearl  and  82  Beaver  streets,  New  York. 

Chemical  Works  and  Docks,  Oakland,  Ash  and  Box  streets, 

Brooklyn,  N.  Y. 

189 

In  consideration  of  one-half  cent  per  pound  rebate,  to  be  paid 
us  by  Church  & Co.,  on  each  pound  of  their  Arm  and  Hammer 
Brand  of  Soda  and  Saleratus  we  purchase  from  them,  the  under- 
signed faithfully  promise  not  to  sell,  or  allow  any  person  con- 
nected with  our  establishment  to  sell  Church  & Co.’s  Arm  and 
Hammer  Brand  of  Soda  or  Saleratus  in  boxes  to  the  trade  of  New 
York  State  or  New  Jersey  at  less  than  basis  of  5^  cents  per  pound 
for  pound  packages,  or  4 cents  per  pound  basis  for  bulk  in  kegs, 
all  F.  O.  B.  in  New  York;  or  at  above  prices  by  jobbers  in  our  re- 
spective cities,  or  any  other  jobbing  point  in  New  York  or  New 
Jersey. 

Neither  will  we  allow  or  countenance  any  indirect  evasion  of 
above  agreement.  The  price  for  above  article  to  us  is  to  be  on 
basis  of  5 cents  per  pound  for  pounds,  and  3^  cents  per  pound  for 
kegs  bulk,  F.  O.  B.,  in  New  York  city;  terms,  60  days,  or  less 
per  cent,  for  cash.  Goods  will  be  billed  by  Church  & Co.,  basis 
of  5^  cents  per  pound  for  pound  packages  and  4 cents  per  pound 
for  kegs  bulk,  F.  O.  B.  in  New  York,  and  a rebate  of  £ cent  per 
pound  to  be  paid  us  on  the  first  of  the  following  months:  Jan- 
uary, April,  July  and  October. 

It  is  also  understood  that  we  are  not  to  sell  any  soda  or  saler- 
atus in  boxes  under  our  private  or  other  brands  at  less  price  than 
Arm  and  Hammer. 

If  we  are  compelled  to  purchase  cheap  bulk  soda  in  kegs,  bar- 
rels or  casks  we  agree  not  to  push  the  sale  of  such  goods,  but  to 
sell  as  limited  a quantity  as  possible,  and  that  only  because  re- 
quired by  our  trade. 


35 


546 


[Senate, 


It  is  also  understood  that  if  we  fail  to  maintain  the  above  agree- 
ment we  are  to  forfeit  any  and  all  rebates  coming  to  us  from 
Church  & Co.  We  would  also  say  that  we  realize  that  the  above 
agreement  is  intended  by  Church  & Co.  to  be  for  our  best  inter- 
est, and  to  secure  for  us  a moderate  profit;  therefore  we  cheer- 
fully enter  into  it  and  pledge  ourselves  to  use  every  effort  to  see 
that  it  is  maintained. 


Q.  Then  you  continued  to  use  it  in  your  respective  companies 
up  to  the  time  of  the  incorporation  of  the  new  company,  did  you 
not?  A.  Yes,  sir. 

Q.  You  are  shipping  to  these  same  people  now  that  you  were 
shipping  to  before?  A.  Yes,  sir. 

Q.  And  upon  the  same  terms  as  to  payment?  A.  Yes,  sir; 
that  is — I would  modify  that — I suppose  it  is;  as  I say  we  have 
made  no  agreement  under  the — 

Q.  I would  like  to  read  to  you  from  this  contract:  “In  consider- 
ation of  one-half  cent  per  pound  rebate,  to  be  paid  us  by  John 
Dwight  & Co.,  on  each  pound  of  their  Cow-Brand  Soda  and  Sal- 
eratus  we  purchase  from  them,  the  undersigned  faithfully  prom- 
ise not  to  sell,  or  to  allow  any  person  connected  with  our  estab- 
lishment, to  sell  Dwight’s  Cow-Brand  Soda  or  Saleratus  in  boxes 
to  the  trade  of  New  York  State  or  New  Jersey  at  less  than 
basis  of  cents  per  pound  for  pound  packages,  or  four 
cents  per  pound  basis  for  bulk  in  kegs,  at  jobbing  points  in  the 
States  of  New  York  and  New  Jersey;  neither  will  we  allow  or 
countenance  any  indirect  evasion  of  above  agreement.”  That 
was  the  substance  of  the  agreement?  A.  Yes,  sir. 

Q.  Why  did  you  limit  to  the  States  of  New  York  and  New  Jer- 
sey A.  Because  we  considered  it  a great  nuisance  to  us  and  did 
not  wish  to  go  into  it  at  all. 

Q.  Outside  of  these  two  States?  A.  Yes;  we  did  not  wish  to 
go  into  that  in  New  York  State. 


No.  40.] 


547 


Q.  You  do  sell  soda  in  other  States  than  the  States  of  New 
York  and  New  Jersey?  A.  Yes,  sir;  we  sell  it  in  every  State  in 
the  Union. 

Q.  You  sell  only  in  the  State  of  New  York  your  bicarbonate 
of  soda  of  the  Cow-Brand  or  the  Arm  and  Hammer  Brand  to  the 
jobbers  at  cents?  A.  Yes,  sir. 

Q.  That  is  the  price  now,  is  it  not?  A.  That  is  the  price  in 
pound  packages;  we  have  covered — 

Q.  And  if  he  lives  up  to  the  terms  of  your  agreement  then  he 
is  to  have  a rebate  of  one-half  cent  per  pound;  is  that  true?  A. 
If  he  lives  up  to  an  agreement  that  he  made  himself,  he  does; 
yes,  sir. 

Q.  Now,  I read  further  from  this:  “The  price  for  Cow 
Brand  Soda  or  Saleratus  to  us  is  to  be  on  net  basis  of  5 cents 
per  pound  for  pound  packages,  and  3 1-2  cents  per  pound  for 
kegs  bulk  F.  O.  B.  in  New  York  city;  terms  60  days,  or  less  U| 
per  cent,  for  cash.  Goods  will  be  billed  by  John  Dwight  & Co., 
basis  of  cents  per  pound  for  pound  packages  and  four  cents 
per  pound  for  kegs  bulk,  F.  O.  B.  in  New  York,  and  a rebate  of 
1-2  cent  per  pound  to  be  paid  on  the  first  of  the  following  months: 
January,  April,  July  and  October.”  That  is  part  of  the  agree- 
ment? A.  Yes,  sir. 

Q.  You  have  become  a party  to  that  agreement  by  shipping 
orders  thereunder  and  accepting  orders  thereunder,  haven’t  you; 
you  consider  yourselves  parties  to  the  agreement  to  supply  these 
people  with  soda  they  may  order  at  5 1-2  cents  per  pound?  A. 
I suppose — I don’t  know  about  the  legal  points  of  it,  I am  sure;  I 
haven’t  asked  anything  about  it. 

Q.  Now,  I will  read  further:  “It  is  also  understood  that  we  are 
not  to  sell  any  soda  or  saleratus  in  boxes  under  our  private  or 
other  brands  at  less  price  than  Cow-Brand.”  A.  Yes,  sir. 

Q.  That  is  contained  in  that  agreement?  A.  Yes,  sir — except 
further  than  that  bulk  there  at  which  they  have  the  right  to  sell 
at  any  price. 

Q.  Thus,  any  jobber  that  is  dealing  in  your  Arm  and  Hammer 
Brand  or  your  Cow-Brand  of  bicarbonate  of  soda  must  sell  all 


548 


[Senate, 


other  sodas  or  saleratus  that  are  in  packages,  no  matter  under 
what  brand  they  may  be  designated,  for  5 1-2  cents  a pound,  in 
order  that  they  may  claim  from  you  the  rebate  of  one-half  cent; 
is  that  true?  A.  I presume  that  is  what  it  amounts  to. 

Q.  Now,  at  that  price  does  the  jobber  sell  these  goods  to  the 
retailer?  A.  I don’t  know,  I am  sure. 

Q.  Oh,  he  can  charge  more?  A.  He  can  charge  anything — 

Q.  But  he  cannot  charge  less;  that  is  the  idea,  is  it?  A.  That 
is  the  idea. 

Q.  Then  you  are  fixing  the  price  not  only  of  your  own  soda  and 
saleratus,  at  which  it  shall  be  sold  by  the  jobbers,  but  you  are 
also  fixing  the  price  of  every  other  brand  of  soda  or  saleratus 
that  may  be  put  up  in  packages;  that  is,  if  the  jobber  wants  to  do 
business  with  you?  A.  That  is  it. 

Q.  That  is  the  fact,  isn’t  it?  A.  I don’t  know — well,  the — 

Q.  Now,  Mr.  Walker,  it  is  a fact  that  the  Cow-Brand  of  soda 
and  of  saleratus  and  the  Arm  and  Hammer  Brand  have  a very 
large  and  extensive  sale,  in  both  the  States  of  New  York  and  New 
Jersey,  is  it  not?  A.  I think  it  has. 

Q.  What  would  you  estimate  to  be  the  proportion  of  the  soda 
that  is  used  that  is  Arm  and  Hammer,  done  up  in  pound  pack- 
ages; I am  speaking  now  in  these  two  States?  A.  I could  not 
tell.  | 

Q.  Well,  have  you  any  idea  or  any  facts  upon  which  to  base  an 
opinion?  A.  No,  sir;  I have  not. 

Q.  Well,  can  you  approximate?  A.  I don’t  think  I could;  no, 

sir. 

Q.  You  know  liow  much  you  sell  in  this  State,  do  you  not,  of 
your  own  brand?  A.  No,  sir. 

Q.  You  have  no  idea?  A.  I haven’t  any  idea — 

Q.  What  officer  of  your  company  could  furnish  that  informa- 
tion? A.  I think  perhaps  Mr.  Dwight  could. 

Q.  Which  Mr.  Dwight?  A.  Mr.  John  E.  Dwight. 

Q.  Has  he  been  subpoenaed?  A.  Yes,  sir. 

Q.  I will  read  further  in  this  contract:  “If  we  are  compelled 
to  purchase  cheap  bulk  soda  in  kegs,  barrels  or  casks,  we  agree 


No.  40.] 


549 


not  to  push  the  sale  of  such  goods,  but  to  sell  as  limited  a quan- 
tity as  possible,  and  only  such  limited  quantity  as  is  absolutely 
demanded  by  our  trade;  it  is  also  understood  that  if  we  fail  to 
maintain  the  above  agreement,  we  are  to  forfeit  any  and  all  re- 
bates coming  to  us  from  John  Dwight  & Co.;  we  would  also  say 
that  we  realize  that  the  above  agreement  is  intended  by  John 
Dwight  & Co.  to  be  for  our  best  interest,  and  to  secure  for  us  a 
moderate  profit,  therefore,  we  cheerfully  enter  into  it,  and  pledge 
ourselves  to  use  every  effort  to  see  that  it  is  maintained.”  That 
is  correct,  is  it  not?  A.  Yes,  sir. 

Q.  Now,  Mr.  Walker,  if  a jobber  having  this  agreement  with 
you,  should  sell  the  soda  of  another  party  under  another  brand 
done  up  in  pound  packages,  at  5 cents  per  pound,  to  the  retailer, 
instead  of  5^  cents,  you  would  then  consider  that  jobber  was  not 
entitled  to  the  rebate  called  for  in  that  agreement — is  not  that 
true?  A.  Yes,  sir. 

Q.  You  would  then  refuse  to  furnish  any  more  goods  to  the 
jobber?  A.  No,  sir. 

Q.  Then  you  would  furnish  them  to  the  jobber  at  what  price? 
A.  Furnish  him  at  the  5^  cent  price. 

Q.  Then  there  would  be  no  rebate?  A.  No,  sir. 

Q.  Don’t  you  know  as  a fact  that  the  jobbers  to-day,  are  selling 
your  bicarbonate  of  soda,  these  two  brands  that  I have  named,  at 
5£  cents  to  the  retailer,  and  that  the  only  margin  of  profit  that 
exists  for  the  jobber  is  \ cent  per  pound  rebate,  which  would  come 
to  him  under  the  agreement?  A.  No,  sir;  I don’t  know  that. 

Q.  You  don’t  know  it?  A.  No,  sir. 

Q.  Well,  will  you  say  that  that  is  not  the  fact?  A.  Yes,  sir. 

Q.  Well,  what  is  the  fact?  A.  We  give  the  jobber  a still  fur- 
ther rebate,  not  only  in  New  York  State  but  every  other  State. 

Q.  What  is  the  other  rebate?  A.  Give  him  5 per  cent,  and  2£ 
per  cent. 

Q.  Well,  suppose  you  sell  to  the  jobber  who  has  not  the  factor’s 
agreement  with  you,  does  the  jobber  then  get  that  5 per  cent,  and 
the  2^  per  cent?  A.  Yes,  sir. 

Q.  Then,  that  is  the  only  reduction  from  the  price  of  5-3,-  cents 


550 


[Senate, 


that  lie  gets,  if  lie  is  not  under  agreement  with  you  as  a factor 
and  an  agent  for  you?  A.  Yes,  sir;  we  make  no  difference  what- 
ever in  the  price  over  every  State  in  the  Union. 

Q.  Yes;  you  sell  in  every  State  of  the  Union  at  the  same  price? 
A.  We  sell  in  every  State  in  the  Union  at  the  same  price  that  we 
do  in  New  York;  of  course,  we  do  not  pay  the  freight;  there  is  no 
discrimination  in  any  State,  whatever. 

Q.  Then,  the  jobber,  who  has  an  agreement  with  you  by  which 
he  gets  his  rebate  of  one-half  cent  per  pound,  and  the  addi- 
tional 5 per  cent.,  and  the  additional  \ per  cent.,  which  I presume 
is  based  upon  the  time  of  payment,  is  in  the  position  where  he  can 
undersell  at  any  time  a jobber  w'ho  has  to  pay  his  five  and  a half 
cents  per  pound  and  receives  no  rebate,  is  he  not?  A.  The  jobber 
who  pays  five  and  a half  cents  does  receive  a rebate. 

Q.  I am  speaking  now  of  the  jobbers  who  do  not  enter  into 
this  agreement?  A.  Yes,  sir;  if  the  jobber  does  not  enter  into  the 
rebate  he  gets  the  5 per  cent,  and  2^  per  cent,  any  way. 

Q.  Very  true,  but  he  does  not  get  the  one-half  cent  per  pound 
rebate?  A.  In  New  York  State  he  does  not. 

Q.  Now,  in  New  Jersey? 

By  Mr.  Lexow: 

Q.  The  fact  is  that  no  man  who  has  not  this  jobber’s  agree- 
ment can  compete  handling  your  goods  with  a man  who  is  and 
acts  under  the  jobber’s  agreement?  A.  Will  you  state  that  ques- 
tion? j 

(Question  read.) 

Q.  They  can  compete  on  any  one’s  else  goods,  so  far  as  that  is 
concerned. 

By  Mr.  Bedell:  ( 

Q.  How  can  he?  A.  Perhaps  he  can’t  on  ours. 

By  Mr.  Lexow: 

Q.  I mean  with  reference  to  yours;  have  you  not  produced  a 
situation  in  this  State,  according  to  which  every  jobber  must 
handle  your  goods  of  necessity?  A.  No,  sir;  I don’t  see  that  we 
have. 


No.  40.] 


551 


Q.  Do  you  operate  through  the  Wholesale  Grocers’  Associa- 
tion? A.  I do  not  know  as  I understand  that  exactly. 

Q.  Are  the  factors  who  sign  your  agreements  those  who  are 
connected  with  the  Wholesale  Grocers’  Association  of  the  State? 
A.  1 presume  the  most  of  them  are;  there  may  be  others;  I do  not 
know  about  that. 

Q.  Now,  the  man  who  signs  your  factor’s  agreement,  receiving 
the  rebate,  is  in  a position  of  superiority  to  the  man  who  does  not 
sign  vour  factor’s  agreement  to  just  the  extent  of  the  rebate  that 
jou  will  allow,  is  he  not?  A.  I suppose  he  is. 

Q.  And  must,  therefore,  compete  with  the  man  who  receives 
the  rebate,  in  the  open  market?  Isn’t  that  true?  A.  I don’t  know 
whether  it  is  or  not ; he  doesn’t  get  the  rebate. 

Q.  And  can  he  without  receiving  that  rebate  compete  in  the 
open  market?  A.  I don’t  suppose  he  can,  but  I am  not  prepared 
to  say  whether  he  cannot. 

Q.  That  rebate  is  a profit  that  you  speak  of  that  you  fix  in  favor 
of  the  factor?  A.  It  is  rebate  that  the  factor  fixed  in  favor  of 
himself. 

Q.  If  the  factor  fixes  this  profit,  why  is  it  that  you  take  the 
trouble  to  have  these  agreements  signed?  A.  The  wholesale 
grocers  told  us  that  they  couldn’t  make  any  money  on  the  goods 
and  could  not  handle  them  without  we  would  protect  them  in 
this  way. 

Q.  You  were  acting  as  the  protectors  of  the  factors  to  this 
agreement?  A.  I suppose  we  do. 

Q.  Now,  while  you  do,  why  do  you  incidentallly  compel  these 
factors  not  to  sell  any  other  product  at  any  lower  price  than 
that  fixed  by  you  in  your  price-list?  A.  It  was  their  own  pro- 
position that  they  would  do  it. 

Q.  It  was  their  proposition  that  they  should  be  constrained 
not  to  compete  against  your  brands  with  any  other  brand  that 
is  in  the  market? 

(Question  read.) 

A.  I don’t  know  that  I fully  grasp  the  whole  of  that  question. 

Q.  Do  you  mean  to  be  understood  as  saying  that  the  factors 


552 


[Sexatb, 


who  sign  these  agreements  with  you  voluntarily  ask  you  to  re- 
strain them  from  putting  a lower  price  on  the  product  of  men 
who  compete  with  you  in  the  sale  of  bicarbonate  of  soda?  A. 
Yes,  sir. 

Q.  Why  can’t  they  refuse  to  sell  that  bicarbonate  of  soda  with- 
out binding  themselves  to  you  by  agreement?  A.  Why  can’t 
they? 

Q.  Why  can’t  they  undersell  your  product  in  the  market,  if 
they  choose,  without  binding  themselves  under  a formal  agree- 
ment? A.  Why,  they  can,  if  they  want  to. 

Q.  They  can’t  as  soon  as  they  have  signed  this  agreement,  can 
they?  A.  They  ought  not  to. 

Q.  They  can’t  if  they  want  the  rebate?  A.  No,  sir. 

Q.  Now,  explain  to  this  committee,  how  it  is,  that  men  who  are 
free  agents  when  they  start  ask  you  to  place  restriction  upon 
them  in  the  free  traffic  with  reference  to  bicarbonate  of  sodas, 
that  were  in  competition  with  yours  in  this  State?  A.  May  I 
make  a long  statement  on  that? — not  very  long — 

Q.  Not  as  long  as  some  of  this  morning’s  statements?  A.  I 
wasn’t  here  this  morning;  I think  it  was  in  3889;  about  that 
time;  as  near  as  I can  recollect,  when  that  committee  of  the 
Wholesale  Grocers’  Association  of  New  York  visited  us  and  re- 
quested that  we  put  a price  on  our  goods  and  give  them  a rebate, 
agreeing  at  that  time  if  we  would  make  such  a price,  or  would 
hold  our  price  where  it  was  or  would  advance  it  by  a small 
amount,  and  give  them  a rebate — 

By  Mr.  Bedell: 

Q.  Did  you  advance  it?  A.  No,  sir;  w7e  did  not  at  that  time. 

Q.  Have  you  since?  A.  We  have — we  advanced  some  time  in 
— I should  think  about  five  years  ago;  a small  amount — 

Q.  How  much?  A.  I think  it  amounted  to  about  13  cents; 
something  of  that  kind. 

Q.  A hundred?  A.  A hundred. 

Q.  Was  that  on  the  bulk  or  on  the  package?  A.  No,  only  on 
the  packages;  the  bulk  was  reduced;  the  cheap  soda  was  re- 


No.  40.] 


553 


duced;  the  wholesale  grocers  agreed  that  if  we  would  put  our 
price  at  44  cents,  I think  it  was  then,  and  give  them  a rebate,  we 
would  be  entirely  satisfied;  that  they  had  been  selling  the  goods 
for  a long  time  at  cost;  competition  was  so  keen  they  could  not 
make  any  money  on  it;  and  that  if  we  could  not  give  them  some 
protection  they  did  not  see  howT  they  could  handle  the  goods; 
well,  we  said  to  them  we  were  afraid  if  we  gave  them  the  rebate, 
that  they  would  merely  hold  our  goods  in  stock  and  push  other 
brands,  sell  other  brands;  then,  to  the  best  of  my  recollection 
they  suggested  that  they  -would  sell  all  brands  alike  if  we  would 
give  them  this  rebate;  that  is  the  history  of  the  rebate,  of  that 
circular,  so  far  as  I can  recollect;  it  was  a nuisance  to  us;  we  did 
not  wish  to  go  into  it;  it  has  taken  time  and  trouble  to  make  it 
up. 

Q.  (By  Mr.  Bedell).  And  your  agreement  of  1S89?  A.  Yes, 
sir.  ] V ''  J 

Q.  (Continuing)  Only  restricted  them  as  to  their  own  private 
brands,  compelling  them  to  maintain  the  price  at  the  same  price 
as  yours  only  on  their  own  private  brands  and  had  no  referece 
whatever  ever  to  other  makes;  when  did  you  insert  in  your  con- 
tract, “ and  other  private  brands?  ” A.  Well,  if  it  was  not  there 
at  the  time  it  was  talked  on  and  was  left  out  of  the  contract, 
because  that  was  a thorough  understanding  so  far  as  my  recol- 
lection goes  of  the  contract. 

By  Mr.  Lexow: 

Q.  Do  you  mean  to  be  understood  as  stating  that  these  factors 
signing  this  agreement  in  which  they  engaged  not  to  sell  their 
own  brands  or  put  their  own  brands  upon  the  market  at  a less 
price  than  that  fixed  by  you  for  your  stuff,  asked  you  to  so  re- 
strict them  with  reference  to  their  own  brand?  A.  Yes,  sir;  I 
think  they  did. 

Q.  Wasn’t  it  a fact  that  at  this  time  before  the  factor’s  agree- 
ments were  signed  there  were  a number  of  brands  in  the  market 
which  were  selling  at  lower  prices  than  the  Arm  and  Hammer 
Brand  and  the  Cow  Brand?  A.  You  mean  in  1889? 


554  [Senate, 

Q.  Yes?  A.  I presume  so;  there  has  always  been  lower  priced 
goods. 

Q.  Wasn’t  this  agreement  or  factor’s  arrangement  of  1889  con- 
ceived and  put  into  practice  for  the  purpose  of  stopping  these 
factors  from  selling  their  own  brand  at  a lower  price  than  that 
fixed  by  you  for  yours?  A.  No,  sir. 

Q.  What?  A.  No,  sir. 

Q.  How  then  can  you  explain  that  phase  of  the  contract?  A. 
I can  explain  it  only  in  the  way  that  I have;  there  was  never  any 
idea  of  driving  these  other  manufacturers  out  of  trade  in  New 
York  State. 

Q.  Then  why  that  clause  in  the  contract?  A.  As  I have  ex- 
plained, the  wholesalers  agreed  to  hold  all  the  goods  at  the  same 
price  if  we  would  give  them  this  rebate  on  our  goods. 

Q.  But  the  subsequent  agreement  restricted  not  only  the  sale 
of  the  factors’  brands  but  also  the  sale  of  any  other  brand?  A. 
Well,  that  was  intended  to  be  in  the  original  agreement. 

Q.  And  you  wish  to  be  understood  as  stating  that  an  agree- 
ment that  you  as  a merchant  or  representative  of  a corporation 
cause  to  be  signed,  fixing  your  own  price  upon  your  product  and 
preventing  the  factor  from  selling  any  other  product  at  a less 
price,  was  not  your  own  discovery  but  was  insisted  upon  by  the 
factors  themselves?  A.  I think  it  was. 

Q.  Well,  are  you  sure  about  it?  A.  Well,  I am  reasonably  sure; 
yes,  sir;  it  is  quite  a number  of  years  ago  we  had  that  conversa- 
tion; I am  quite  positive  that  was  the  way  it  came  about. 

Q.  Isn’t  it  a fact  that  if  a factor  now  sells  any  other  brand  of 
bicarbonate  of  soda  in  packages  at  a lower  price  than  that  fixed 
by  you  in  the  factor’s  agreement  for  the  sale  of  yours,  that  the 
factor’s  agreement  is  withdrawn,  and  he  loses  rebates  that  would 
otherwise  flow  to  him  from  it?  A.  Well,  we  have  had  no  such 
experience  since  the  corporation  was  formed. 

Q.  Not  one?  A.  No,  sir;  not  that  I recollect  of;  I don’t  think 
we  have  had  any. 

Q.  Do  you  mean,  therefore,  that  you  have  raised  the  price  of 
every  competing  brand  with  yours  up  to  the  point  of  the  price  fixed 


No.  40.] 


555 


by  you  on  your  brand,  and  that  that  has  never  been  departed 
from?  A.  We  have  not  departed  from  that  contract  on  package 
goods;  bulk  goods  have  been  sold  down  to  a point — 

Q.  I am  speaking  of  package  goods  now  entirely;  do  you  mean 
to  say  that  after  the  institution  of  this  system  of  factors  you  have 
succeeded  in  raising  the  price  of  every  competing  brand  so  that 
no  competing  brand  is  now  sold  by  a factor  at  a less  price  than 
that  fixed  by  you  in  your  factor’s  agreement;  that  is  a plain  ques- 
tion? A.  I don’t  know  whether  we  have  or  not;  I have  not  in- 
quired of  them  whether  they  have  lived  up  to  the  agreement. 

Q.  You  say  the  agreements  have  not  been  violated?  A.  So  far 
as  I know.  , 

Q.  Then  the  fact  is  as  stated  in  my  question?  A.  That  we  have 
succeeded  in  raising  the  price  on  all  these  goods?  A.  On  all 
others  handled  by  the  factors  who  sign  your  agreement?  A.  I 
should — I don’t  know  about  that;  certainly  not. 

Q.  Then  you  don't  know  whether  your  agreements  have  been 
violated  or  not?  A.  I know  they  have  been  to  some  extent  in 
years  past;  I dont  know  anything  about  it  now;  I haven’t  heard 
anything  recently  about  it. 

Q.  And  on  violation  the  factor’s  agreement  has  been  with- 
drawn? A.  I don’t  know  whether  it  has  been  or  not. 

Q.  Don’t  you  know  whether  or  not  you  have  followed  out  the 
principles  established  in  this  system?  A.  I know  that  we  would 
hear  that  it  was  violated  in  some  respects;  but  when  we  wrote 
the  man  and  asked  him,  or  wrote  the  wholesale  grocers  and  asked 
them  they  were  very  urgent  to  have  it  continued. 

Q.  And  did  you  continue  whether  a breach  had  occurred  or 
not?  A.  Did  we  what?  ; 

Q.  Did  you  continue  the  factor's  arrangement  with  the  particu- 
lar party  having  broken  it?  A.  I presume  we  did. 

Q.  Do  you  know  whether  you  did  or  not?  A.  I haven’t  any  dis- 
tinct recollection,  but  I — I think  we  did  probably. 

Q.  Don’t  you  know  that  there  are  cases  where  you  did  not?  A. 
I think  there  may  have  been  one,  possibly  two  in  the  whole  time, 
as  near  as  I can  recollect. 


556 


[Senate, 


Q.  The  fact  is,  is  it  not,  that  you  having  established  a large 
demand  for  these  two  brands  have  by  the  making  of  these  fac- 
tors’ agreements  practically  limited  the  sale  of  bicarbonate  of 
soda  to  your  two  brands  in  this  State?  A.  2s o,  sir. 

Q.  What  is  sold  in  competition  with  you?  A.  You  mean  in 
the  State  of  New  York? 

Q.  In  the  State  of  New  York?  A.  Why,  I guess  every  manu- 
facturer sells  in  the  State  of  New  York. 

Q.  I am  speaking  of  bicarbonate  of  soda  in  packages?  A.  I 
presume  there  are  packages  of  soda  sold  by  most  of  the  other 
manufacturers,  and  private  brands. 

Q.  To  what  extent?  A.  I don’t  know,  I am  sure;  I have  heard 
of  them;  I don’t — 

Q.  Do  you  notice  that  there  is  any  competition  against  you  in 
this  State?  A.  Yes,  sir. 

Q.  In  package  goods?  A.  Yes,  sir. 

Q.  To  what  extent?  A.  I don’t  know  to  what  extent. 

Q.  Very  small,  isn’t  it?  A.  Well,  it  is  comparatively  small; 
yes,  sir. 

Q.  You  have  practically  secured  a monopoly  of  the  market  in 
bicarbonate  of  soda  in  packages?  A.  In  New  York  State? 

Q.  Substantially?  A.  Well,  I wouldn’t  say  that;  no,  sir. 

Q.  When  I say  substantially  I mean  with  reasonable  limita- 
tions; is  it  not  true  that  you  have  secured  a practical  monopoly  of 
the  sale  of  bicarbonate  of  soda  in  packages?  A.  I wouldn’t  say 
we  have  a monopoly;  I presume  we  sell  more  packages  in  New 
York  State  than  any  other  brand. 

Q.  And  you  have  done  it  under  this  system  of  factors  agree- 
ment, whereby  you  have  fixed  the  price  of  every  competitor  in 
the  market?  A.  No,  sir;  I don’t  think  we  have. 

Q.  How  else?  A.  Because  it  is  the  same  condition  of  affairs 
in  every  other  State  in  the  Union,  where  we  have  no  contract 
whatever. 

Q.  Now  isn’t  it  a fact  that  the  wholesale  business  of  the  State 
is  transacted  through  these  factors  acting  in  connection  with  the 
Wholesale  Grocers’  Association  of  the  State;  isn’t  that  true? 


No.  40.] 


557 


(Question  read.)  , 

A.  Operating  through  the  Wholesale  Grocers’  Association? 

Q.  Yes.  A.  Well  I don't  know  whether  the  wholesalers  of  New 
York  State  are  members  of  the  Association. 

Q.  I am  speaking  now  within  reasonable  limits.  A.  I presume 
that  most  of  the  grocers,  nine-tenths  of  them  at  least,  were  very 
■anxious  to  continue  this  agreement. 

Q.  Nine-tenths  A.  Nine-tenths,  about  that,  that  is  about  the 
number. 

Q.  And  that  being  the  fact  and  they  representing  nihe-tenths 
of  the  business  of  the  State  and  they  having  requested  you  to 
perfect  these  factor's  agreements,  isn't  it  a fact  that  operating 
nnder  that  system  you  have  practically  excluded  every  other 
brand  from  the  State  of  New  York  that  wants  to  sell  at  a less 
price  than  fixed  by  you  upon  your  list?  A.  No,  sir. 

Q.  How  can  they  get  their  goods  upon  the  market?  A.  The 
same  way  they  get  them  on  the  market  in  every  other  State. 

Q.  How  can  they?  A.  They  would  find  them  in  the  other 
States  in  the  same  way  they  do  in  New  York  State;  there  has 
been  no  change  in  that  I think. 

Q.  When  you  testify,  as  you  do,  that  nine-tenths  of  the  whole- 
sale grocers  of  the  State,  are  operating  under  this  factor  agree- 
ment, will  you  explain  how  it  is  that  any  other  brands  can  come 
in  competition  with  yours  at  the  price  you  fixed  in  this  State? 
A.  Why  any  wholesale  grocer — and  there  are  many  of  them  in 
the  State — that  have  not  these  agreements,  can  sell  any  goods 
for  any  price  that  they  have  a mind  to;  but  the  public  calls  for 
these  two  brands  and  has  for  years,  even  before  1889  and  the 
people  want  them  and  buy  them;  that  is  all. 

Q.  And  you  have  eliminated  competition  by  compelling  new 
brands  and  brands  less  favorably  known  or  largely  known 
throughout  the  community  to  be  sold  by  these  factors  at  the 
same  price  that  you  have  fixed  for  yours,  haven’t  you?  A.  No, 
•sir,  we  have  not  compelled  them  to  do  it. 

Q.  Haven’t  you  eliminated  competition  by  compelling  under 
jour  factor’s  agreements  those  factors  to  sell  competing  brands 


558  [Senate, 

less  favorably  and  largely  known  than  yours  at  the  same  price 
that  you  have  fixed  for  yours?  A.  No,  sir. 

Q.  Explain  how  not?  A.  Because  there  is  not  a wholesaler 
in  the  State  if  he  could  make  more  money  on  one  brand  of  goods 
but  that  would  buy  it  in  preference  to  ours  or  any  one’s  else. 

Q.  Then  why  limit  the  price  of  competing  products  to  the 
price  fixed  by  you  on  yours?  A.  We  did  not  limit  it;  they  did 
it  themselves. 

Q.  That  is  your  agreement,  isn’t  it?  A.  Yes,  sir. 

By  Mr.  Bedell: 

Q.  (Showing  witness  agreement.)  You  had  this  agreement 
printed  yourselves,  didn’t  you?  A.  Oh,  yes. 

Q.  You  sent  it  out  when  the  orders  came  to  you?  A.  Yes, 
sir;  yes,  sir. 

By  Mr.  Lexow: 

Q.  And  you  punish  the  offenders  if  he  offends?  A.  Well,  we 
— I presume  we  say  we  do  there. 

By  Mr.  Bedell: 

Q.  Now  Mr.  Walker  at  what  price  do  you  sell  your  bulk  soda 
bicarbonate?  A.  In  what  package? 

Q.  Well,  if  there  are  different  packages,  name  the  different 
prices?  A.  We  have  bulk  packages  in — as  kegs. 

Q.  Yes?  A.  As  barrels.  1 

Q.  Well  how  much  by  the  barrel,  and  how  much  by  the  keg 
per  pound?  A.  Cheap  bulk?  What  I — 

Q.  I mean  of  the  same  class  of  goods  as  your  Arm  and  Hammer 
brand  and  vour  Cow  brand?  A.  As  the  same  class  of  goods? 

Q.  The  same  class  of  goods  as  you  put  up  in  pound  packages, 
and  where  you  sell  it  by  the  bulk  what  do  you  charge  for  it?  A. 
Do  you  mean  the  Arm  and  Hammer  kegs  and  the  Cow  kegs — Cow 
brand  kegs;  these  made  with  the  brand — 

Q.  I mean  with  the  brands  on  them?  A.  Yes,  sir. 

Q.  At  what  price?  A.  Three  and  a half  cents  a pound. 

Q.  Suppose  you  put  the  same  soda  in  kegs  that  haven’t  the 
brand  on,  wrhat  do  you  sell  it  for?  A.  Well,  that  is — would  be 
a queer — 


No.  40.] 


559 


Q.  Don’t  you  do  that?  A.  If  we  put  the  same  soda  in  a.  keg 
we  sell  it  for  three  and  a half  cents. 

Q.  Well,  do  you  only  sell  Cow  brand  and  Arm  and  Hammer 
brand  of  soda  when  the  kegs  are  branded  or  barrels  are  branded 
with  that  particular  brand?  A.  When  the  Cow  brand  or  the 
Arm  and  Hammer  soda  is  on  a keg  it  has  our  guarantee  and 
always  has  had. 

Q.  Yes,  but  that  is  not  quite  the  question  that  I am  trying 
to  have  you  answer;  I want  to  know  whether  you  do  not  take 
the  identical  same  soda  with  no  difference  existing  between  them 
and  put  it  in  kegs  and  not  put  any  brand  on  it,  Cow  brand  or 
Arm  and  Hammer  brand — then  I want  to  know  when  you  sell  that 
soda  what  price  you  ask  for  it?  A.  Well  I am  not  the  factory 
man,  I can’t  answer  you. 

Q.  Don’t  you  know?  A.  No,  sir. 

Q.  How  is  it  that  you  are  well  acquainted  with  the  fact  of 
the  prices  of  other  sodas  and  you  can’t  tell  me  as  to  that?  A. 
Price  of  which  sodas? 

Q.  Well  the  Arm  and  Hammer  brand  in  kegs  and  barrels,  and 
in  packages,  you  know  the  price  you  charge  for  those?  A.  Our 
price  list  give  that;  I am  not  the  manufacturer;  I don’t — 

Q.  At  what  price  do  you  sell  bulk  soda  that  has  no  brand?  A. 
A dollar  and  a half  in  kegs  of  a hundred. 

Q.  That  is  a cent  and  a half  a pound?  A.  Yes,  sir. 

Q.  Is  there  any  difference  between  that  soda  and  the  soda  that 
you  put  in  your  packages,  and  mark  with  your  brand?  A.  Well, 
I can’t  answer  that;  you  will  have  to — 

Q.  Well,  what  is  your  best  opinion?  A.  I am  not  a manufac- 
turer. 

Q.  Well,  what  is  your  best  opinion?  A.  My  opinion  is  that  I 
can’t  answer. 

Q.  You  must  have  some  opinion — whether  or  not  there  is  any 
difference  between  this  soda  that  you  sell  in  bulk  without  any 
particular  designation  at  a cent  and  a half  a pound,  and  that 
which  you  sell  with  a designation  at  three  cents  and  a half  a 
pound;  and  put  up  in  packages  at  five  and  a half  cents  a pound; 


5G0 


[Senate, 

don’t  you  know  whether  there  is  any  difference  or  not?  A.  I 
know  there  is  a great  difference  in  cost  between  the  kegs  and 
boxes. 

Q.  You  recognize  the  fact  that  there  is  a difference  in  cost,  but 
is  there  a difference  in  quality?  A.  You  will  have  to  ask  the  man- 
ufacturer. 

Q.  What  member  of  your  company  could  give  that  informa- 
tion? A.  Mr.  Church  or  Mr.  Dwight. 

Q.  Any  one  else  besides  Mr.  Church  or  Mr.  Dwight?  A.  No, 
sir;  they  are  the — they  have  had  to  do  with  the  manufacturing. 

Q.  Now,  Mr.  Walker,  can  you  tell  me  what  it  costs  per  pound 
to  put  this  soda  in  packages?  A.  No,  sir. 

Q.  Who  could  give  that  information?  A.  Either  one  of  the 
two  gentlemen  that  I have  named. 

Q.  I would  like  to  ask  you  if  you  are  positive  that  you  sell  these 
same  goods — Cow  Brand  and  Arm  and  Hammer  Brand — in  pack- 
ages all  through  the  United  States  in  packages  at  five  cents  and  a 
half  a pound?  A.  No;  I said  we  did  not. 

Q.  Where  do  you  sell  it  cheaper  than  that?  A.  We  sell  it  to 
the  jobbers. 

Q.  Where?  A.  In  New  York  State  and  in  New  Jersey  and 
every  other  State  at  five  cents  a pound. 

Q.  I am  taking  into  consideration,  and  in  my  asking  you  the 
questions,  we  will  consider  that  we  are  allowing  for  the  discount 
of  five  per  cent,  and  two  and  a half  per  cent,  which  you  say  you 
have  granted?  A.  Yes,  sir. 

Q.  And  the  half  cent  rebate?  A.  No;  we  have  no  rebate  outside 
of  New  York  State;  that  is  no  half  cent  rebate. 

Q.  Well,  then,  at  what  price  do  you  sell  outside  of  New  York 
State?  A.  In  pound  packages. 

Q.  Yes?  A.  Five  cents;  just  what  the  New  York  jobber  pays 
for  the  goods,  with  the  half  cent  rebate  which  he  receives  every 
two  months. 

Q.  Then  the  other  States  of  the  Union  get  it  without  this  re- 
bate added?  A.  Yes,  sir. 

Q.  So  your  own  home  State  where  you  have  your  own  manu- 
facturing interests  pays  half  a cent  a pound  more  for  your  soda 


No.  40.] 


561 


than  all  the  other  States  of  the  Union  except  New  Jersey,  per- 
haps? A.  Not  if  they  bay  bulk  goods,  which  they  can  buy  very 
cheap. 

Q.  But  if  they  buy  package  goods  they  do?  A.  If  they  buy 
package  goods  I suppose  they  do;  but  they  don’t  buy  so  very 
much — but  I presume  get  more  profit  on  it  than  New  York  State 
does  which  is  nearby  home,  which  has  to  pay  very  little  freight 
and  all  that  kind  of  thing. 

Q.  Don't  you  have  these  factor  agreements  outside  of  this 
State?  A.  Not  outside  of  New  York  and  New  Jersey;  no,  sir. 

Q.  Haven't  you  agreements  that  are  in  force  in  Pennsylvania? 
A.  No,  sir. 

Q.  Applying  to  sales  by  jobbers  within  the  State  of  New  York? 
A.  Oh,  we  may  have;  we  have  a few,  not  many;  I had  forgotten  it. 

Q.  Haven’t  you  contracts  with  jobbers  in  all  the  States  that 
surround  New  York  State  where  those  jobbers  ship  into  New 
York  to  the  trade?  A.  I don’t  think  for  anything — 

Q.  For  instance,  in  Pennsylvania,  Vermont,  Massachusetts, 
Connecticut;  haven’t  you  those  factors’  agreements  with  the 
wholesalers?  A.  I think  possibly  we  have  when  they  come  into 
New  York  State;  I had  forgotten  that. 

Q.  And  they  are  restricted  to  sell  your  goods  at  five  and  a half 
-cents  per  pound  provided  it  is  to  go  into  the  State  of  New  York, 
is  that  true?  A.  Yes,  sir;  in  the  package  goods. 

Q.  Yes?  A.  Yes,  sir. 

Q.  But  there  is  no  restriction  placed  on  them  if  they  are  going 
to  sell  it  in  the  State  of  Pennsylvania  or  the  State  of  Vermont? 
A.  No,  sir. 

Q.  That  is  true?  A.  That  is  true. 

Q.  Do  you  also  have  these  factors’  agreements  with  druggists, 
wholesale  druggists?  A.  Well,  not  that  I know  of ; we  would  not 
have  them  without  they  handled  the  package  goods;  I don’t  know 
whether  they  do  or  not;  I don’t  know  whether  there  are  any 
wholesalers  of  that  kind  that  handle  package  goods. 

Q.  The  entire  amount  of  soda  that  you  had  put  up  in  packages 
under  the  Arm  and  Hammer  Brand  or  Cow  Brand  is  manufac- 
tured in  this  State,  is  it  not?  A.  Yes,  sir. 

•36 


5G2  [Senate, 

Q.  And  all  by  the  Solvay  Company  at  Syracuse?  A.  Nearly 
all;  yes,  sir. 

Q.  Didn’t  you  have  manufacturing  concerns  of  your  own  at 
which  you  produced  your  bicarbonate  of  soda  up  to  within  one  or 
two  years  ago?  A.  Yes,  sir;  we  have  had  manufacturing  con- 
cerns where  we  produced  a good  deal  of  soda  right  along  for  a 
good  many  years ; yes,  sir. 

Q.  You  didn’t  buy  of  the  Solvay  Company  until  a few  years 
ago,  did  you?  A.  We  bought  all  their  product  for  five  years. 

Q.  Well,  prior  to  that  time  you  produced  your  own,  didn’t  you? 
A.  Yes,  sir. 

Q.  What  is  the  Solvay  process?  A.  What  do  you  mean? 

Q.  How  do  they  produce  bicarbonate  of  soda ; is  it  a secret  pro- 
cess? A.  Yes,  sir. 

Q.  Is  it  what  is  known  as  the  ammoniated  process?  A.  I am 
not  a chemist,  but  I understand  that  is  what  it  is;  it  is  the  best 
soda  in  the  world. 

Q.  That  produced  by  that  process?  A.  Yes,  sir. 

Q.  Have  you  always  been  of  that  opinion?  A.  No,  sir;  the 
soda  was  not  always  as  good  as  it  is  now. 

Q.  Well,  have  you  always  been  of  the  opinion  that  the  soda 
thus  produced  was  the  best  soda  in  the  world?  A.  No,  sir. 

Q.  When  did  you  change  your  opinion?  A.  Changed  our  opin- 
ion when  the  soda  was  made  pure. 

Q.  How  long  ago  was  that;  you  have  been  handling  it  for  five 
years?  A.  Well,  just  about  the  time  we  took  hold  of  it  they  per- 
fected it,  so  that  I understand  the  chemical  analysis  of  it  now — 
as  I asked  to-day — was  about  99  7-10  pure;  purer  even  than  the 
so-called  bicarbonate  of  soda  which  you  buy  in  drug  stores;  it  is 
the  finest  soda  made  in  the  world. 

Q.  You  know  the  Natrona  soda  , do  you  not?  A.  Yes,  sir. 

Q.  Is  that  a fine  soda?  A.  It  is  a good  soda,  I understand. 

Q.  Isn’t  it  a pure  soda?  A.  I can’t  say;  I am  not  sure;  it  is  not 
as  pure  as  ours,  I think;  I don’t  think  there  is  any  soda  that  is. 

Q.  Is  your  soda  produced  by  filtration?  A.  I can’t  tell  you 
anything  about  the  manufacture  of  it;  I am  not  a manufacturer. 


No.  40.] 


563 


Q.  Haven't  your  companies,  yourselves,  before  you  entered  into 
the  contract  to  taketbe  entire  product  of  tbe  Solvay  Process  Com- 
pany asserted  that  your  soda,  as  you  produced  it  by  other  meth- 
ods, was  a purer  soda  than  theirs?  A.  Yes,  sir;  and  it  was  then. 

Q.  And  it  has  changed  when  you  gained  control  of  the  com- 
pany? A.  No;  not  that  idea  at  all — 

Q.  Well,  how  long  ago  did  the  soda  change?  A.  It  is  a fact 
(that  perhaps  twelve  years  ago  the  ammonia  process  soda — bicar- 
bonate of  soda — had  contained  a good  deal  of  ammonia;  but  that 
has  been  eliminated  from  it  entirely,  and  it  is  now,  as  I say,  the 
finest  soda  in  the  world,  and  has  been  for  years. 

Q.  Is  there  any  other  company  in  the  world  that  is  producing 
soda  to-day  by  what  is  known  as  the  Solvay  process?  A.  In  the 
world? 

Q.  In  the  world?  A.  Yes,  sir. 

Q.  Where  are  those  located;  are  there  any  others  in  the  United 
States?  A.  I don’t  know;  there  may  be  by  the  ammonia  process. 

Q.  I am  speaking  of  the  Solvay  process?  A.  Yes;  that  is  what 
I mean — no ; not  by  the  Solvay  process. 

Q.  They  are  the  only  manufacturers  in  the  United  States?  A. 
I believe  so. 

Q.  Is  there  a company  in  England  that  manufactures  by  the 
Solvay  process?  A.  Yes,  sir. 

Q.  What  is  that  known  as?  A.  Bruner,  Mond  & Company. 

Q.  Well,  do  the  United  Alkali  Companies  produce  by  the  same 
process?  A.  I don’t  know. 

Q.  Is  the  Bruner,  Mond  Company  to-day  shipping  its  soda  into 
this  country?  A.  I don’t  know. 

Q.  Don’t  you  know?  A.  No,  sir. 

Q.  Do  you  knowr  whether  there  is  any  contract  existing  between 
your  company  or  between  John  Dwight  & Company  and  Church 
& Company,  with  the  Solvay  Company  at  Syracuse  by  which  they 
undertake  to  prevent  the  Bruner,  Mond  Company  from  shipping 
soda  into  this  market  to  come  into  competition  with  your  pro- 
duct? A.  I know  there  is  no  such  agreement. 

Q.  You  know  there  is  no  such  agreement?  A.  Yes,  sir. 


564 


[Senate, 


Q.  Nor  any  such  understanding?  A.  No,  sir. 

Q.  Do  you  know  of  any  difference  in  the  soda  produced  on  the 
other  side  by  the  Solvay  process  and  the  soda  produced  here  at 
Syracuse  by  the  Solvay  process?  A.  I don’t  know  anything 
about  it. 

Q.  It  is  the  same  process  on  both  sides  of  the  water,  is  it  not? 
A.  I don’t  know. 

Q.  Well,  this  Solvay  Company  here  is  an  offshoot  of  the  Eng- 
lish Company?  A.  I presume  it  is;  I don’t  know  whether  they 
manufacture  their  bicarbons  the  same  way;  I can’t  tell  anything 
about  that. 

Q.  And  this  Solvay  Company  produces  what  is  termed  the  “bi- 
product,” they  produce  the  bicarbonate  of  soda,  and  they  produce 
the  sal  soda,  and  the  produce  the  soda  ash,  do  they  not?  A.  I 
don’t  think  they  make  any  sal  soda;  they  make  ash,  I believe. 

Q.  They  make  soda  ash?  A.  Soda  ash;  yes. 

Q.  And  that  is  done  at  the  same  time  they  produce  the  bicar- 
bonate of  soda?  A.  Well,  I am  not  a manufacturer. 

Q.  You  don’t  understand  the  technical  part  of  that?  A.  Not  at 
all. 

Q.  Do  you  know  the  J.  Monroe  Taylor  Company?  A.  I know 
of  them;  yes. 

Q.  Are  they  manufacturers  of  soda?  A.  Have  been;  yes,  sir; 
are  now,  I think. 

Q.  They  are  a reputable  concern,  are  they  not?  A.  Yes,  sir. 

Q.  Do  you  know  the  Deland  Company?  A.  Yes,  sir. 

Q.  They  are  a reputable  concern,  are  they  not?  A.  Yes,  sir. 

Q.  Now,  is  there  any  other  manufacturer  in  this  State  of  bicar- 
bonate of  soda?  A.  Yes,  sir. 

Q.  Who?  A.  A.  J.  Howell  & Son. 

Q.  That  is  a reputable  concern?  A.  Yes,  sir. 

Q.  Now,  Mr.  Walker,  do  you  consider  it  a sound  business  prop- 
osition that  the  Legislature  of  this  State  should  endorse  that,  you 
by  your  statements  having  created  an  enormous  demand  for  your 
particular  products  of  soda,  the  public  having  used  it  for  years, 


No.  40.] 


565 


been  accustomed  to  its  use  and  demanding  it,  that  you  attempt  to- 
wipe  out  competition  of  other  reputable  concerns  producing  a 
soda  that  is  on  a par  with  yours?  A.  No,  sir;  there  is  no  soda  on 
a par  with  ours. 

Q.  But  you  told  me  you  did  not  understand  the  technical  part 
of  this;  how  do  you  know?  A.  Well,  I know  there  is  not,  because 
I have  seen  the  analysis  of  it  time  and  time  again. 

Q.  Oh,  you  have  seen  the  analysis  of  it?  A.  Yes,  sir. 

Q.  Well,  then,  I will  say — who,  producing  a soda  which  they 
wish  to  put  upon  the  market,  and  according  to  your  position  is 
of  an  inferior  quality,  that  you  shall  make  contracts  with  the 
wholesale  dealers  in  this  State — and  according  to  your  state- 
ments nine-tenths  of  them  have  made  these  contracts — whereby 
you  are  going  to  compel  these  firms  to  sell  their  soda,  or  have  their 
soda  sold,  at  the  same  price  as  your,  when  they  may  desire  to 
enter  into  a reasonable  competition,  and  dispose  of  this  soda  to 
the  public  at  a less  price  than  you  charge — what  is  your  opinion 
of  that?  A.  That  is  too  long  a statement  for  me. 

Q.  Well,  have  the  stenographer  read  it? 

(Question  read.) 

A.  I can’t  answer  that;  it  is  too  long  for  me. 

Q.  You  have  an  opinion,  have  you  not?  A.  I haven’t  got  the 
sense  of  it;  it  is  too  long. 

By  Mr.  Lexow: 

Q.  If  these  other  products  are  inferior  why  don’t  you  permit 
your  factors  to  sell  them  at  a lower  price?  A.  Well,  I don’t 
know  in  the  first  place  whether  they  really  are  our  factors;  I 
know  one  thing;  we  shall  be  very  much  pleased  to  do  without  the 
contracts,  if  the  grocers  would  allow  it;  it  is  not  pleasant  to  us  to 
send  them  rebates;  it  takes  time  and  expense  and  so  on. 

By  Mr.  Mazet: 

Q.  Were  you  coerced  into  making  such  an  arrangement  as 
that?  A.  Practically — I wrnn’t  say  coerced. 


5G6  [Senate, 

Q.  By  whom?  A.  (Continuing)  Oh,  yes;  I don’t  know  but  I 
will,  too;  yes,  sir. 

Q.  By  the  grocers?  A.  Yes,  sir. 

By  Mr.  Bedell : 

Q.  Can  you  tell  the  number  of  sixty  pound  boxes  of  soda  and 
saleratus  that  you  sell  per  month?  A.  No,  sir. 

Q.  Your  books  would  give  that  statement,  would  they  not? 
A.  I presume  they  would. 

Q.  Will  you  furnish  them  to  the  committee,  please,  covering 
last  year?  A.  Are  you  speaking  now  of  Church,  Dwight  & Co. 
-or  John  Dwight  & Co.? 

Q.  Of  both?  A.  Or  Church  & Co.? 

Q.  Of  both.  A.  I will  try  to,  if  you  want  them. 

Q.  All  of  the  members  of  this  company  are  related,  are  they 
not?  A.  Yes,  sir. 

Q.  So  that  you  have  the  whole  thing  within  the  family,  so  to 
speak,  and  there  are  no  outsiders?  A.  No,  sir. 

Q.  That  are  interested  in  the  company — well,  up  to  the  time  of 
your  formation  or  consolidation  of  the  John  Dwight&Co.,  and  the 
Church  & Co.  in  1896  you  were  competing  firms,  were  you  not? 
A.  Yes,  sir;  John  Dwight  & Co.,  together  with  the  principal — I 
with  John  Dwight,  together  with  the  principal  in  the  Church 
Company  firm,  were  together  fifty  years  ago. 

Q.  Yes?  A.  Started  in  business  in  this  country,  made  the  first 
goods  that  were  ever  made  here,  and  they  have  continued  the 
business  down  to  now., 

Q.  Now,  Mr.  Walker,  I would  like  to  ask  you  a question:  You 
have  asserted  here  that  the  making  of  these  contracts  and  the 
desire  to  have  these  contracts  flowed  entirely  from  the  Whole- 
sale Grocers’  Association;  is  it  not  a fact  that  within  this  last 
year  you  have  had  a representative  going  through  this  State 
and  calling  on  the  jobbers  who  had  not  returned  your  contracts 
signed,  and  this  representative  wras  instructed  to  get  the  signa- 
tures of  each  one  of  these  jobbers,  if  possible?  A.  We  had — we 


No.  40.] 


567 


sent  out  during  sometime  last  rear  letters  to  the  wholesale  gro- 
cers asking  them  whether  they  wished  to  continue  that  contract. 

Q.  Yes?  A.  Or  that  paper,  whatever  you  call  it — agreement — 
I do  not  know  what  it  is  called;  and  as  I say,  the  large  majority 
of  them  urged  us  to  continue  it;  they  did  not  wish  to  put  it  down; 
as  I say  it  was  an  annoyance  to  us  to  handle. 

Q.  What  did  this  man  do?  A.  I don’t  know  what  he  did;  I 
presume  that  is  our  salesman  going  through  and  asked  them  to 
give  him  the  paper. 

Q.  Asking  them  to  sign  the  contract?  A.  I suppose,  so;  I 
don't  know  anything  of  this  case. 

Q.  What  was  this  man’s  name?  A.  I don’t  know. 

Q.  Was  it  William  S.  Lyons?  A.  William  S.  Lyons — are  you 
speaking  now  of  John  Dwight  & Company,  or  Church  Company? 

Q.  Well,  either  one?  A.  William  R.  Lyons  is  with  us;  yes,  he 
may  have  done  so. 

Q.  You  have  spoken  of  reports  of  this  date  in  respect  to  the 
jobbers — whether  or  not  the  jobbers  are  violating  any  of  the 
terms  of  this  agreement?  A.  No,  sir. 

Q.  Don’t  you  instruct  your  agents  who  are  out  on  the  road; 
are  not  the  agents  of  the  wholesalers  directed  to  gain  informa- 
tion in  that  direction  and  communicate  it  to  you?  A.  Well,  I 
never  knew  of  one  being  so  instructed;  it  is  possible;  it  is  pos- 
sible. 

Q.  Do  you  know,  Mr.  Walker,  of  any  other  sodas  having  been 
put  on  the  market  within  the  past  two  or  three  years  in  this 
State  that  came  in  competition  with  you,  sold  at  a less  price  than 
yours?  A.  Do  you  mean  now  in  bulk  goods,  or  in  packages? 

Q.  In  package  goods?  A.  I don’t  remember;  no,  sir;  there 
may  have  been  some. 

Q.  If  there  has  been  any  competition?  A.  Yes,  I know  of  one 
or  two;  there  is  one  at  Fairport,  a chemical  company  puts  one 

on. 

Q.  The  Fairport  Chemical  Company?  A.  I think  so. 

Q.  But  the  competition  that  they  gave  you  was  so  slight  it 
was  scarcely  noticed,  is  that  it?  A.  Well,  I don’t  know;  they 
seem  to  be  doing  pretty  well,  as  near  as  I can  state. 


568  [Senate, 

Q.  But  you  have  not  noticed  competition  from  any  other  direc- 
tion? A.  I don’t  recollect — there  may  have  been  some. 

Q.  Now,  Mr.  Walker,  I would  like  to  know  what—  A.  (Inter- 
rupting) There  are  a great  many  private  brands,  you  know,  that 
are  put  up  and  sold  in  New  York  State. 

Q.  Yes?  A.  A great  many  of  them. 

Q.  But  your  jobbers  cannot  sell  them  for  less  than  five  and 
a half  cents  a pound?  A.  Well,  not  in  this  State,  no  sir. 

Q.  Now  will  you  tell  me  in  what  light  you  hold  men  who  enter 
into  this  agreement  with  you;  in  the  light  of  an  agent?  A.  I 
don’t;  I can’t  answer  that;  I am — 

Q.  What  is  your  opinion?  A.  I haven’t  any  opinion;  I don’t 
know  in  what  light  we  do  hold  them. 

Q.  Absolutely  no  opinion  on  the  subject?  A.  No,  sir;  no,  sir. 

Q.  You  enter  into  this  factor  agreement  with  the  jobbers  en- 
tirely for  the  benefit  of  the  grocers?  A.  Went  into  it  at  their 
request. 

Q.  Entirely  for  their  benefit?  A.  Yes,  for  their  benefit  en- 
tirely; yes,  sir. 

Q.  And  you  have  this  system  whereby  you  require  that  they 
shall  keep  up  the  price  of  your  goods  entirely  for  their  benefit? 
A.  Yes. 

Q.  Couldn’t  they  perfect  that  same  agreement  among  them- 
selves? A.  We  asked  them  to  do  it,  and  they  told  us  they 
couldn’t  do  it;  they  would  cut  each  other’s  prices,  and  so  on, 
and  it  was  utterly  impossible  to  keep  track  of  them. 

Q.  What  particular  interest  has  your  company  to  enter  into 
this  contract  with  the  jobbers?  A.  Nothing  whatever. 

Q.  It  puts  you  to  a great  deal  of  trouble?  A.  Yes,  sir. 

Q.  With  these  contracts,  but  it  does  have  the  result  of  stamp- 
ing out  competition  among  jobbers,  doesn’t  it?  A.  Well,  it  was 
not  entered  into  with  any  such  object;  not  at  all;  it  was  merely 
with  these  men  as  I said. 

Q.  I know,  but  it  does  have  the  result  of  eliminating  competi- 
tion between  the  jobbers?  A.  I don't  know  whether  it  does  or 
not. 


No.  40.] 


569 


Q.  Do  they  handle  other  people’s  goods,  these  other  jobbers? 
A.  Yes,  sir;  as  I understand,  they  do,  and  as  I say,  the  same  con- 
dition of  affairs  affects  any  other  States  where  they  have  not  this 
contract.  j 

By  Mr.  Bedell: 

Q.  What  do  you  pay  to  the  Solvay  Process  Company  Tor  your 
soda?  A.  I don’t  know. 

Q.  Is  it  as  much  as  a cent  and  a half?  A.  I can’t  tell. 

Q.  You  have  no  knowledge  on  the  subject?  A.  No,  sir. 

Q.  And  still  you  are  secretary  and  treasurer  of  this  company? 
A.  I am  not  the  secretary;  I am  the  treasurer;  yes,  sir. 

Q.  And  you  have  no  knowledge  as  to  the  amount  per  pound 
that  you  pay  the  Solvay  Company  for  their  bicarbonate  of  soda? 
A.  No,  sir. 

Q.  You  don’t  know?  A.  I don’t  think  anybody  would. 

Q.  Well,  would  you  please  tell  me  how  you  arrive  at  a basis  of 
calculation?  A.  Because  we  cannot  tell  until  we  have  been  in 
business  one  year;  we  have  only  been  going  about  four  months. 

Q.  Why  can’t  you  tell?  A.  Because  it  depends  on  the  amount 
of  goods  we  sell. 

Q.  The  purchase  price?  A.  Yes,  sir. 

Q.  Well,  is  it  graded  then?  A.  Somewhat;  yes,  sir. 

Q.  What  is  the  highest  price  per  pound  that  you  are  to  pay  the 
Solvay  Company?  A.  I can’t  tell  that. 

Q.  Don’t  you  know?  A.  No,  sir. 

Q.  You  know  something  of  the  terms  of  your  contract?  A. 
Yes,  sir. 

Q.  Is  it  as  high  as  a cent  and  a half?  A.  I can’t  tell  what  it  is. 

Q.  Will  you  furnish  the  committee  with  that  statement?  A.  I 
don’t  know  whether  I can  or  not. 

Q.  Why?  A.  Because  I don’t  think  anybody  could  tell. 

Q.  You  must  have  some  agreement  or  some  arrangement  with 
the  Solvay  Company?  A.  There  are  certain  reasons,  Mr.  Chair- 
man, why,  if  I could  answer  that  question,  I should  certainly  take 


570  [Senate, 

counsel  before  I did  answer  it;  the  reason  is  that  we  have  com- 
petitors in  this — 

Q.  Is  that  the  reason  that  you  cannot  answer  the  question  now? 
A.  No,  sir;  it  is  not — wTe  have  competitors  in  this  room;  we  have 
one  man  here  -whose  name  is  Walsh  whom  we  discharged  for 
good  cause  in  1895  who  is  suing  us  at  present;  I should  not  want 
even  though  I could,  to  give  the  price,  in  view  of  all  this;  and  I 
don’t  really  think  that  the  committee  ought  to  ask  me  to  do  it. 

Q.  Well,  that  will  be  a subject  for  discussion  among  the  mem- 
bers of  the  committee;  what  is  the  duty  now  on  bicarbonate  of 
soda?  A.  I think  it  is  three-quarters  of  a cent  per  pound. 

Q.  Three-quarters  of  a cent?  A.  No;  half  a cent;  half  a cent. 

Q.  Isn’t  it  a quarter?  A.  No,  sir;  I believe  it  is  half  a cent. 

Q.  Will  you  tell  me  what  your  package  soda  is  sold  for  to  the 
retailers  by  the  jobbers,  at  what  price?  A.  I don’t  know,  sir;  it 
is  sold  for  all  the  way  from  four  and  a half  to  six  cents. 

Q.  Your  package  soda?  A.  Yes,  sir. 

Q.  By  the  jobber  to  the  retailer?  A.  Yes,  sir;  you  mean  in  New 
York  State? 

Q.  I mean  in  New  York  State?  A.  I don’t  know;  I don’t  look 
at  those  things;  I mean  all  around  the  country  they  sell. 

Q.  But  in  other  States  it  is  sold  from  four  to  what  price?  A. 
They  give  it — oh,  you  mean  package  goods  entirely;  packages? 

Q.  Yes.  A.  Well,  I was  thinking  of  kegs  when  you  first  spoke; 
from  four  and  a half  to  six  cents  they  sell  package  goods,  I pre- 
sume for  anything  they  are  a mind  to  from  what  it  cost  them  in 
freight,  I suppose;  they  can  sell  it  for  two  and  a half  if  they  see 
fit;  that  is  not  part— none  of  our  affair. 

Q.  Do  you  know  what  the  usual  retail  price  of  your  goods — ■ 
A.  I don’t  know;  I presume  it  is  from  eight  to  ten  cents;  from 
seven  to  ten  cents;  somewhere  along  there;  yes,  sir;  it  has  been 
for  twenty  years,  as  near  as  I can  understand,  in  packages,  pound 
packages. 

Q.  In  what  form  do  you  pay  this  rebate  in  this  new  corpora- 
tion? A.  In  what  form? 

Q.  Yes;  how  do  you  pay  it?  A.  We  pay  it  every  three  months. 

Q.  By  check?  A.  Yes,  sir. 


No.  40.] 


571 


Q.  What  proof  has  the  jobber  to  make  to  you  to  entitle  him  to 
receive  this  rebate?  A.  We  have  it  printed  on  the  back  of  a 
check  that — I would  say  printed  on  the  back  of  the  check  some- 
thing like  “our  signature  on  here” — “on  this  check  is  our  word 
that  we  have  not  broken  the  price” — or  something  of  that  kind; 
I don’t  recollect  exactly. 

Q.  That  is  to  say  a certification  by  the  act  of  endorsement  of 
the  check  that  they  have  lived  up  to  the  terms  of  this  factors’ 
agreement?  A.  Yes,  sir. 

Q.  Is  that  the  substance  of  it?  A.  Yes,  sir 

Q.  Can  you  tell  me  what  the  price  in  bulk,  the  market  price  in 
bulk  of  bicarbonate  of  soda  was  in  1889?  A.  1889  I think  it 
was — let  us  see — 

Q.  Well,  about  what?  A.  I don’t  recollect. 

Q.  Was  it  about  two  and  three-quarters  to  three  cents  per 
pound?  A.  I presume  so,  if  you  have  the  figures  there;  I don’t 
recollect  exactly  what  it  is. 

Q.  And  was  that  price  reduced  by  the  fact  that  the  tariff  duty 
on  bicarbonate  of  soda  was  reduced  from  three-fourths  of  a cent 
to  a quarter  of  a cent  a pound?  A.  I don't  know  whether  that 
was  the  reason  or  not;  I know  the  price  was  reduced  right  along. 

Q.  But  notwithstanding  that  fact  your  prices  increased  for  the 
package  goods;  is  that  true?  A.  No,  sir. 

Q.  Did  you  swear  to  the  statement  here  awhile  ago  that  a few 
years  ago  the  price  of  your  package  goods  was  five  cents;  it  was 
then  afterward  increased  by  you  to  five  and  a half?  A.  Oh,  no; 
it  was  four  and  a half,  and  increased  to  five  with  a rebate. 

Q.  Yes;  and  it  is  five  and  a half  now?  A.  No. 

Q.  Confine  yourself  to  New  York  State?  A.  Oh,  yes;  in  New 
York  State. 

Q.  Then  you  did  not  increase  it  in  New  York  State  one-half 
cent  a pound?  A.  Well,  we  increased  the  price  in  New  York 
State  from  five  to  five  and  a half  and  gave  them  one-half  cent 
back.  v 

Q.  By  rebate?  A.  In  rebate,  yes. 

Q.  And  it  was  an  increase;  to  any  one  wiio  wanted  to  purchase 


572 


[Senate, 


your  goods  and  would  not  enter  into  the  factors’  agreement,  isn’t 
that  so?  A.  Well,  I don’t  know,  but  that  would  be  so;  yes,  I 
think  it  would — I do  not — 

Q.  (Interrupting)  This  increase  was  made  notwithstanding  the 
fact  that  the  price  of  bulk  soda  had  been  reduced?  A.  We  re- 
duced the  price  of  bulk  goods  along  on  that — yes,  sir. 

Q.  You  had  considerable  competition  in  bulk  goods,  hadn’t 
you?  A.  Yes,  and  in  box  goods,  too. 

Q.  But  your  long  established  trade-marks  of  Cow  brand  and 
Arm  and  Hammer  brand  enabled  you  to  keep  the  price  up  of  pack- 
age goods,  but  in  bulk  soda,  without  any  designation  or  without 
any  brands,  you  had  an  open  competition?  A.  Yes,  we  had  an 
open  competition. 

Q.  Therefore  you  reduced  your  price  on  the  bulk  goods?  A. 
So  we  did  on  bulk  goods;  in  the  former. 

Q.  I say  on  bulk  goods?  A.  I would  say,  ou  package  goods, 

Q.  When  you  reduced  your  price?  A.  I say  we  had  that  same 
competition  on  package  goods. 

Q.  But  you  haven’t  it  now?  A.  Yes,  we  have  a good  deal  of 
competition  on  package  goods. 

Q.  Not  as  much  as  you  had  a few  years  ago,  have  you?  A. 
Well,  I don’t  know  that  we  have  as  much  as  we  had;  I don’t 
know,  too,  but  we  have;  there  are  as  many  manufacturers,  I 
think,  or  even  more  than  there  were  then. 

Q.  Now,  Mr.  Walker,  isn’t  it  a fact  that  no  manufacturing  con- 
cern can  do  business  in  this  State  and  sell  its  package  goods  in 
this  State  in  competition  with  you?  A.  No,  sir. 

Q.  At  the  price  of  five  and  a half  cents  per  pound?  A.  No, 
sir;  it  is  not. 

Q.  And  that  the  men  who  are  engaged  in  your  business  have  to 
rely  almost  entirely  for  the  disposition  of  their  goods  on  States 
other  than  the  States  of  New  York  and  New  Jersey?  A.  No, 
sir;  it  ought  not  to  be. 

Q.  Isn’t  it  a fact  that  you  do  business  with  almost  nine-tenths 
of  the  wholesale  grocers  of  this  State?  A.  I presume  it  is. 

Q.  Then  it  follows  from  that,  under  these  agreements?  A. 
Yes,  sir. 


No.  40.] 


573 


Q.  Then  it  is  a fact  that  nine-tenths  of  the  wholesale  grocers 
of  this  State  cannot  sell  any  of  these  other  brands  of  goods  and 
live  up  to  their  agreement  with  you,  for  less  than  five  cents  and 
a half  per  pound  to  the  retailer;  isn't  that  true?  A.  The  retail- 
ers can  sell  other  brands. 

Q.  I am  speaking  now  of  the  wholesalers;  the  wholesalers  are 
obliged  to  sell  to  the  retailers  at  five  and  a half  cents  per  pound, 
no  matter  what  brand  it  may  be,  isn’t  that  true?  A.  Yes. 

Q.  Then  you  are  practically  wiping  out  all  competition  in  this 
State  by  every  competing  manufacturing  concern  in  the  State  on 
package  goods,  are  you  not?  A.  No,  sir;  I don’t  think  we  are. 

Q.  Are  you  not  placing  the  public  in  that  position — in  the 
position — of — A.  No,  sir. 

Q.  Why,  you  place  the  jobber  in  the  position  that  he  has  your 
goods  to  sell  at  five  and  a half  cents  per  pound,  and  he  must  sell 
everything  else  at  five  and  one-half  cents  per  pouud?  A.  The 
jobber — if  you  will  allow  me  just  a moment — the  jobber  doesn’t 
sell  goods  to  the  consumer. 

Q.  I realize  that  fact  very  plainly?  A.  The  retailer  can  buy 
those  goods  if  he  has  a mind — we  never  restrict  him  in  any  way 
whatever;  haven’t  anything  to  do  with  him. 

Q.  No;  but  you  restrict  the  jobber — and  is  not  nine-tenths  of 
the  business  done  through  the  jobbers  in  this  State?  A.  Well, 
I presume  it  is,  on  such  staples  like  Hour  and  those  things — 

Q.  Isn’t  it  on  soda?  A.  Yes,  it  is  on  soda,  too — 

Q.  Isn't  it  a fact  that  no  manufacturing  concerns  could  start 
out  and  endeavor  to  deal  with  the  retailers  direct  and  make  a 
success  of  his  business?  A.  No,  sir;  there  is  where  the  majority 
of  them  start  in  and  make  a success. 

Q.  But  you  swear  here  that  they  must  trade  through  the  job- 
ber if  they  want  to  trade  with  you?  A.  They  can  do  it  in  every 
other  State.  • 

By  Mr.  Lexow: 

Q.  Do  you  think  that  any  system  should  be  tolerated  in  this 
State  whereby  under  the  laws,  if  you  are  permitted  to  do  so  by 


574 


[Senate, 


law,  you  can  compel  the  consumer  in  this  State  to  pay  more  for 
your  product,  although  a New  York  State  corporation,  than  is 
paid  for  it  by  other  States — consumers  of  other  States?  A.  No, 
sir;  I don’t  think  they  do. 

By  Mr.  Warner: 

Q.  Don’t  the  retailers  pay  more  in  other  States  than  they  do 
in  the  States  of  New  York  and  New  Jersey?  A.  Pay  more  for 
goods  than  they  do  in  the  States  of  New  York  and  New  Jersey? 

Q.  Yes?  A.  Yes,  I think  they  do,  because  the  freight  is 
higher,  and  they  are  obliged  to;  a little  more  freight. 

Q.  Pay  less,  I mean?  A.  I don’t  think  they  do;  I think  they 
pay  more. 

Q.  Don’t  you  know?  A.  No,  I don’t  know,  because  there  is 
such  a competition  that,  for  instance;  in  the  far  west  they  will 
even  sell  goods  for  just  what  it  costs  in  order — 

Q.  On  account  of  the  competition?  A.  On  account  of  compe- 
tition. 

Q.  And  on  account  of  lack  of  competition  in  this  State  they  pay 
higher?  A.  Well,  here  they  have  no  freight  to  pay— 

Q.  Don't  they  pay  a higher  price  here  in  this  State;  on  account 
of  the  lack  of  competition,  as  I understand  you?  A.  They  don’t 
pay  any  higher  price  on  our  goods. 

Q.  The  retailers  don’t?  A.  No,  sir. 

Q.  You  are  incorporated,  are  you,  under  the  laws  of  this  State? 
A.  We  are;  yes,  sir. 

By  Mr.  Bedell: 

Q.  You  stated  earlier  in  your  examination  that  you  had  a fac- 
tory at  Harlem — John  Dwight  & Co.?  A.  Yes,  sir. 

Q.  There  you  manufactured  bicarbonate  of  soda,  at  one  time, 
didn’t  you?  A.  Yes,  sir. 

Q.  What  did  you  do  with  that  factory?  A.  Have  it  now. 

Q.  Are  you  operating  it?  A.  Yes,  sir. 

Q.  What  are  you  producing  there?  A.  We  are  producing  sal- 
soda,  and  using  it  to  pack  our  goods  in  just  the  same  as  we  did  be- 
fore. * . . 


No.  40.] 


579 


Q.  Are  you  using  all  the  factories — are  you  usiug  your  factory 
at  Greenpoint?  A.  Yes,  sir;  expect  to  continue  using  it. 

Q.  And  so  far  as  the  production  of  bicarbonate  of  soda  was 
concerned  they  dismantled  it,  didn’t  they?  A.  Well,  they  are  not 
dismantled,  but  we  are  not  using  them  for  that  now. 

Q.  You  do  not  employ  as  many  men  as  you  did  before?  A.  I 
think  we  employ  considerably  more. 

Q.  In  proportion  to  the  business  that  you  did?  A.  Yes;  I pre- 
sume we  did  employ  a great  many  more  since  we  are  building — 

Q.  That  is  due  to  the  manufacture  of  other  products?  A.  Yes, 
air. 

By  Mr.  Mazet: 

Q.  Since  you  have  used  this  agreement  with  the  wholesalers  or 
the  jobbers  in  New  York,  have  any  cases  come  to  your  knowledge 
of  violation  of  the  agreement  by  them?  A.  By  the  grocers? 

Q.  Or  sellers — yes;  the  factors  who  signed  this  agreement?  A. 
I think  there  have;  yes. 

Q.  In  what  respect;  by  selling  your  goods  at  a lower  rate,  or 
selling  goods  of  other  grades?  A.  I think  both,  as  near  as  I can 
recollect;  I don’t  recollect  now  just  how  they  are. 

Q.  How  many  cases?  A.  There  are  not  many. 

Q.  How  many  cases  of  that  kind  that  you  know  of?  A.  We 
heard  from— how  many  cases? 

Q.  Yes?  A.  I don’t  recollect;  it  is  not — it  is  some  years  ago. 

Q.  You  said  there  were  not  many;  I presume  you  know  approx- 
imately? A.  No;  I don’t  recollect  how  many;  there  may  have 
been  perhaps  half  a dozen  in  as  many  as  ten  years,  or  eight  years; 
I don’t  know. 

Q.  How  long  has  this  agreement  been  in  force?  A.  Since  1889. 

Q.  What  is  your  method  of  treatment  of  those  cases?  A. 
Well,  the  usual  manner  with  Dwight  & Company  was  to  not  hear 
of  it  for  some  time  (laughter)  — was  to  make  sure  that  he  was 
not  doing  it. 

Q.  But  after  they  established  that?  A.  It  took  a long  time  to 
find  that  out. 


576 


[Senate, 


Q.  What  would  that  result  in,  as  far  as  your  treatment  of  them 
was  concerned?  A.  I don’t  recollect  we  ever  kept  a man’s  rebate 
back  or  not;  we  may  have  done  that,  one  or  two — I don’t  believe 
there  were  any  more  than  that  even. 

Q.  You  did  it  in  one  or  two  cases?  A.  Well,  we  may  have 
done  it;  I won’t  say  we  did;  I am  not  positive  about  it. 

Q.  Will  you  swear  that  you  did  not?  A.  Did  not  what? 

Q.  Will  you  swear  that  you  did  not?  A.  Did  not,  eh? 

Q.  Refuse  to  return  the  rebate,  that  you  retained  the  rebate? 
A.  Will  I swear  that  we  did  not  return  to  him  the  rebate? 

Q.  Yes,  sir?  A.  No;  I won’t  swear  that  I did  not  return  it  to 
him. 

Q.  In  cases  of  that  kind  did  you  still  continue  to  sell  those  peo- 
ple goods?  A.  I don’t  think — I don’t  know  whether  we  ever  had 
one  that  we  ever  did  refuse  to  sell;  we  may  have  had — that  we 
have  refused  to  sell. 

Q.  Not?  A.  I don’t  think  that  "we  ever  refused  to  sell  any 
one — as  far  as  I know. 

Q.  I mean  after  you  have  discovered  a violation  of  the  contract 
of  your  agreement?  A.  No,  sir;  I don’t  think  we  ever  refused  to 
sell  any  one;  I never  recollect  of  any  such;  certainly  it  never  was 
our  idea  to. 

Q.  Have  you  to-day  among  your  customers  people  who  have 
violated  your  agreement  and  you  are  still  continuing  to  sell  them 
goods?  A.  Without  any  agreement  did  you  mean,  or  under  a 
new  agreement? 

Q.  No;  those  who  have  violated  the  agreement?  A.  I think  of 
the  people  that  we  have  in  New  York  State  that  we  sell  we  have 
agreements  with;  but  I have  an — I think  also  that  nearly  all,  as 
I have  said  before  the  grocers — 

Q.  I don’t  think  you  understand  my  question;  are  you  to-day 
selling  any  one  goods  who  has  violated  your  agreement?  A.  I 
think  we  are;  I don’t  recollect  the  individuals;  if  we  are  they  have 
new  agreements. 

Q.  Oh,  not  under  agreement — once  having  violated  your  agree- 
ment you  are  not  selling  them  under  the  terms  of  the  agreement? 


No.  40.] 


577 


A.  Well,  we  may  have,  but  I don’t  know;  I am  not  sure  of  that; 
we  wouldn't  refuse  a man  goods  under  any  circumstances,  and 
never  have. 

Q.  But  you  refuse  him  rebate?  A.  We  would  refuse  him  re- 
bate; yes,  sir. 

Q.  Therefore,  he  would  not  be  as  favorably  situated  as  far  as 
return  is  concerned  if  he  is  not  selling  under  your  agreement? 
A.  No,  sir;  I don’t  think  he  would. 

By  Mr.  Warner: 

Q.  You  never  thought  in  making  these  contracts  with  the  job- 
bers here  in  the  State  whereby  they  are  not  to  sell  goods  of  other 
concerns  less  than  what  they  sell  yours  for  is  in  violation  of  the 
law  of  the  State  as  illegal  combination  and  restraint  of  trade,  did 
you?  A.  No,  sir;  I never  knew  it. 

By  Mr.  Mazet: 

Q.  You  don’t  consider  it  so,  do  you?  A.  Why,  we  never  had 
any  such  idea;  we  never  restricted  bulk  goods;  it  has  been  sold 
for  years — was  sold  just  as  freely  as  the  package  goods  are. 

By  Mr.  Bedell; 

Q.  E-xcept  when  the  bulk  goods  had  the  Arm  and  Hammer 
brand  on  and  the  Dwight  soda  brand;  then  they  agreed  to  main- 
tain the  price?  A.  Yes,  sir;  but  there  are  just  as  many  goods 
handled  without  any  brands  on  as  there  are  with;  a great  many 
more;  on  which  there  is  no  restriction  whatever,  and  never  has 
been. 

Q.  Now,  Mr.  Walker,  I wish  you  would  furnish  to  this  commit- 
tee a statement  of  the  Church-Dwight  Company,  through  the  two 
companies  that  went  to  make  up  this  concern,  of  the  number  of 
pounds  of  Cow  Brand  and  Arm  and  Hammer  Brand  of  soda  that 
was  sold  i the  last  year  from  January  1, 1896,  to  January  1, 1897? 
A.  Yes,  sir. 

Q.  Mr.  Walker,  in  what  way  was  the  stock  of  this  new  company 
divided?  A.  In  what  way? 

07 
O ( 


578 


[Senate, 


Q.  Yes?  A.  Half  of  the  stock  goes  to  Church  Company,  the 
people  that  were  in  that  company;  half  to  John  Dwight  & Com- 
pany. 

Q.  Each  put  their  respective  properties  in  upon  an  equal  basis? 
A.  Yes,  sir. 

Q.  And  then  the  stock  was  divided?  A.  The  stock  has  not  been 
divided  yet. 

Q.  The  stock  has  not  been  issued?  A.  No;  I told  you  that  we 
were  not  ready  to  go  on  with  the  business;  we  had  hardly  started; 
I couldn’t  tell  you  as  yet. 

By  Mr.  Warner: 

Q.  Well,  they  have  transferred  their  property,  as  I understand, 
to  the  new  corporation?  A.  Yes,  sir. 

Q.  And  have  the  other  two  corporations  been  dissolved?  A. 
They  were  not  corporations. 

Q.  Oh?  A.  They  were  merely  firms;  just  two  old  firms  who 
were  brothers-in-law  came  together;  two  firms  coming  together 
into  a corporation,  or  rather  the  individuals  in  each  firm  forming 
a corporation,  the  other  two  firms  coming  in. 

By  Mr.  Lexow: 

Q.  And  everything  has  been  accomplished  except  the  formality 
of  the  division  of  the  capital  stock,  which  has  been  agreed  to  on 
an  equal  basis  as  between  the  two  concerns?  A.  Yes,  sir. 

(Church  & Company  document  marked  “February  17,  Exhibit 
D.”) 

John  Dwight,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Bedell: 

Q.  What  is  your  official  position  with  this  company?  A.  I am 
the  second  vice-president. 

Q.  Are  you  familiar  with  the  business  details  of  the  company? 
A.  I think  so,  more  or  less. 

Q.  Are  you  familiar  with  the  price  of  soda;  that  is,  price  that 
you  have  to  pay  for  soda  of  the  Solvay  Company?  A.  Why,  I 
don’t  know  what  price  we  have  to  pay  them. 


No.  40.] 


579 


Q.  You  make  the  same  answer  to  that  question  as  Mr.  Walker? 
A.  I presume  so. 

Q.  Now,  Mr.  Dwight,  there  is  one  contract  that  I failed  to 
identify  by  Mr.  Walker,  and  I would  like  to  identify  that  (show- 
ing witness  paper);  I wish  you  would  look  at  this  paper  that 
bears  Church  & Company  at  the  head  and  tell  me  if  that  is  the 
form  of  contract  that  has  been  in  use  by  Church  Company  and 
Dwight  Company  in  dealing  with  the  factors  in  this  State?  A. 
I presume  about  the  same;  and  that  looks  to  me  like  it,  though  I 
couldn’t  tell  unless — I have  no  reason  to  doubt  it. 

Q.  I wish  you  to  examine  it  carefully  to  be  sure;  I want  to  es- 
tablish its  identity  (showing  witness  document  previously  marked 
“ February  17,  Exhibit  D ”).  A.  I presume  that  is  their  form,  al- 
though I am  not  familiar  with  it. 

Q.  Are  you  able,  Mr.  Dwight — I don't  want  to  call  you  back 
again  to  the  stand  to-morrow — I would  like  to  finish  up  this  case 
— are  you  able  to  give  us  an  estimate  of  the  amount  of  your  pro- 
duct of  bicarbonate  of  soda  in  the  Arm  and  Hammer  Brand  and 
■the  Cow  Brand,  for  the  last  year?  A.  No,  sir. 

Q.  Can  you  approximate  it?  A.  You  mean  the  Church  & 
Dwight  Company? 

Q.  Both,  or  either  company;  that  is,  I mean  both — the  separate 
companies,  and  then  the  consolidation?  A.  Well,  I presume  it  is 
about  twenty-five  thousand  tons. 

Q.  Twenty-five  thousand  tons?  A.  About  twenty-five  thousand 
tons,  easily  enough. 

Q.  That  is  in  fact  one  particular  branch  of  your  industry,  the 
bicarbonate  of  soda?  A.  Yes,  sir;  the  bicarbonate. 

Q.  That  would  be  in  the  neighborhood  of  forty  million  pounds 
a year?  A.  Forty  millions — well,  I presume  that  is  about  it. 

Q.  Now  let  us  make  a little  arithmetkical  calculation,  Mr. 
Dwight;  it  is  fair  to  assume,  is  it  not,  that  the  cost  of  this  bulk 
* rsoda — of  this  soda  in  bulk — will  not  exceed  one  and  a half  cents 
per  pound?  A.  Well,  you  might  assume  that. 

Q.  Well,  you  could  do  that  with  safety,  could  you  not?  A. 
Well,  sir,  I don’t  think  we  know  what  the  cost  of  it  is. 


580 


[Senate, 


Q.  Well,  I am  speaking  now,  it  is  recognized  that  the  Solvay 
company  can  produce  soda  as  cheap  as  any  other  company?  A. 
We  sell  it  for  a cent  and  a half. 

Q.  You  do  sell  it  for  a cent  and  a half?  A.  Yes,  sir. 

Q.  Well,  then,  it  isn’t  likely  that  it  will  cost  you  more  than  a 
cent  and  a half,  is  it?  A.  Why,  it  is  very  likely  to,  yes,  sir. 

Q.  Even  though  you  sell  it  for  a cent  and  a half?  A.  Yes,  sir. 

Q.  Why  is  that?  A.  People  do  sell  below  cost  occasionally 
— I mean,  it  is  possible. 

Q.  Are  you  selling  below  cost  now?  A.  Well,  I don’t  know. 

Q.  You  don’t  know?  A.  No,  sir. 

Q.  But  you  are  selling  at  a cent  and  a half?  A.  We  are  sell- 
ing for  a cent  and  a half. 

Q.  Now  what  does  it  cost  per  pound  to  put  up  these  packages? 
A.  Do  I have  to  answer  these  questions  with  our  competitors 
here;  do  you  think  it  is — 

Q.  Well,  approximately?  A.  Well,  I don’t — 

Q.  I don’t  mean  literally?  A.  Well,  it  is  rather — 

(The  members  of  the  committee  here  held  a consultation.) 

By  Mr.  Bedell: 

Q.  You  as  a company  have  not  yet  declared  any  dividends, 
have  you?  A.  No,  sir. 

Q.  Well,  I will  abandon  that  line  of  examination,  because  we 
do  not  desire  to  have  brought  out  here  by  this  investigating  com- 
mittee anything  that  will  be  of  service  to  your  competitors,  and 
I think  that  we  can  get  all  of  the  information  that  we  desire 
through  other  channels.  A.  I am  much  obliged. 

Q.  Now,  Mr.  Dwight,  you  heard  Mr.  Walker’s  testimony  as  to 
the  practical  operations  of  this  agreement  in  this  State?  A. 
Yes,  sir. 

Q.  Have  you  any  changes  to  make  in  the  testimony  that  he 
gave?  A.  Why — 

Q.  I want  to  consolidate  this  if  I can?  A.  Why,  I feel  that  in 
those  contracts  with  the  wholesaler,  the  jobber  was  made  a 
factor,  the  jobber  was  made  a factor,  for  the  consideration  of  his 
doing  a certain  work  for  us  he  received  the  consideration. 


No.  40.] 


5S1 


Q.  You  consider  him  then  as  your  agent?  A.  We  considered 
him  as  our  agent;  we  have  certain  work  which  he  does  for  us; 
we  pay  him  the  compensation. 

Q.  That  is  the  point  that  I wanted  to  get  at,  and  which  Mr. 
Walker  did  not  seem  to  understand;  I thought  that  you  would 
understand  that  situation. 

Charles  F.  Pope,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Bedell. 

Q.  What  is  your  name?  A.  Charles  Fairview  Pope. 

Q.  Where  do  you  reside?  A.  One  hundred  and  tenth  East 
Thirty-first  street,  New  York  city. 

Q.  Are  you  a member  of  the  J.  Munroe  Taylor  Chemical  Com- 
pany? A.  Yes,  sir. 

Q.  What  position  do  you  occu-py  in  that  company?  A.  I am 
junior  member  of  the  concern;  I take  care  of  the  salesmen  and 
part  of  the  business  advertising. 

Q.  How  long  has  your  firm  been  in  business?  A.  Since  1S44. 

Q.  Do  you  manufacture  soda  and  saleratus,  that  is  bicarbonate 
of  soda?  A.  Yes,  sir. 

Q.  About  how  much  capital  is  invested  in  your  business?  A. 
Well,  about  $300,000. 

Q.  Did  you  previous  to  the  year  1S89  have  a large  business  in 
soda  and  saleratus  throughout  the  State  of  New  York?  A.  Yes, 

sir. 

Q.  Do  you  know  of  these  contracts  which  have  been  mentioned 
here  which  the  former  firms  of  John  Dwight  & Company  and 
Church  & Companj’  have  between  the  jobbers  and  the  whole- 
sale grocers?  A.  Yes,  sir. 

Q.  How  has  the  enforcement  of  this  contract  by  Dwight  & Co. 
and  by  Church  & Co.  affected  your  business?  A,  Well,  to  a cer- 
tain extent  it  hurts  it. 

Q.  To  what  extent?  A.  Well,  now,  I could  not  tell  how 
largely. . 

Q.  AY  ell,  approximately;  what  is  the  effect  upon  your  business 
here  in  this  State?  A.  Well,  our  price  to  the  retailer  is  natur- 
ally— or  is  lower  than  their  price. 


5S2 


[Senate, 


Q.  What  is  the  price  to — I don’t  mean  to  the  retailer,  but  to 
the  jobber?  A.  Our  price  to  the  jobbing  trade  in  less  than  100 
box  lots  is  two-twenty;  in  100  box  lots  is  two — 

Q.  That  is  two  and  seven-tenths  cents  a pound?  A.  No;  there 
is  only  sixty  pounds  to  a box. 

Q.  Well,  how  much  would  that  be?  A.  That  would  be  a little 
over  four  and  a quarter  cents;  about  four  and  a half  cents;  and  in 
hundred  box  lots  about  four  and  a quarter  cents. 

Q.  Well,  you  do  not  sell  to  any  of  the  jobbers  that  sell  the 
goods  of  the  Ohurch-Dwight  Company,  do  you?  A.  That  I 
couldn’t  say  positively., 

Q.  Well,  so  far  as  your  knowledge  extends?  A.  No,  sir. 

By  Mr.  Lexow: 

Q.  You  do  not?  A.  Not  that  I know  of;  I can’t  state  that  posi- 
tively, because  I don’t  know  exactly  how  they  are  used  by  that 

firm. 

By  Mr.  Bedell : 

Q.  Are  you  any  way  connected  with  the  Church-Dwight  Com- 
pany by  any  agreement  as  to  the  price  of  soda  in  packages  in  this 
State?  A.  No,  sir. 

Q.  What  is  your  opinion  as  to  the  benefit  to  the  consumer  of 
wiping  out  these  contracts  that  exist  in  favor  of  the  Dwight- 
Church  Company;  would  that  leave  his  soda  at  a less  price  or  at 
a greater  price?  A.  Well,  that  depends,  of  course,  entirely  upon 
the  state  which  the  market  may  be  in;  you  take  a time  like  this— 

Q.  I am  speaking  now  of  packages — A.  Well,  that  is  in  the 
same  case;  if  English  soda  is  coming  to  this  market  it  will  affect 
the  American  product;  we  are  naturally  obliged  to  meet  it  even 
at  a loss  and  hold  on  to  our  trade  in  that  way. 

Q.  Assuming  that  the  same  conditions  exist  that  exist  now? 
A.  Well,  then,  package  soda  is  much  cheaper. 

Q.  The  consumer  would  buy  package  soda  cheaper  than  he  is 
buying  it  to-day?  A.  Decidedly. 


No.  40.] 


583 


By  Mr.  Lexow: 

Q.  How  much  do  you  think?  A.  Possibly,  well,  possibly  a cent 
and  a half  a pound. 

Q.  Instead  of  it  being  five  and  a half  cents  it  would  be  four 
cents  a pound?  A.  It  would  be  from  three  and  a half  to  four  and 
a half  cents  a pound;  in  fact,  soda  has  been  sold  in  boxes  and 
packages  as  low  as  two  and  a half  cents  a pound. 

Q.  You  wish  to  be  understood  that  these  factor  agreements  that 
have  been  put  into  circulation  by  the  Dwight-Church  Company 
have  the  effect  of  increasing  the  price  to  the  consumer  to  the  ex- 
tent of  one  to  one  and  a half  cents  per  pound?  A.  Well,  I can’t 
state,  because  it  would  depend  upon  whether  the  retailer  knocked 
off  his  profit  to  the  housekeeper  or  not;  if  the  retailer  fixes  the 
price  at  ten  cents  a pound  or  eight  cents  a pound  to  the  house- 
keeper, and  sells  at  that  whether  he  buys  his  soda  for  four  cents 
or  five  cents,  you  could  not  tell  whether  it  was  going  to  make  a 
difference  to  the  consumer  or  not. 

Q.  You  do  not  know  therefore  whether  the  difference  in  price 
would  redound  to  the  benefit  of  the  retailer  or  the  consumer?  A. 
No,  sir. 

Q.  But  there  would  be  a difference  of  probably  one  to  one  cent 
and  a half  per  pound  on  this  product  either  to  the  retailer  or  the 
consumer  were  it  not  for  the  existence  of  these  factor  agree- 
ments? A.  Well,  I believe  so;  in  New  York  State;  yes,  sir. 

Q.  I am  speaking  now  of  the  State  of  New  York?  A.  Yes,  sir. 

By  Mr.  Bedell: 

Q.  Now,  can’t  you  give  us  any  figures  as  to  the  value  per  pound 
of  the  soda  that  was  used  by  the  Dwight-Church  Company  which 
they  packed  under  the  name  of  Cow  Brand  and  Arm  & Hammer 
Brand?  What  would  you  consider  it  in  bulk?  A.  I rather  not 
answer  that  question;  I don’t  feel  as  though  I — 

Q.  What  is  the  average  price  of  bicarbonate  of  soda  in  bulk? 

A.  Well,  it  is  selling  as  low  as  one  and  a half  cents  a pound. 

Q.  Is  that  pure  soda?  A.  Yes,  sir. 


584 


[Senate, 


Q.  Do  you  consider  it  as  good  as  the  soda  produced  by  the  Sol- 
vay  Company  of  which  the  Dwight-Church  Company  take  the 
product?  A.  Most  certainly,  sir. 

Q.  Equally  as  good?  A.  Yes,  sir. 

Q.  Do  you  know  the  Natrona  soda?  A.  Yes,  sir. 

Q.  How  is  it  recognized  by  the  people  who  are  skilled  in  the 
business — as  pure  soda?  A.  Yes,  sir. 

Q.  As  pure  as  theirs?  A.  I believe  so;  yes,  sir. 

Q.  What  can  that  be  purchased  for  in  bulk?  A.  I couldn’t  an- 
swer that  positively. 

Q.  Do  you  know  approximately?  A.  Well,  I have  an  idea  that 
it  has  been  sold  as  low  as  a cent  and  three-quarters,  and  one  in- 
stance as  low  as  a cent  and  a half. 

Q.  Is  that  considered  to  be  as  high-priced  a soda  as  there  is  on 
the  market?  A.  Yes,  sir. 

Q.  Now,  can’t  you  give  me  an  estimate  of  what  it  costs  per 
pound  to  pack  soda  in  these  one-pound  packages?  A.  Well,  it 
can  be  packed  for — if  I have  got  a piece  of  paper  about  I can  tell 
you  in  a very  few  minutes;  (witness  makes  a computation  on  a 
piece  of  paper.)  By  running  full  capacity,  I would  say,  car  load 
after  car  load,  half  a day,  it  can  be  packed  for  about  a cent  or  a 
cent  and  a half  per  pound. 

Q.  From  a cent  to  a cent  and  a half  per  pound?  A.  Yes,  sir. 

Q.  What  has  been  the  effect  of  these  contracts  upon  your  busi- 
ness in  this  State?  A.  Well,  they  have  hurt  us  more  or  less;  we 
have  to-day,  we  have  one  or  two  cases  whereby  we  have  had  our 
orders  turned  down,  where  we  turned  in  jobbers’  large  orders — 
comparatively  large  orders  in  retail  trade,  and  refused  to  sell 
them  unless  we — 

Q.  Put  the  price  of  five  and  a half  cents  per  pound?  A.  Yes, 

sir. 

By  Mr.  Lexow: 

Q.  Whether  you  wanted  to  sell  at  three  and  a half,  or  four,  or 
four  and  a quarter?  A.  Our  price  from  here  was  to  the  retail 
trade  $3  per  box,  that  is  five  cents  per  pound;  that  we  charged 
the  retail  trade  in  New  York  city  at  the  time. 


No.  40.] 


585 


By  Mr.  Bedell: 

Q.  That  is  the  retail  trade?  A.  Yes,  sir. 

Q.  What  was  your  price  to  the  jobbers?  A.  In  less  than  100- 
pound  boxes  §2.70. 

Q.  And  now  you  cannot  sell  to  the  jobbers’  trade  and  compete 
with  the  Church-Dwight  Company  for  less  than  five  cents,  can 
you?  A.  We  can  sell  them  at  no  price. 

Q.  And  they  cannot  sell  to  the  retail  trade  for  less  than  five  and 
a half?  A.  That  is  the  way  I understand  it. 

Q.  Do  you  believe  your  trade  would  be  larger  in  this  State  if  it 
were  not  for  the  fact  of  these  agreements?  A.  Yes,  sir. 

By  Mr.  McCarren: 

Q.  Mr.  Fope,  I understand  you  to  say  that  your  trade  was 
affected  by  Church  & Company  by  lowering  the  price  of  your 
goods,  did  I understand  correctly?  A.  Yes,  sir;  we  lowered  our 
price  to  the  trade — these  agreements — we  lowered  our  price  to 
the  retail  trade  to  sell  them  direct  for  cash  accompanying  orders. 

Q.  That  was  one  effect  of  the  operation  of  the  Dwight-Church 
Company  as  I understand  it — to  lower  the  price  of  your  goods? 
A.  No;  I don’t  think  that  they  intended  to  lower  the  price  of 
our  goods. 

Q.  But  that  was  the  result  of  it?  A.  That  was  the  result. 

Q.  I understand  you  to  say  also  that  if  it  wyere  not  for  this 
company  or  similar  companies,  that  the  price  to  the  consumer 
would  be  lower?  A.  I think  it  would. 

Q.  How  do  you  reconcile  those  two  statements?  A.  I think 
that  the — if  soda  was  being  sold  at — by  the  jobbing  trade  under 
their  own  brands,  trade-mark  brands  at  a less  price  than  which 
they  now  sell  it,  the  retailer  would  get  the  benefit  of  that  and 
incidentally  the  housekeeper. 

Q.  Well,  how  could  that  apply,  if  the  effect  of  the  trade  of  the 
Dwight-Church  Company  has  been  to  lower  the  price  of  your 
goods?  A.  I don’t  catch  the  gist  of  that. 

Q.  I say  how  do  you  argue  that  the  price  to  the  consumer 
would  be  less  when  you  admit  that  the  effect  of  the  Dwight- 


580 


[Senate, 


Church  opposition  has  been  to  lower  the  price  of  your  goods? 
A.  Well,  the  consumer  don’t  get  our  goods  now;  they  are  paying 
a higher  price  than  they  would  to — 

Q.  Do  you  sell  to  the  wholesalers  at  any  less  price  than  the 
Dwight-Church  people  do?  A.  Yes,  sir. 

Q.  At  the  present  time?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  Do  I understand  this  to  be  the  situation;  that  in  order  to 
put  your  goods  on  the  market  at  all  you  have  got  to  trade  now 
direct  with  the  retailer?  A.  Yes,  sir. 

Q.  That  in  order  to  trade  directly  with  the  retailer  you  have 
to  decrease  the  price  of  your  product?  A.  Yes,  sir. 

Q.  Or  you  can’t  get  it  out  into  the  market?  A.  Not  all — 
through  some  of  the  jobbers — 

Q.  That  is  it;  the  system  herefore  introduced  has  been  that 
you  have  to  sell  to  the  jobber  who  increases  the  price  of  your 
product  in  conformity  with  the  requirements  of  this  factor’s 
agreement?  A.  Yes,  sir. 

Q.  And  inasmuch  as  your  brand  is  not  as  w:ell  known  as  the 
other  brand  you  cannot  get  itpOut  to  the  consumer  there;  so  that 
you  are  stopped  in  both  ways  from  reaching  the  consumer.  A. 
Yes,  sir — unless  you  go  to  the  consumer  directly. 

Q.  And  can  you  afford  to  go  to  the  consumer  directly,  A.  No, 
sir. 


By  Mr.  McCarren: 

Q.  What  was  the  price  of  your  goods  prior  to  the  opposition 
of  the  Dwight-Church  Company,  higher  or  lower  than  at  pres- 
ent? A.  It  was  in  New  York  State — it  was  higher. 

Q.  Then  the  practical  result  has  been  to  lower  the  price  of 
your  goods?  A.  Yes,  sir. 

Q.  In  that  case  the  Dwight-Church  people  would  seem  to  be 
good  Samaritans?  A.  Not  exactly. 

(Laughter.)  • > 


No.  40.] 


537 


P "T 

By  Mr.  Lexow: 

Q.  Do  I understand  tliat  you  annex  a qualification  to  that  that 
you  cannot  get  the  goods  out?  A.  We  cannot  get  the  goods 
out  in  the  same  quantity  as  we  got  them  out  before,  in  New  York 
State. 

Q.  So  that  notwithstanding  the  decrease  in  the  price  that  you 
put  upon  your  goods,  you  cannot  circulate  your  goods  through- 
out the  State?  A.  No,  sir,  we  cannot  as  much  as  we  could  be- 
fore. 


By  Mr.  McCarren: 

Q.  But  also  in  the  same  connection  that  if  the  Dwight-Church 
company  was  not  in  existence  your  goods  would  be  higher  than 
they  are?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  Just  let  us  understand  so  there  can  be  no  question  about 
what  the  true  situation  is;  do  you  mean  to  say  that  as  the  result 
of  these  factors’  agreements  you  are  compelled  to  put  down  your 
prices  to  the  retailer,  but  owing  to  the  establishment  of  the  sys- 
tem you  cannot  reach  the  retailer?  A.  Yes,  sir. 

Q.  That  then,  if  you  trade  through  the  wholesaler  your  price 
is  increased  to  the  extent  of  from  one  to  one  and  a half  cents 
per  pound  by  the  factor  operating  under  this  factor  agreement? 
A.  Well,  now,  I can  explain — 

Q.  So  that  in  each  case  when  your  product  reaches  the  retailer 
from  one  to  one  cent  and  a half  per  pound  has  been  added  owing 
to  the  prevailing  of  this  system  of  factor’s  agreements;  now  is 
that  true  or  isn’t  it?  A.  Well,  in  that  case  if  the  Church-D wight 
Company  did  not  have  these  contracts  we  should  go  out  to  the 
retail  trade  with  salesmen  the  same  as  they  do,  and  solicit  their 
trade;  for  the  benefit  of  jobbers  in  that  case,  we  could  do  it  as 
cheap  as  we  can  do  it  by  circulars — and  we  would  make  more 
money  out  of  it  possibly  in  the  total;  as  it  is  now,  we  are  obliged 
to  send  out  circulars  and  ask  the  retailer  to  send  cash  with 
his  order,  and  there  isn’t  one  in  a hundred  that  will  pay  the  cash 
for  goods. 


588 


[Senate, 


Q.  (By  Mr.  Bedell)  The  fact  being  that  you  are  enabled  to  sell 
cheaper — A.  (Interrupting)  Yes,  sir. 

Q.  (Continuing)  Because  there  is  a great  difference  in  expense 
of  the  market  of  your  business  between  now — A.  (Interrupting) 
Yes,  sir. 

Q.  (Continuing)  But  if  you  engaged  in  open,  active  competition 
you  would  have  your  men  out  on  the  trade,  and  also  this  expense 
would  make  the  price  higher?  A.  Yes,  sir;  there  is  a large  dif- 
ference between  putting  up  trade  mark  brands  and  putting  up 
brands  for  other  parties;  to  put  up  trade  marks  you  have  got  an 
expense  to  sell  it  to  your  retail  men  and  advertising;  in  putting 
up  a brand  of  goods  for  the  jobber  you  deduct  that  right  from  the 
cost  of  the  goods. 

Q.  Has  the  effect  of  the  contracts  been  to  wipe  out  your  busi- 
ness in  putting  up  brands  for  other  people?  A.  Yes. 

Q.  When  you  make  private  brands  for  the  jobbers  that  is 
marked  with  their  particular  brands?  A.  Yes,  sir'. 

Q.  You  had  no  dealings  whatever  with  the  retailer,  then?  A. 
No,  sir. 

Q.  You  simply  worked  through  the  jobber?  A.  Yes,  sir. 

Q.  These  contracts  have  had  the  effect  of  wiping  out  that  busi- 
ness to  a large  extent?  A.  Yes,  sir. 

Q.  To  what  extent?  A.  Well,  we  used  to  pack  for  four  houses 
here  in  New  York  city  possibly  a hundred  boxes  a month,  as  I 
recollect  now,  which  have  not  since  ordered. 

Q.  They  are  parties  to  an  agreement  with  the  Church-Dwight 
Company?  A.  So  we  understand. 

Mr.  McCarren : 

Q.  Have  you  any  reason  for  a suspicion  in  your  mind  that  the 
Dwight-Church  people  in  any  way  influence  the  wholesale  grocers 
to  prefer  their  brand  to  yours?  A.  Not  any  more  than  by  honest 
competition;  sometimes  we  try  to  influence  the  retail  trade  that 
our  goods  are  better  than  theirs. 

Q.  You  have  no  reason  to  believe  that  they  coerce  or  threaten 
or  intimidate  the  wholesale  grocers  in  any  way?  A.  Not  as  I 


No.  40.] 


5S9 


know  of,  except  by  this  agreement;  and  I don't  know  whether 
that  is  on  the  part  of  the  -wholesalers  or  on  their  part. 

Mr.  Lexow:  The  other  witnesses  subpoenaed  with  reference 
to  this  pai’ticular  matter  may  be  deemed  dismissed  unless  they 
are  notified  to  appear  again. 

The  committee  will  now  adjourn  until  to-morrow  morning  at 
10  o’clock. 


NINTH  PUBLIC  HEARING.  COMMON  COUNCIL,  NEW 
YORK,  THURSDAY,  FEBRUARY  18,  1897,  10  A.  M. 

Mr.  Lexow : A quorum  being  present  the  committee  will  now 
come  to  order. 

Mr.  Lexow:  Is  Mr.  Parsons  in  the  room? 

Mr.  Parsons:  I desire  to  inform  the  committee  that  Mr.  H.  O. 
Havemeyer  is  attending  the  funeral  of  the  late  Mr.  St.  John,  but 
will  be  here  later.  I am  here  to  answer  to  the  request  of  the  com- 
mittee to  produce  certain  documents.  The  directors  of  the  Amer- 
ican Sugar  Refining  Company  had  a meeting  yesterday  afternoon, 
and  the  request  of  the  committee  that  the  company  would  furnish 
a statement  of  taxes  paid  in  New  York,  certain  labor  statistics,  a 
certified  copy  of  the  minute  book  of  the  company  authorizing  the 
purchase  of  the  Philadelphia  refineries,  and  the  agreements  for 
these  refineries  was  presented.  It  was  resolved  that  I should  be, 
and  I was  authorized  to,  and  I do  furnish  to  the  committee  the  ex- 
tract from  the  minutes,  copies  of  the  agreements  or  authority  (for 
the  purchase  of  the  Spreckels  stock  there  was  no  written  agree- 
ment), and  a statement  of  taxes.  The  statement  in  reference  to 
labor  statistics  which  the  committee  desires  is  being  prepared 
and  will  be  presented  as  soon  as  ready. 

Mr.  Lexow:  Will  Mr.  Havemeyer  be  here  so  that  we  can  put 
these  various  documents  in  evidence? 

Mr.  Parsons:  They  are  sworn  to;  but  he  will  be  here  to  an- 
swer questions  concerning  them. 

Mr.  Lexow : I think  we  will  be  ready  for  him  after  recess. 


59Q  [Senate, 

Mr.  Parsons:  I took  the  precaution  to  have  them  certified  and 
sworn  to. 

Mr.  Warner:  Were  you  served  yesterday  with  a subpoena 
duces  tecum  to  produce  the  books? 

Mr.  Parsons:  I was  not. 

Mr.  Lexow:  Mr.  Flint  will  please  take  the  stand. 

Flint,  Charles  R.,  recalled: 

Examined  by  Mr.  Lexow: 

Q.  You  were  requested  to  produce  certain  documents  yester- 
day; what  answer  have  you  to  make  to  the  request  of  the  com- 
mittee? A.  I have  sent  for  a copy  of  the  Simmons  report  and 
expect  it  will  be  here  within  a short  time;  it  was  not  convenient 
for  me  to  get  the  original  document,  but  I shall  certify  that  the 
copy  produced  is  a copy  of  the  original  report;  I was  also  asked 
to  bring  statements  in  reference  to  the  rates  of  wrages  paid  by  the 
United  States  Rubber  Company  and  the  rates  of  wages  paid  by 
competitive  plants;  I have  that  data  and  will  now  read  it  if  the 
committee  desires. 

Q.  Covering  what  period  of  time?  A.  Covering  the  past  year; 
I am  willing  to  testify  that  there  has  been  a substantial  differ- 
ence for  two  years  or  more;  but  the  figures  that  I have  now  are 
the  figures  that  have  prevailed  within  the  past  six  months. 

Q.  Have  you  got  the  comparison  between  the  figures  paid  by  the 
independent  companies  previous  to  the  consolidation  with  those 
now  paid?  A.  I have  not,  except  that  the  gentleman  familiar 
with  that  branch  of  the  business,  the  president  of  the  company, 
has  stated  to  me  that  he  had  not  reduced  wages;  that  there  has 
been  no  reduction  since  the  organization. 

Q.  Who  is  there  that  is  qualified  to  speak  on  the  subject?  A. 
Well,  there  would  be  several  persons  in  the  concern;  if  the  com- 
mittee desire  I will  obtain  that  information  more  in  detail;  I will 
send  you  that  information  if  you  desire  it. 

Q.  You  have  said  that  you  received  information  from  somebody 
in  the  company  qualified  to  speak  upon  that  subject;  please  give 


No.  40.] 


591 


the  name  of  that  person?  A.  There  would  be  several  parties; 
there  would  be  Mr.  Evans,  and  all  the  superintendents. 

Q.  He  is  away?  A.  Yes,  sir. 

Q.  What  person  is  there  in  the  State  of  New  York  that  can 
speak  with  authority  upon  that  subject?  A.  We  have  no  factor- 
ies in  the  State  of  New  York;  but  the  superintendents  of  any  of 
the  mills  would  be  able  to  give  the  information,  and  I will  be  very 
glad  to  furnish  it. 

Q.  Have  you  kept  statistics  showing  the  price  of  labor  of 
the  independent  companies  prior  to  consolidation  and  after  con- 
solidation? A.  No. 

Q.  You  have  not?  A.  No,  sir. 

Q.  What  other  figures  have  you  there?  A.  I have  a comparison 
between  the  wages  paid  by  the  United  States  Rubber  Company 
and  a competitive  company;  they  are  as  follows: 

Q.  What  competitive  company?  A.  A company  on  Long  Isl- 
and, at  Setauket. 

Q.  They  no  longer  pay  any  wages  at  all,  do  they?  A.  They 
have  within  perhaps  a few  days. 

Q.  It  is  a few  weeks?  A.  I don’t  think  so;  I think  they  have 
been  running  until  within  a few  days. 

Q.  Are  you  prepared  now  to  answer  the  question  that  was  put 
to  you  yesterday  on  the  subject,  as  to  whether  or  not,  after  refus- 
ing in  the  winter  to  run  the  New  Brunswick  factory  on,  “ third 
quality  goods  ” and  closing  that  factory  during  the  winter,  you 
resolved  in  the  spring  to  run  a small  United  States  Rubber  Com- 
pany factory  on  third  quality  goods  for  the  purpose  of  reducing 
the  price  of  some  brands  manufactured  by  the  Liberty  Company 
of  Setauket  and  pressed  that  company  to  the  wall  and  compelled 
it  to  close  and  discharge  its  employees?  A.  I cannot  testify  on 
that  subject,  but  I can  give  the  rates  of  wages  paid. 

Q.  Let  us  follow  out  that;  did  anybody  in  your  employ,  or  rep- 
resenting you,  destroy  factory  property  at  Setauket,  L.  I.?  A. 
What  do  you  mean  by  factory  property? 

Q.  I mean  the  facilities  for  the  production  of  rubber  goods?  Did 
you  destroy  facilities  there?  A.  I personally  have  no  knowledge 
of  the  subject. 


592 


[Senate, 


Q.  Wliy  do  you  not  answer  “yes”  or  “no?”  A.  No. 

Q.  Have  you  any  information  about  it?  A.  No. 

Q.  Do  you  know  a man  by  the  name  of  Joseph  W.  Elverson? 
A.  Yes,  sir. 

Q.  What  relation  did  he  bear  to  your  company?  A.  J.  W. 
Elverson  has  never  been  an  officer  or  director  of  the  United 
States  Rubber  Company. 

Q.  What  relation  did  he  bear  to  the  Company,  if  any?  A.  He 
may  have  had  stock  in  it;  but  no  other  reason. 

Q.  He  was  interested  financially?  A.  He  may  have  had  stock 
in  the  United  States  Rubber  Company. 

Q.  Do  you  know  a man  by  the  name  of  Gardner?  A.  I don’t 
remember  any  such  person. 

Q.  Do  you  know  a property  belonging  to  the  United  States 
Rubber  Company  at  Brookhaven  ? A.  I do  not. 

Q.  Didn’t  the  United  States  Rubber  Company  ever  have  any 
property  there?  A.  I think  not;  they  had  stock  in  a corporation 
that  had  property  there. 

Q.  What  was  that  corporation?  A.  The  Brookhaven  Rubber 
Shoe  Company. 

Q.  That  is  what  I have  in  mind.  A.  Well,  I give  you  the  in- 
formation. 

Q.  Did  the  United  States  Rubber  Company  cause  rubber  maiju- 
facturing  facilities  to  be  destroyed  at  Brookhaven?  A.  Not  to 
my  knowledge;  rubber  shoes  are  being  manufactured  there. 

Q.  Yes;  I know  that;  did  it  cause  facilities  that  were  then  in 
existence  belonging  to  the  company  in  which  it  had  this  stock  in- 
terest to  be  dismantled  or  destroyed,  either  wholly  or  partially? 
A.  Not  to  my  personal  knowledge. 

Q.  Why  did  you  put  in  the  limits  of  your  personal  knowledge? 
A.  Not  to  my  knowledge. 

Q.  Have  you  any  information  on  the  subject?  A.  No,  sir. 

Q.  Do  you  know  that  about  $50,000  worth  of  property  there 
was  rendered  inoperative  by  order  of  the  United  States  Rubber 
Company?  A.  I don’t  know  it. 

Q.  Have  you  any  doubt  of  it?  A.  Yes,  sir. 


No.  40. j 


593 


Q.  You  never  heard  of  a man  by  the  name  of  Gardner?  A.  I 
do  not  remember  him  now;  if  you  give  me  his  full  name  I may  be 

able  to  tell  you., 

Q.  Do  you  remember  anything  occurring  on  the  29th  or  30th 
day  of  October  with  reference  to  the  property  of  the  Brookhaven 
Eubber  Company?  A.  Of  October  last? 

Q.  Yes,  sir.  A.  No,  sir;  I don’t  remember. 

Q.  What  interest  did  you  have  in  the  stock  of  the  Brookhaven 
Eubber  Company?  A.  The  United  States  Eubber  Company 
owned  all  the  stock  of  the  Brookhaven  Eubber  Company. 

Q.  Then  you  owned  the  whole  company?  A.  All  the  stock. 

Q.  Did  you  do  anything  to  the  property  of  the  Brookhaven  Eub- 
ber Company  on  the  29th  or  30th  day  of  October?  A.  Of  which 
year? 

Q.  1896.  A.  Not  to  my  knowledge. 

Q.  Was  it  in  1895?  A.  Not  that  I know  of. 

Q.  You  absolutely  know  nothing  about  any  incidents  occurring 
to  the  Brookhaven  factory  on  the  29th  or  30th  day  of  October  of 
any  year?  (No  answer.) 

:Q.  Since  the  organization  of  the  United  States  Eubber  Com- 
pany, then?  A.  Not  that  I remember. 

Q.  Never  heard  of  it?  A.  I don’t  remember. 

Q.  Was  the  plan  of  operations  of  the  Brookhaven  Eubber  Com- 
pany changed  in  any  particular  at  that  time  or  thereabouts?  A. 
I have  no  knowledge  of  any  date;  I know  in  a general  way  that 
the  plant  of  the  Brookhaven  Eubber  Company  was  sold  to  Mr. 
Elverson  personally  or  to  a company  in  which  he  was  interested. 

Q.  That  was  sold?  A.  Yes;  the  plant  of  the  Brookhaven  Rub- 
ber Company. 

Q.  Was  sold  to  him?  A.  Or  a company  of  which  he  had  con- 
trol. 

Q.  By  the  United  States  Eubber  Company?  A.  By  the  Brook- 
haven Eubber  Company,  the  stock  of  which  the  United  States 
Eubber  Company  owned. 

Q.  Do  you  mean  to  say  that  you  held  and  the  United  States 
Eubber  Company  held  any  stock  of  the  Brookhaven  Eubber  Com- 
38 


594 


[Senate, 


pany  that  was  sold  to  Mr.  Elverson?  A.  I mean  to  say  that  the 
United  States  Rubber  Company  owned  and  now  owns  all  the 
stock  of  the  Brookhaven  Rubber  Company;  I mean  to  say  that  the 
Brookhaven  Rubber  Company  sold  to  Mr.  Elverson  or  a company 
of  which  he  was  the  manager  or  the  majority  holder  the  plant  of 
the  Brookhaven  Rubber  Company. 

Q.  So  that  while  keeping  the  stock  of  the  Brookhaven  Rubber 
Company  as  an  asset  in  the  treasury  of  the  United  States  Rubber 
Company  you  sold  its  assets  to  Mr.  Elverson  or  the  Brookhaven 
Company;  did  you  operate  that  company?  A.  No;  the  United 
States  Company  didn’t,  nor  did  the  Brookhaven  company  sell  its 
assets. 

Q.  Who  did?  A.  As  I stated  the  Brookhaven  Rubber  Company 
sold  its  plant  and  not  the  stock,  as  you  can  appreciate,  represent- 
ing other  assets,  namely:  Account,  bills  receivable,  etc. 

Q.  But  its  manufacturing  plant  and  appurtenances,  its  factory 
known  as  such;  was  it  sold  to  Mr.  Elverson?  A.  That  was  sold 
either  to  Mr.  Elverson  or  a company  in  which  he  was  largely 
interested. 

Q.  What  was  that?  A.  I don’t  know  the  name  of  the  com- 
pany; because  there  were  several  companies;  there  was  the  Man- 
hattan Rubber  Company  and  another  company,  the  North  Ameri- 
can Company;  I don’t  remember  now  to  which  company  the  plant 
was  sold,  to  a company  or  Mr.  Elverson;  I don’t  remember  just 
which;  for  as  I have  said,  I didn’t  attend  to  it. 

Q.  When  did  this  occur?  A.  I don’t  remember;  it  was  over  a 
year  ago. 

Q.  Was  it  not  just  prior  to  the  30th  day  of  October?  A.  I 
cannot  state;  I did  not  personally  attend  to  the  matter. 

Q.  How  long  have  you  been  owners  of  the  stock  of  the  Brook- 
haven Rubber  Company?  A.  I don’t  remember  the  time. 

Q.  Was  that  taken  in  in  the  original  syndicate?  A.  I will 
produce  the  Simmons  report. 

Q.  Don’t  you  know  whether  it  was  part  of  the  Simmons  re- 
port? A.  I am  not  sure  it  was;  it  is  a comparatively  small  plant; 
I am  not  clear  about  that. 


No.  40.] 


599 


Q.  When  will  that  report  be  here?  A.  I expect  it  every  mo- 
ment; I have  sent  for  it. 

Q.  What  is  your  best  recollection  as  to  the  time?  A.  I have 
an  idea  that  it  was  taken  in  at  the  time  of  the  Simmons  report; 
I think  it  was. 

Q.  And  operated  by  the  United  States  Rubber  Company?  A. 
I don't  remember. 

Q.  You  don't  remember?  A.  I don’t  know;  it  was  not  a large 
establishment,  and  I don’t  remember  whether  it  was  operated  by 
the  United  States  Rubber  Company. 

Q.  As  treasurer  of  the  company  don’t  you  remember  whether 
after  securing  the  assets  represented  by  the  capital  stock  or 
the  former  independent  companies,  you  operated  that  company 
or  closed  it  down?  A.  I don't  remember,  Mr.  Chairman,  whether 
it  was  operated;  if  so,  I can  state  in  a general  way  that  it  was 
not  operated  for  a long  period. 

Q.  It  was  not?  A.  No,  sir. 

Q.  Had  you  closed  it  down  before  the  sale  by  the  Brookhaven 
Rubber  Company  of  its  plant  to  Everson?  A.  That  f don’t  re- 
member. 

Q.  Well,  if  you  remember  that  you  closed  it  down  at  all,  you 
must  remember  about  the  time,  as  to  whether  it  occurred  before 
you  sold  it  out?  A.  I was  impressed  by  the  fact  of  the  sale — 

Mr.  Lexow  (interrupting):  As  treasurer  of  the  United  States 
Rubber  Company  do  you  only  attend  to  its  purely  fiscal  matters, 
as  to  its  money  exchanges  and  credits  and  debts,  and  pay  no 
attention  at  all  to  the  workings  of  the  company  as  such,  although 
a director  of  the  company?  A.  I have  a general  knowledge  of 
the  business  as  I have  shown  in  the  statements  made. 

Q.  I ask  you  this  question  now,  whether  that  company  was 
running  or  closed  down;  as  a director  of  the  company  you  ought 
to  know?  A.  I know  the  essential  facts  that  this  stock  was  pur- 
chased; I know  that  if  it  wTas  run  at  all  by  the  United  States 
Rubber  Company  it  was  run  but  for  a short  time;  I know  that  the 
plant  was  sold  to  a company  which  Mr.  Elverson  either  owned 
or  had  control  of;  there  is  the  essential  fact,  Mr.  Chairman. 


506 


[Senate, 


Q.  Why  did  you  sell  it  to  Elverson?  A.  Elverson  wanted  to 
buy  and  we  felt,  as  I think  that  the  facts  have  shown,  that  they 
didn’t  have  there  as  good  facilities  for  manufacturing  as  the 
United  States  Rubber  Company  had  at  its  other  plants,  and  that 
in  order  to  make  money  it  would  have  to  be  done  on  low  price 
labor,  and  we  preferred  to  use  labor  saving  machinery  and  the 
methods  of  the  more  economical  plant. 

Q.  What  was  done  with  the  plant?  A.  Mr.  Elverson  operated 
the  plant;  the  statement  that  I have  made  in  regard  to  wages  I 
obtained  from  him;  in  order  to  meet  the  possibilities — 

Mr.  Lexow  (interrupting):  One  moment,  do  not  side-track  the 
other;  you  said  Mr.  Elverson  operated  the  plant. 

A.  I did. 

I 

Q.  On  your  property?  A.  No;  he  bought  the  property;  he 
bought  the  plant  from  the  United  States  Rubber  Company. 

Q.  Did  he  buy  the  realty  as  well  as  the  running  plant?  A.  He 
bought  the  realty  as  well  as  all  the  machinery,  its  engines,  the 
manufacturing  plant. 

Q.  Did  he  destroy,  tear  up  or  dismantle  that  plant?  A.  Not 
to  my  knowledge. 

Q.  Have  you  no  knowledge  on  the  subject?  A.  I don’t  know; 
I know  the  plant  has  been  in  operation  until  within  a very  short 
time,  say  within,  as  I understand  it,  a few  days;  it  is  merely 
closed  up — I don’t  know  that  it  is  closed;  if  it  is  closed  I under- 
stand that  it  is  merely  temporarily;  the  property  is  in  operation; 
I have  no  information  to  lead  to  the  conclusion  that  there  is  any 
intention  of  closing  the  business. 

Q.  Was  not  at  least  a portion  of  the  plant  dismantled?  A. 
Not  to  my  knowledge. 

Q.  Was  not  the  manufacture  of  rubber  boots  and  shoes  dis- 
continued? A.  I understand  the  manufacture  was  continued 
for  a time;  but  they  have  been  manufacturing  rubber  boots  and 
shoes  at  Setauket  for  a year  or  more  and  have  a very  consider- 
able capacity  for  manufacturing  them  there. 

Q.  Didn’t  Mr.  Elverton  as  part  and  parcel  of  that  transac- 
tion agree  with  you  or  the  United  States  Rubber  Company  Trust 


No.  40.] 


597 


not  to  manufacture  boots  and  shoes  upon  this  premises?  A.  Not 
to  my  knowledge. 

Q.  Who  made  the  transaction?  A.  That  is  a business  that 
would  have  been  attended  to— naturally  it  would  have  been  at- 
tended to  by  those  in  charge  of  manufacturing  and  by  those  in 
charge  of  the  legal  business  of  the  corporation,  if  done  at  all. 

Q.  Is  it  not  true  that  in  July  of  last  year  an  order  was  issued  by 
the  United  States  Rubber  Company  closing  that  factory  and  dis- 
charging between  400  and  500  hands?  A.  In,  July,  1S96. 

Q.  Yes,  sir?  A.  I am  very  well  satisfied  that  the  United  States 
Rubber  Company  didn’t  own  the  plant. 

Q.  Make  it  1S95?  A.  That  they  had  no  control  over  it  then. 

Q.  Make  it  1S95?  A.  Not  to  my  knowledge;  I think  that  that 
plant  has  been  under  the  control  of  Mr.  Elverson,  that  he  had  ab- 
solute control;  the  United  States  Rubber  Company  sold  the  plant 
and  parted  with  all  interest  in  it  and  have  no  interest  to-day 
whatsoever;  they  sold  it  to  Mr.  Elverson  or  a company  which  he 
controlled. 

Q.  Was  that  not  made  upon  the  stipulation  that  he  would  not 
manufacture  upon  those  premises  any  goods  that  came  in  compe- 
tition with  your  line  of  manufacture?  A.  Not  to  my  knowledge. 

Q.  Will  you  swear  that  that  was  not  part  of  the  understand- 
ing? A.  I will  swear  that  I do  not  know  it. 

Q.  Who  made  that  understanding?  A.  That  business  would 
naturally  be  attended  to  by  those  in  charge  of  manufacturiug  and 
by  legal  counsel. 

Q.  I am  asking  who  they  are?  A.  The  president  of  the  com- 
pany; Robert  D.  Evans,  a gentleman  who  has  charge  of  legal  mat- 
ters in  the  company;  he  has  not  acted  as  counsel,  but  as  a man 
who  consulted  on  behalf  of  the  company  as  counsel  with  Samuel 
P.  Colt. 

Q.  Where  does  he  live?  A.  He  is  president  of  the  Industrial 
Trust  Company  of  Providence,  R.  I. 

Q.  Has  he  an  office  in  the  city  of  New  York?  A.  He  resides 
in  Providence;  he  is  president  of  the  National  Rubber  Company 
of  Bristol,  and  lives  there  during  the  Summer;  among  the  offices. 


598 


[Senate, 


he  fills  is  the  position  of  president  of  the  Industrial  Trust  Com- 
pany of  Providence;  he  is  a member  of  the  board  of  directors  of 
the  United  States  Rubber  Company. 

Q.  Is  Mr.  Evans  in  New  York  city?  A.  I don’t  know;  I don’t 
think  he  is;  I think  he  is  in  Boston. 

Q.  Has  he  been  here  since  this  investigation  started?  A.  Yes, 
sir. 

Q.  When  is  he  expected  back?  A.  I don’t  know;  I will  be  glad 
to  ascertain. 

Q.  Will  he  appear  before  this  committee  prior  to  its  adjourn- 
ment? A.  I hope  so. 

Q.  When  do  you  expect  him  here?  A.  I don’t  know;  I will 
communicate  with  him  if  you  desire. 

Q.  Please  do  so;  at  the  time  that  I have  referred  to,  were  not 
all  the  dies  and  moulds  for  the  manufacture  of  rubber  shoes  and 
boots  destroyed  in  that  factory?  A.  Not  to  my  knowledge. 

Q.  WThat  is  the  number  of  the  office  of  the  United  States  Rub- 
ber Company?  A.  No.  88  Reade  street,  New  York. 

Q.  Does  Mr.  El  verson  have  an  office  at  No.  88  Reade  street?  A. 
I don't  know  where  it  is. 

Q.  That  is  in  the  next  building,  is  it  not?  A.  I have  never  been 
in  it  and  have  never  seen  it;  I understand  that  he  has  an  office  in 
Reade  street. 

Q.  Do  you  know  whether  orders  were  issued  from  there  to  de- 
stroy this  plant  SO'  far  as  its  boot  and  shoe  facilities  were  con- 
cerned? A.  I do  not;  Mr.  Chairman,  please  excuse  me  for  a mom- 
ent; I want  to  make  inquiry  in  regard  to  the  Simmons  report. 
(Witness  leaves  stand.) 

Mr.  Flint:  I have  the  Simmons  report  here. 

Q.  Before  going  into  that  is  if  not  a- fact  that  in  this  sale  of 
the  property  ot  Elverson  you  reserved  all  the  movable  parapher- 
nalia for  the  making  of  boots  and  shoes,  and  that  after  Elverson 
took  possession  it  was  your  agent  and  not  his  who  destroyed 
that  paraphernalia?  A.  Not  to  my  knowledge. 

Q.  Have  you  any  knowledge  on  the  subject?  A.  No,  sir. 

Q.  Never  heard  of  it?  A.  I have  no  positive  knowledge  on  it. 


No.  40.] 


599 


Q.  I ask  you  whether  you  have  ever  heard  of  it;  there  seems  to 
be  a doubt  in  your  mind?  A.  I may  have  heard  it,  but  I don’t 
know.  < 

Q.  Do  you  think  that  it  is  possible  for  you  not  to  have  heard  of 
a transaction  involving  the  sending  of  agents  by  the  United 
States  Rubber  Company  to  destroy  movable  property  upon  prem- 
ises sold  by  that  company  to  another?  A.  Yes,  sir;  it  might 
have  been;  whatever  the  facts  are  they  can  be  readily  obtained; 
it  is  a branch  of  the  business  that  I do  not  attend  to;  there  are 
parties  in  the  company;  I will  be  glad  to  obtain  the  information; 
but  I have  no  personal  knowledge  in  regard  to  it. 

Q.  Have  you  any  particular  branch  in  the  business  that  de- 
stroys facilities  for  manufacture  as  well  as  creates  them?  A. 
We  have  a branch  in  charge  of  manufacturing;  I can  get  at  any 
facts  in  that  connection  that  are  desired. 

Q.  Row,  let  us  turn  to  this  Simmons  report,  the  report  of  Sim- 
mons and  his  associates;  have  you  got  it  there?  A.  It  will  be 
here  in  a few  moments ; I understood  that  it  was  here,  but  I will 
have  it  in  a few  moments. 

Q.  Give  the  rate  of  wages  paid  during  the  last  six  months  and 
the  number  of  workingmen  employed.  A.  In  giving  the  rate  of 
wages,  Mr.  Chairman,  I desire  to  state  that  the  larger  percentage 
of  the  wages  are  paid  on  the  basis  of  piece  work ; so  that  I could 
not — so  that  in  giving  the  rates  of  a considerable  portion  of  the 
business  I will  state  the  amount  paid  for  certain  products;  the 
United  States  Rubber  Company  pays  for  men’s  boots  16  cents, 
Setauket  pays  10  cents;  the  United  States  Rubber  Company  pays 
for  “lumbermen’s  perfection”  10  cents,  Setauket  pays  5J  cents; 
the  United  States  pays  for  arctic  7 cents,  Setauket  pays  4J. 

Q.  Who  asked  you  to  compare  with  Setauket?  A.  I under- 
stood that  you  wanted  to  know  the  price  of  wages  paid  by  the 
United  States  Rubber  Company  as  compared  with  that  paid  by  a 
competitive  plant. 

Q.  Why  did  you  pick  out  a plant  that  is  not  in  operation  and 
does  not  pay  wages?  A.  The  plant  has  been  in  continuous  oper- 
ation for  the  past  year;  as  I am  informed  it  only  shut  down  for  a 


GOO 


[Senate, 


week  or  two  for  repairs;  it  is  a going  concern,  doing  business  and 
making  contracts  for  goods;  selling  goods  for  the  next  season. 

Q.  When  you  speak  of  shutting  down  for  repairs,  isn’t  it  a fact 
that  the  Setauket  factory  has  shut  down  permanently  so  far  as 
any  competition  in  the  boot  and  shoe  business  is  concerned,  under 
an  arrangement  with  you,  and  that  it  proposes  to  continue  its 
business  as  a “tawny”  shoe  manufacturing  concern?  A.  It  is  not 
the  fact,  Mr.  Chairman;  as  I am  informed,  and  I thoroughly  be- 
lieve, that  the  Setauket  factory  is  a going  concern,  and  I believe 
they  are  selling  goods  for  delivery  during  the  present  year;  that 
there  is  no  idea  of  limiting  their  production  or  closing  down  the 
factory. 

Q.  They  have  an  arrangement  with  you  now?  A.  They  have 
not. 

Q.  Isn’t  one  now  in  contemplation  and  under  discussion?  A. 
No-,  sir. 

Q.  Do  you  swear  to  that  positively?  A.  I swear  that — 

Mr.  Lexow  (interrupting) : Do  you  mean  to  say  that  there  are 
no  negotiations  and  have  been  no  negotiations  between  your  com- 
pany and  the  Liberty  Company  of  Setauket?  A.  I mean  to  say 
that  there  is  no  arrangement;  there  is  none  under  discussion; 
that  there  is  no  arrangement  existing  of  any  kind. 

Q.  And  none  under  discussion  by  the  representatives  of  your 
company  with  the  representatives  of  the  Setauket  Company? 
A.  The  idea  has  been  talked  of  of  forming  a selling  company; 
Mr.  Elverson  has  wanted  to  extend  his  business  larger  than  per- 
haps his  present  financial  position  would  warrant,  and  there  has 
been  talk  of  the  idea  of  organizing  a selling  company  that  would 
make  advances  against  his  merchandise;  but  no  arrangement  of 
any  kind  whatsoever  has  been  made  to  my  knowledge. 

Q.  Are  you  waiting  until  this  investigation  is  over?  A.  No;  I 
would  say  that  I have  decidedly  advised  against  any  such  ar- 
rangement as  we  have  talked  of. 

Q.  You  are  opposed  to  it?  A.  I am  opposed  to  it. 

Q.  But  you  know  of  the  instance  of  the  arrangements  under 
consideration  by  your  company  in  connection  with  the  Liberty 


No.  40.] 


601 


Company  of  Setauket?  A.  There  are  no  considerations  and  no 
negotiations;  and  the  idea  that  you  indicate  of  the  possibility  of 
any  arrangement  being  made  after  the  adjournment  of  this  com- 
mittee there  is  no  intention  or  reason  to  contemplate  such  a con- 
dition. 

Q.  You  have  developed  before  this  committee  the  general  fea- 
tures of  the  arrangement  which  is  in  contemplation,  the  proposi- 
tion to  make  this  company  a selling  company  in  harmony  with 
the  United  States  Rubber  Company;  there  are  negotiations  in 
shape  that  offer  promise  of  speedy  fulfilment?  A.  No,  sir. 

Q.  What  is  the  inducement  for  this  alliance  with  the  Liberty 
Company  of  Setauket?  A.  The  inducement  would  be  a com- 
mission paid  to  the  selling  company  on  sales. 

Q.  And  the  absorption  of  the  Liberty  Company’s  plant  as  a 
competing  concern?  A.  Iso  such  idea  has  been  contemplated 
to  my  knowledge  as  to  the  absorption  of  the  plant. 

Q.  Isn’t  that  substantially  involved  in  the  proposition  to  make 
them  selling  agents  for  you?  A.  No. 

Q.  Do  you  mean  to  say  that  you  would  create  as  selling 
agents  those  who  are  competitors  in  the  open  market  against 
your  goods?  A.  We  recognize  that  there  has  got  to  be  competi- 
tion. 

Q.  Advances  are  made  to  Rubber  Company?  A.  This  selling 
company  might  advance — 

Mr.  Lexow:  We  understand  that  perfectly  well;  then,  you  not 
only  permit  them  to  exist  as  a competing  concern  but  you  will 
put  a premium  upon  their  competition  by  making  advances  on 
their  goods?  A.  We  might. 

Q.  Is  that  in  order  to  preserve  enough  competition  to  deceive 
the  public  into  the  belief  there  is  actual  and  active  competition 
between  companies?  A.  No,  sir;  that  is  not  for  that  purpose. 

Q.  Is  the  same  situation  that  applies  in  this  State  with  refer- 
ence to  the  Mollenhauer  Company  against  the  American  Sugar 
Refining  Company;  a competition  that  might  be  destroyed  at 
once  by  the  larger  concern  but  is  kept  in  existence  in  order  to 
establish  a presumption  of  competition.  A.  There  is  no  such 
idea  contemplated. 


602 


[Senate, 


Q.  Then  how  in  the  world  can  you  explain  that  you  not  only 
will  suffer  a competing  concern  in  the  throes  of  bankruptcy  to 
compete  with  you,  but  that  you  will  foster  an  infant  industry  by 
advances  upon  its  goods?  A.  We  recognize  that  there  must  be 
some  competition. 

Q.  Would  you  rather  have  that  kind  of  competition  than  ac- 
tive, aggressive,  strongly  backed  financial  competition  against 
you;  is  that  the  proposition?  A.  We  think  that  competition  is 
desirable;  the  way  we  feel  is  this:  That  the  business  is  pre- 
judiced by  the  manufacturing  and  output  of  poor  and  inferior 
goods;  we  feel  that  it  hurts  our  larger  product;  that  I have  ex- 
plained before;  there  is  no  way  for  a consumer  to  ascertain  the 
quality  of  rubber  goods;  a poor  shoe  has  the  same  appearance 
as  a high  quality  shoe;  and  we  think  that  it  is  prejudical  to  the 
general  interests  of  the  rubber  industry  turning  out  a poor  qual- 
ity of  goods;  for  when  the  consumer  buys  a poor  boot  or  a shoe,  a 
lumberman  for  instance,  he  is  prejudiced  against  rubber  shoes 
in  general;  and  as  our  trade  was  very  much  larger  than  Elver- 
son’s  trade  a consideration  of  that  kind  would  lead  us  to  try  and 
facilitate  the  output  of  better  goods. 

Q.  Has  that  company  the  reputation  of  making  poor  goods? 
A.  It  has. 

Q.  If  it  has  the  reputation  in  the  trade  of  making  poor  goods 
it  cannot  hurt  you;  it  is  only  where  a concern  makes  poor  goods 
when  it  is  supposed  to  make  good  goods,  that  it  can  hurt  your 
trade?  A.  I will  explain  how  it  hurts  us;  it  would  not  hurt  us 
perhaps  with  a jobbing  trade,  but  it  would  hurt  us  with  the 
consumer;  a great  many  consumers  buy  rubber  shoes  and  boots 
without  examining  the  trade  mark;  the  jobber  examines  the 
trade  mark,  and  the  retailer  examines  the  trade  mark,  and  as  a 
rule  the  value  of  the  trade  mark  is  owing  to  the  fact  that  the 
retailer  insists  upon  the  best  goods  which  are  known  b}r  the  trade 
marks;  but  the  consumer,  take  a man  who  does  not  buy  rubber 
boots  or  shoes  very  often,  he  buys  them  without  knowing  any- 
thing about  the  trade  mark;  when  they  get  a poor  shoe  or  a 
boot  it  will  wear  out  quickly  and  then  the  rubber  boot  or  shoe  is 


No.  40.] 


603 


generally  condemned;  and  our  plan  is  to  make  good  goods;  they 
may  make  a million  pairs  a year  without  their  making  money, 
and  to  the  great  prejudice  and  injury  of  our  industry. 

Q.  And  now  you  propose,  in  order  to  prevent  the  competition 
of  inferior  goods,  to  destroy  the  boot  and  shoe  manufacturing 
facilities  of  that  plant,  and  you  propose  to  act  as  selling  agents 
for  that  independent  company  in  order  to  secure  a uniformity 
in  the  goods?  A.  We  do  not  propose  to  act  as  selling  agents; 
the  suggestion  was  made  by  Mr.  Elverson  that  a selling  company 
should  be  established,  and  there  was  an  indication  that  the 
quality  of  goods  could  be  improved. 

Q.  You  went  further  than  that  and  proposed  to  advance  money 
upon  their  goods;  did  the  agreement  not  imply  that  you  should 
handle  the  total  product  of  that  factory?  A.  There  was  no 
agreement. 

Q.  Isn’t  that  the  proposition?  A.  No,  sir;  the  proposition  was 
made  by  Mr.  Elverson — he  may  have  anticipated  it — but  the  pro- 
position was  made  in  connection  with  th£  fact  that  the  standard 
of  the  quality  would  be  raised. 

Q.  The  proposition  in  connection  with  the  fact  that  you  would 
make  advances;  that  you  would  therefore  control  the  sale  of  the 
product;  isn’t  that  true,  Mr.  Flint?  A.  When  you  speak — 

Mr.  Lexow  (interrupting):  Is  that  true?  A.  When  you  use  the 
expression  you 

Mr.  Lexow  (interrupting):  I am  speaking  of  the  Lmited  States 
Rubber  Company?  A.  That  would  involve  an  explanation,  if  you 
will  allow  me  to  make  it. 

Q.  The  fact  can  be  easily  answered  categorically;  the  stenog- 
rapher will  please  repeat  the  question. 

(Question  repeated.) 

Q.  The  creation  of  the  selling  company,  and  the  making  of  ad- 
vances upon  the  goods  of  the  Liberty  Company  of  Setauket,  in- 
volves the  proposition  that  you  control  the  product  of  that  fac- 
tory, does  it  not?  A.  I would  like  to  advance  certain  informa- 
tion which  I think  will  throw  light  on  this  situation;  it  was  not 
proposed  that  Mr.  Elverson — didn’t  propose  that  the  selling  com- 


604 


[Senate, 


pany  should  be  controlled  by  the  United  States  Rubber  Company; 

I desire  to  explain  that  a concern  in  which  I am  interested,  prior 
to  the  organization  of  the  United  States  Rubber  Company,  before 
this  Rubber  Company  was  thought  of,  made  advances  to  the  com- 
pany controlled  by  Mr.  Elverson;  those  advances  have  not  been 
fully  paid;  therefore,  in  my  relation  to  this  business  I have  an 
independent  interest  in  advances  to  that  property;  and  am  there- 
fore, from  that  point  of  view,  a man  with  a conflict  of  interests, 
which  I frankly  explain;  this  results  from  advances  made  prior 
to  the  existence  of  the  United  States  Rubber  Company;  in  fact — 

Mr.  Lexow  (interrupting) : What  has  that  to  do’  with  this  ques- 
tion? A.  It  has  to  do  in  this  way;  that  personally  it  would  be  in 
my  interests  to  facilitate  the  establishment  of  the  selling  com- 
pany, perhaps  taking  an  interest  therein  if  I can  do  so  with  the 
consent  of  the  directors  of  the  United  States  Rubber  Company, 
and  facilitate  the  operation  of  that  plant,  because  interested  there 
largely  as  creditor. 

Mr.  Lexow:  The  stehographer  will  please  repeat  the  original 
question. 

The  stenographer  repeated  the  following  question: 

“The  proposition  in  connection  with  the  fact  that  you  would 
make  advances,  was  that  you  would  control  the  sale  of  the  pro- 
duct; isn’t  that  true,  Mr.  Flint?” 

A.  It  was  not  the  proposition  of  Mr.  Everson  that  the  selling 
company  should  control  the  sale  of  the  product;  on  the  contrary, 
he  took  the  position  that — 

Mr.  Lexow  (interrupting):  I am  not  speaking  of  the  proposition 
with  Mr.  Elverson;  I am  speaking  of  the  theoretical  proposition; 
that  the  one  would  be  necessarily  followed  by  the  other?  A.  The 
theoretical  proposition,  Mr.  Chairman,  was  that  thei  sale  of  the 
Elverson  goods  would  continue  under  the  direction  and  control 
of  Mr.  Elverson;  there  are  two  brothers — several  in  the  family — 
and  they  were  to  control  the  price  and  the  disposition  of  the 
goods;  they  would  be  employed  by  the  selling  company. 

Q.  Do  you  mean  to  say  that  the  United  States  Rubber  Company 
contemplates  entering  into  any  arrangement  that  involves  the 


No.  40.] 


603 


advance  upon  goods  of  a competing  company,  the  sale  of  the 
goods  of  that  competing  company  under  the  orders  of  the  owners 
of  the  competing  company's  factory?  A.  They  have  never — no; 
they  have  never  committed  themselves  to  any  such  idea. 

Q.  Do  you  mean  to  say  that  an  insane  notion  of  that  kind  has 
been  entertained  for  a minute?  A.  I don’t  think  it  is. 

Q.  Don’t  you  consider  it  insane  on  its  statement  as  a business 
proposition?  A.  Not  from  a cei’tain  point  of  view;  I think  that  it 
would  be  a great  advantage  to  the  United  States  Rubber  Com- 
pany if  the  character  of  the  E Iverson  product  could  be  improved; 
I think  that  the  organization  of  a selling  company  would  facili- 
tate that;  and,  personally,  I am  willing  to  admit  that  having 
made  advances,  I -would  be  very  glad  to  see  that  business  facili- 
tated. 

Q.  I understood  you  to  say  that  you  wTere  the  one  who  was  op- 
posed to  it,  and  that  the  others  were  in  favor  of  it.  A.  Not  to  an 
arrangement  on  proper  lines;  I would  personally  take  an  interest 
in  the  selling  company  to  facilitate  it. 

Q.  Is  that  arrangement  now  pending  before  the  board  of  di- 
rectors of  the  United  States  Rubber  Company  ? A.  It  is  not. 

Q.  With  whom  is  Mr.  Elverson  conferring?  A.  I have  talked 
with  Mr.  Elverson  from  the  standpoint  of  a creditor  of  his  con- 
cern. 

Q.  Are  you  the  only  one  who  has  been  discussing  the  matter 
with  him?  A.  No. 

Q.  Is  the  company,  as  a company,  discussing  the  proposition? 
A.  Not  officially. 

Q.  Are  the  directors  discussing  it,  or  any  number  of  them?  A. 
It  is  being  discussed  by  a representative  of  the  company. 

Q.  Do  you  mean  by  a director  of  the  company?  A.  Yes,  sir. 

Q.  Or  its  counsel?  A.  Being  considered  by  counsel  and  by  its 
counsel. 

Q.  Do  you  mean  outside  of  yourself?  A.  I am  not  in  a position 
in  that  business  to  represent  the  United  States  Rubber  in  any 
way;  I have  explained  that  I have  an  interest  as  a creditor;  I can- 
not represent  it  in  any  form;  I have  so  stated  to  the  directors. 


606 


[Senate, 


Q.  Isn’t  this  substantially  the  same  situation  that  has  devel- 
oped itself  at  the  factory  at  Colchester  and  the  selling  company 
there;  were  your  interests  not  the  same  and  was  not  the  same 
situation  prevalent  there?  A.  No. 

Q.  There  is  a great  similarity  between  the  two  transactions,  is 
there  not?  A.  There  has  been  no  transaction  at  Setauket. 

Q.  I mean  the  proposed  transaction?  A.  There  is  similarity 
in  the  idea  of  the  formation  of  the  selling  company. 

Q.  Then,  with  other  words,  there  you  formed  a selling  company 
to  undertake  the  product  of  the  Colchester  works;  you  had  made 
advances,  and  the  Colchester  Selling  Company,  which  owed  you  a 
large  sum  of  money,  was  turned  over  into  the  United  States  Rub- 
ber Company;  now,  is  not  the  general  proposition  that  is  being 
considered  with  reference  to  the  Liberty  Company  at  Setauket 
practically  on  all  fours  with  the  Colchester  operation?  A.  I de- 
sire to  state — < 

Mr.  Lexow  (interrupting):  Is  it  or  is  it  not?  A.  I ask  for  a 
division  of  the  question;  in  what  sense  do  you  use  the  word — 

Mr.  Lexow  (interrupting) : I am  speaking  in  a general  sense, 
representing  the  United  States  Rubber  Company?  A.  No. 

Q.  Then  as  an  individual?  A.  No. 

Q.  Then  in  both  capacities?  A.  No,  sir. 

Q.  Or  either?  A.  No. 

Q.  Why  do  you  make  the  distinction  “personally”;  why  did  you 
ask  me  a moment  ago  “in  what  sense  do  you  use  the  word  ‘you?’  ” 
A.  I wanted  to  ascertain  in  order  to  make  an  explanation  in  ref- 
erence to  this  credit  business;  the  position  I occupy  in  the  selling 
company  is  as  an  individual ; the  selling  company  never  owed  me 
any  money — the  Colchester  Company  never  owed  me  any  money. 

Q.  The  Commercial  Company?  A.  They  owed  the  Commercial 
Company,  in  which  I was  a minority  stockholder. 

Q.  And  of  which  you  were  a director?  A.  Of  which  I was  a 
director. 

Q.  I am  not  going  into  this  Colchester  business,  except  that  I 
want  you  to  testify  whether,  leaving  out  your  own  personality, 
the  general  proposition  is  not  on  all  fours  with  the  transaction 


No.  40.] 


607 


now  in  contemplation  or  suggested  as  Setauket?  A.  There  is  a 
similarity. 

Q.  And  the  Colchester  transaction  ultimately  developed  into 
the  purchase  of  a bankrupt  concern  and  the  issue  of  a large 
amount  of  stock  of  the  United  States  Rubber  Company  in  pay- 
ment for  it,  didn't  it?  A.  No;  not  to  my  knowledge;  the  Colches- 
ter Company  was  run  a year  and  a half  after  its  purchase. 

Q.  Have  you  not  testified  that  prior  to  the  acquisition  of  the 
Colchester  Company  by  the  United  States  Rubber  Company  it 
was  a bankrupt  concern?  A.  No,  sir. 

Q.  Is  it  a fact  or  not?  A.  Not  to  my  knowledge;  the  Colches- 
ter Company  and  the  Selling  Company — 

Mr.  Lexow  (interrupting):  In  order  to  acquire  the  Colchester 
Company  didn’t  you  first  buy  a first  mortgage  upon  that  Com- 
pany, amounting  to  §149,000?  A.  We  bought  a first  mortgage. 

Q.  And  more  than  a year  after  that  you  bought  §400,000  of  the 
stock  of  that  company  upon  which  you  held  the  first  mortgage, 
is  that  so?  A.  That  stock  was  purchased  by  the  United  States 
Rubber  Company. 

Q.  Did  the  Colchester  Company  pay  any  interest  upon  that 
first  mortgage?  A.  Not  to  my  knowledge. 

Q.  Do  you  mean  to  say,  then,  that  it  was  not  a bankrupt  con- 
cern at  the  time  you  purchased  that  stock?  A.  Not  to  my  know- 
ledge. 

Q.  What  did  you  get  for  the  property  that  you  sold  with  the 
Brookhaven  Company?  A.  I don't  remember  the  transaction; 
I can  get  the  price;  I personally  didn’t  attend  to  it;  I remember 
that  there  was  considerable;  I understand  that  there  was  con- 
siderable drop  of  cash;  I don’t  remember  the  details  of  it. 

Q.  The  United  States  Rubber  Company  paid  a considerable 
amount  of  cash?  A.  I think  so;  but  I don’t  remember  the  de- 
tails. 

Q.  Do  you  know  what  it  paid  for  it?  A.  I don’t;  I don't  re- 
member. 

Q.  Originally?  A.  The  Simmons  report  that  I will  produce 
may  show  that.  * 


608 


[Senate, 


Q.  Do  yon  mean  to  dispute  the  proposition  that  you  haven’t 
an  agreement  w^h  this  Brookhaven  concern  according  to  which 
it  shall  be  run  only  on  “ tawny  ” shoes?  A.  I have  stated  that 
there  is  no  such  agreement  in  existence;  because  if  there  had 
been  it  would  have  been  presented  to  the  directors;  there  is  no 
such  agreement. 

Q.  Why  was  that  property  originally  purchased?  A.  They 
were  doing  business  at  manufacturing  as  my  testimony  shows; 
but  the  amount  paid  to  them  was  comparatively  small  and  they 
were  bought  at  a lower  price  than  other  concerns;  but  they  had 
a certain  value;  they  were  in  business  and  doing  business  to  a 
certain  extent. 

Q.  If  it  had  a certain  value  for  your  combination  why  did  you 
sell  it  last  year?  A.  From  the  fact  that  through  the  enlarge- 
ment of  other  plants  and  the  greater  economies  introduced,  we 
felt  that  we  could  manufacture  to  better  advantages  at  other 
points. 

Q.  You  were  buying  at  other  points,  were  you  not?  A.  Yes, 
we  bought  at  other  points  in  order  to  get  the  advantages  of 
special  processes,  special  prices,  special  trade  and  the  control  of 
special  lines  of  goods;  better  trade  marks. 

Q.  Now,  the  business  operation  with  reference  to  this  one  Long 
Island  concern  in  which  we  are  most  interested,  being  a domestic 
concern,  is  that  you  buy  it  because  you  need  that  concern;  that 
then  you  sell  it  because  you  do  not  need  it  and  destroy 
part  of  its  operating  plant,  and  now  you  propose  to  enter  into 
an  agency  or  selling  agreement  whereby  advances  shall  be  made 
upon  this  product  of  a competitor  to  whom  you  have  sold?  A. 
That  is  Mr.  Elverson’s  proposition;  he  wants  us  to  do  it;  he 
wants  to  make  that  arrangement. 

Q.  You  are  considering  that  proposition?  A.  We  are  listen- 
ing to  what  he  has  to  say. 

Q.  Now,  will  you  continue  the  figures  that  you  were  about  to 
give  us?  A.  Sandals  and  overshoes,  United  States  Rubber  Com- 
pany, three  and  one-quarter  cents;  Setauket,  two  and  one-half 
cents. 


No.  40.] 


609 


Sandals  and  overshoes,  self-acting,  United  States  Rubber  Com- 
pany, four  and  one-half;  Setauket,  two  and  three  and  one-quar- 
ter? 

Q.  What  do  you  mean  by  from  two  to  three  and  one-quarter? 
A.  Cents  per  pound. 

Witness  continuing;  Crooks,  United  States  Rubber  Company, 
three  cents;  Setauket,  two  and  one-half  cents. 

Instep  slippers  or  storm  slippers,  United  States  Rubber  Com- 
pany, three  and  one-half  cents;  Setauket,  two  and  one-quarter 
cents. 

Cutting  soles,  per  hundred  pairs,  United  States  Rubber  Com- 
pany, 31  cents;  Setauket,  12  cents. 

Gum  uppers,  per  hundred  pairs,  United  States  Rubber  Com- 
pany, 40  to  50  cents  as  compared  with  17  cents  paid  at  Setauket. 

Several  prices  in  proportion  in  different  departments: 

The  United  States  Rubber  Company  pays  mill  men  $9  to  $10; 
Setauket  pays  from  $5  to  $6. 

Calender  men  the  United  States  Rubber  Company  pays  from 
$1.75  to  $3;  Setauket  pays  from  $1.25  to  $1.50. 

Calendar-help  men  United  States  Rubber  Company  pays  $1.50 
to  $1.60;  Setauket  pays  from  75  cents  to  90  cents. 

(Blank  room),  United  States  Rubber  Company  pays  from  $1.50 
to  $2.50;  Setauket  pays  75  to  90  cents. 

United  States  Rubber  Company  pays  boys  and  girls  from  75 
cents  to  $1.25;  Setauket  pays  30  cents. 

Q.  I would  like  to  ask  you  how  much  of  the  ingredient  in  the 
manufactured  product  is  labor;  what  percentage  is  it?  A.  I don’t 
know;  it  is  a larger  percentage  than  in  most  industries. 

Q.  I understood  you  to  say  that  the  statistics  show  that  labor 
bore  a proportion  from  80  to  90  per  cent,  of  the  manufactured 
product;  do  you  mean  to  say  that  that  average  is  still  larger  than 
that  of  the  normal?  A.  I mean  to  say  that  I don’t  think  it  is. 

Q.  What  is  the  average?  A.  But,  Mr.  Chairman,  these  prices — 

Mr.  Lexow  (interrupting):  You  have  stated  that  your  labor 
items  exceed  the  average;  what  is  the  average?  A.  I am  not  in- 
formed. 


39 


610  [Senate, 

Q.  Then,  how  could  you  say  that  it  exceeded  the  average? 
what  figure  had  you  in  mind  when  you  spoke  of  the  average?  A. 
I had  in  a general  way,  without  any  detail,  in  mind  the  fact  that 
the  inferior  plant  had  to  reduce  wages  to  compete;  and  you  re- 
quested me  to  bring  data  showing  that  point;  now  I have  shown 
it. 

Q.  I didn’t  want  the  data  to  show  any  point;  I want  the  data 
that  covers  the  situation,  without  reference  to  any  point?  A. 
This  covers  it,  with  the  explanation  that  I will  make. 

Q.  What  I want  is  to  get  at  the  element  of  proportion — how 
much  of  the  finished  product  is  the  percentage  for  labor?  A.  I 
will  try  and  get  those  figures  of  the  gentleman;  I know  it  is 
larger  in  our  industry  than  in  most  others;  the  labor  is  a larger 
element  of  cost  owing  to  the  character  of  the  business — owing 
to  the  great  variety  and  character  of  the  business. 

Q.  Do  you  speak  of  larger  with  reference  to  the  United  States 
census  statistics?  A.  I speak  of  larger,  knowing  in  a general 
way  about  manufacturing  and  in  a general  way  from  general 
knowledge  that  I have  of  manufacturing  industries;  I am  satis- 
fied that  we  pay  a larger  percentage  for  labor  than  most  other 
manufacturing  industries. 

Q.  Where  did  you  get  those  figures  of  the  Setauket  Company? 
A.  I got  them  from  Mr.  El  verson. 

Q.  When,  yesterday?  A.  I asked  for  them  yesterday  and  re- 
ceived them  this  morning. 

Q.  Did  you  receive  the  papers  from  him?  A.  Yes,  sir. 

Q.  Please  show  it  to  me. 

(Mr.  Lexow  examines  paper.) 

Q.  Then,  Mr.  Elverson  has  been  kind  enough  to  figure  out  the 
amount  that  you  paid  your  workingmen  as  well  as  the  amount 
that  he  paid?  A.  No. 

Q.  It  is  all  in  his  handwriting.  A.  No,  sir;  it  is  not;  those  fig- 
ures I obtained  from  an  employee  of  the  United  States  Rubber 
Company. 

Q.  Then  this  is  a copy  of  the  paper  that  Mr.  Elverson  gave  you, 
and  not  the  original?  A.  No;  this  paper,  as  a matter  of  conveni- 


[No.  40.] 


611 


ence.  I sent  him.  and  asked  him  to  give  me  these  figures;  I got 
the  figures  of  the  United  States  Rubber  Company  and  then  I got 
the  figures  of  Elverson,  and  I had  him  put  his  initials  to  the  pa- 
per and  had  him  write  a letter  stating  that  those  were  the  figures; 
I don’t  know  in  whose  handwriting  the  paper  is;  but  I am  willing 
to  state  that  those  are  the  wages  paid  by  the  United  States  Rub- 
ber Company;  I have  got  Mr.  Elverson’s  initials  that  those  are 
the  wages  paid  by  him. 

Q.  When  you  speak  of  the  wages  of  the  United  States  Rubber 
Company  do  you  mean  the  wages  paid  by  all  the  affiliated  com- 
panies forming  the  United  States  Rubber  combination?  A.  I 
mean  to  state  that  the  prices  which  I have  named  are  the  wages 
paid  on  similar  classes  of  goods,  those  produced  by  the  United 
States  Rubber  Company  and  by  the  company  at  Setauket;  that 
the  wages  paid  on  the  high  quality  of  goods  are  higher;  that  is 
to  say,  that  the  high  quality  goods  where  girls  are  making  shoes, 
earn  from  one  dollar  to  two  dollars  a day. 

Q.  Do  you  mean  to  say  that  your  figures  are  confined  to  the 
same  grade  of  shoes  or  product  made  by  the  Liberty  Company  at 
Setauket?  A.  We  claim  to  make  a better  product;  it  is  the  lowest 
product  which  we  make. 

Q.  What  is  called  “third  quality”?  A.  It  is  the  lowest  quality 
we  make. 

Q.  Is  that  what  you  call  “third  quality”  goods?  A.  That  I 
don’t  know;  it  is  the  lowest  product;  yes,  sir. 

Q.  Do  you  mean  to  say  that  you  have  no  information  as  to  the 
designations  your  company  gives  to  its  goods?  A.  I don’t  know 
what  these  are  designated;  I do  know  that  it  is  the  lowest  quality 
that  the  United  States  Rubber  Company  make;  in  making  this 
comparison  I wanted  to  show  the  wages  paid  for  first  quality  and 
for  lowest  quality ; therefore  I took  the  goods  or  the  wages  made 
for  the  lowest  grade  of  goods;  on  the  first  quality  boot  the  boot- 
makers earn  from  $2  to  $3  per  day;  cutters  earn  from  $2  to  $3.50 
per  day;  I wanted  to  show  the  fairness  of  the  comparison. 

Q.  Please  answer  my  former  question  as  to  whether  this  is  a 
summary  average  covering  all  your  factories,  or  whether  this  is 


612 


[Sexatej, 


the  result  of  the  operations  of  one  factory;  and  if  so  which?  A. 
I believe  that  these  prices  are  below  the  average;  I think  the 
prices  that  I first  gave,  being  for  lower  grade  goods,  is  below  the 
average — 

Mr.  Lexow  (interrupting):  That  must  be  true  or  false;  they 
cannot  be  below;  they  are  the  figures  from  some  factory  of  yours? 
A.  I have  stated  that  the  prices  I have  given  in  detail  in  com- 
parison with  the  Setauket  factory  are  the  prices  paid  for  making 
the  lowest  grade  of  goods  we  make,  and  wre  pay  higher  wages 
for  making  a higher  grade  of  goods;  therefore  the  price  paid  for 
the  lower  grade  would  naturally  be  below  the  average  of  the  total 
wages  paid  by  the  United  States  Rubber  Company. 

Q.  Do  you  pay  these  wages  at  Setauket?  A.  We  have  no 
plant  there. 

Q.  The  wages  paid  by  the  Liberty  Company  are  the  wages  paid 
after  the  factories  had  been  closed  at  Setauket?  A.  Those  are 
the  wages  which  have  been  paid  at  Setauket  for  the  past  year;  of 
course  there  are  no  wages  paid  when  a factory  is  closed. 

Q.  When  factories  are  closed  the  excess  of  labor  results  in  low- 
ering the  price  to  the  workingmen ; isn't  that  the  situation  at  Se- 
tauket? A.  I don’t  know. 

Q.  Do  you  know  anything  about  it?  A.  I knowT  this;  I am  sat- 
isfied, and  Mr.  Elverson  stated  to  me  that  these  prices  were  paid 
when  both  factories  were  running,  when  they  were  running  to  the 
full  capacity. 

Q.  Your  figures  show  the  average  of  wages  to  be  lower  in  Se- 
tauket than  in  your  factories  by  how  much  percentage — the  aver- 
age? A.  I haven’t  the  percentage,  but  Mr.  Elverson  stated  that 
he  thought  he  got  labor  25  per  cent.  less. 

Q.  What  is  his  name?  A.  Joseph  W.  Elverson. 

Q.  84  Reade  street?  A.  I don’t  know  where  his  office  is;  I un- 
derstand that  it  is  in  Reade  street. 

Q.  He  is  interested  in  the  United  States  Rubber  Company? 
A.  Not  that  I know  of. 

Q.  Didn’t  you  say  that  he  has  stock?  A.  No;  I said  that  he 
may  have  had  stock ; I think  very  likely  he  has. 


No.  40.] 


613 


Q.  Then  you  know  something  about  it?  A.  I don’t  know;  no. 

Q.  The  wages  th,at  you  have  quoted  in  making  these  statistics 
are  paid  at  what  factory  of  yours?  A.  I haven’t  that  informa- 
tion; I asked  for  the  wages  paid  for  the  lowest  grade  of  goods. 

By  Mr.  McCarren ; 

Q.  Then  they  are  paid  at  the  factory  where  that  particular  class 
of  goods  are  made;  at  the  factory  or  factories?  A.  I should  say 
at  the  factory  making  the  lowest  class  of  goods  that  the  United 
States  Rubber  Company  makes. 

Q.  Do  each  of  these  factories  that  are  run  by  the  United  States 
Rubber  Company  on  the  same  quality  of  goods  pay  the  same 
wages  to  the  workers?  A.  I don’t  know  that  I am  informed 
about  that;  but  I should  say  they  may  have  been  uniform. 

Q.  Do  you  know  whether  they  are  or  not?  A.  No,  sir. 

Q.  Have  you  any  general  uniform  price  list  established?  A. 
For  the  payment  of  wages  ? 

Q.  Yes.  A.  We  have  not;  many  of  the  plants  are  run  by  the 
old  superintendents  and  the  concerns  are  run  on  an  independent 
basis;  there  is  no  general  arrangement  or  uniform  arrangement  as 
to  wages;  that  is  left  to  the  superintendents  of  the  different  fac- 
tories. 

Q.  Do  you  know  where  Mr.  Elverson  is  since  he  handed  you 
that  paper?  A.  I don’t  know. 

Q.  Where  was  he  when  he  handed  it  to  you?  A.  He  handed  it 
to  me  uptown. 

Q.  This  morning?  A.  (No  answer.) 

Q.  Where?  A.  I asked  him  to  meet  me  at  the  Holland  House. 

Q.  This  morning?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  A subpoena  was  issued  for  him  yesterday  and  again  this 
morning  and  he  has  not  been  found;  the  fact  is,  then,  that  you 
don't  know  what  you  pay  for  your  work  in  a particular  factory? 
A.  I have  not  that  information  with  me;  I gave  you  substantially 
the  wages  as  paid. 

Q.  Can  you  figure  out  for  the  benefit  of  this  committee  what 
the  average  difference,  as  shown  by  your  figures,  is  between  the 


614 


[Senate, 


wages  of  workingmen  at  Setauket  and  the  workingmen  in  your 
factory,  wherever  it  may  be?  A.  Owing  to  the  variety  of  goods 
it  would  take  a day  to  make  that  calculation. 

Q.  Approximate  it?  A.  In  round  figures  I understand  that 
we  pay — the  United  States  Rubber  Company  pays — 25  per  cent, 
higher  wages  than  is  paid  at  Setauket;  but  I will  have  the  cal- 
culation to  which  you  refer;  I will  have  it  worked  out  for  you. 

Q.  And  yet  the  Setauket  company  is  closed  and  you  are  doiug 
the  business?  A.  The  Setauket  Company  has  stopped;  its  busi- 
ness is  not  closed;  it  is  doing  business  and  they  are  active  in 
the  market. 

Q.  I mean  business  with  reference  to  the  boot  and  shoe  produc- 
tion. A.  I mean  with  reference  to  the  boot  and  shoe  production; 
they  are  actively  engaged  in  the  business,  as  can  be  ascertained 
at  their  office;  they  are  selling  goods. 

Q.  Are  they  producing  goods?  A.  Until  within  a very  short 
time. 

Q.  Now  will  you  kindly  explain  how  it  is  possible  that  a con- 
cern which  pays  25  per  cent,  less  for  labor — which  forms  the 
largest  ingredient  of  the  product — can  not  compete  with  you  in 
the  open  market,  but  has  to  come  to  you  to  make  advances  on  its 
goods  and  close  its  factory  and  discharge  its  men?  A.  The 
reason  is  owing  to  the  advantages  that  I have  explained,  which 
result  from  the  centralization  of  manufacture;  better  manufac- 
turing methods;  the  larger  utilization  of  labor-saving  machinery, 
all  the  advantages  which  are  familiar  to  you  and  which  I will 
not  enumerate,  that  comes  from  the  centralization  of  large  manu- 
facturing businesses. 

By  Mr.  McCarren: 

Q.  Has  the  value  of  the  trade-marks  anything  to  do  with  it? 
A.  Undoubtedly;  we  have  on  the  higher  grade  of  goods;  they 
are  a safeguard;  many  of  our  concerns  have  been  in  existence 
for  a half  century  or  more;  some  of  them  for  more  than  a half 
century,  and  they  always  give  the  public  good  goods. 


No.  40.] 


615 


By  Mr.  Barry: 

Q.  With  all  your  centralization  of  labor  your  labor  costs  you 
more  than  the  labor  in  the  smaller  factory  by  25  per  cent.?  A. 
Yes;  we  utilize  our  labor;  of  course  there  would  be  a difference 
between  ours  and  that  of  Mr.  El  verson;  but  we  claim  that  our 
labor,  with  the  facilities  that  we  have  in  the  way  of  improved 
methods  and  labor  saving  machinery  that  the  laborer  earns  25 
per  cent,  more  than  under  inferior  facilities  and  conditions. 

By  Mr.  Bedell: 

Q.  Will  you  explain  how  it  was  that  when  you  had  a labor  mar- 
ket at  Setauket,  where  labor  could  be  secured  25  per  cent,  cheap- 
er than  anywhere  else,  you  closed  up  and  sold  that  factory?  A. 
I cannot  answer  that  definitely;  but  my  general  impression  is  that 
after  investigation  it  was  found  that  we  could  get  good  labor  of 
higher  intelligence  at  other  points;  men  that  had  been  thoroughly 
trained  in  the  business  and  more  efficient;  our  aim  has  been  to 
produce  goods  of  the  highest  quality;  and  we  endeavor  to  sell 
goods  of  the  highest  quality  — the  highest  grade  — and  we  im- 
prove that  grade  from  time  to  time;  one  of  the  advantages  of 
centralization  is  that  we  have  learned  a great  deal  in  this  busi- 
ness since  we  came  together;  in  almost  all  of  the  old  concerns 
there  is  some  one  point  of  advantage  of  others;  the  business  is 
one  that  is  largely  experimental;  it  is  not:  subject  to  analysis; 
the  chemist  cannot  come  in  and  assist  us;  we  must  experiment 
with  different  kinds  of  rubber  and  various  elements;  in  every 
one  of  these  plants  there  are  parties  working  out  on  independent 
lines  of  advantage;  and  since  coming  together  we  have  been 
able  to  avail  ourselves  of  those  advantages;  and,  in  a general 
way,  the  idea  has  been  to  improve  the  quality  of  the  goods;  we 
have  found  it  more  convenient  to  develop  at  places  where  there 
existed  superior  manufacturing  facilities. 

By  Mr.  Lexow: 

Q.  I would  like  to  have  you  answer  a little  closer  to  the  ques- 
tion I have  heretofore  put,  to  wit:  Inasmuch  as  labor  forms  the 


616  [Senate, 

largest  ingredient  of  the  manufactured  product,  and  you  had 
a large  factory  in  operation  -at  Setauket,  where  labor  costs  you 
25  per  cent,  less  than  anywhere  else,  why  was  it  that  you  closed 
and  finally  sold  that  factory  and  operated  elsewhere?  A.  I have 
not  stated  that  labor  was  the  largest  percentage;  I have  stated 
that  in  my  opinion  we  paid  a larger  percentage  to  the  laborers 
than  in  most  manufacturing  industries;  but  that  does  not  mean 
the  largest  percentage  of  cost;  and  if  the  United  States  census 
makes  that  report,  I think  the  census  report  is  wrong. 

Q.  I am  not  saying  that  the  United  States  census  report  makes 
that  report  with  regard  to  rubber?  A.  Excuse  me. 

Mr.  Lexow:  I said  it  made  it  on  an  average  of  all  manufac- 
tures. I simply  drew  the  inference,  inasmuch  as  you  said  that 
it  was  higher  than  others — that  it  must  come  pretty  near  being 
the  whole  amount. 

Q.  Can  you  answer  that  question?  A.  No;  the  answer  is  this; 
that  we  claim  that  our  wage-earners  produce  more  than  the  wage- 
earners  at  Setauket,  because  we  have  superior  facilities— better 
organizations — and  that  through  these  organizations  we  are  get- 
ting more  for  our  money,  although  we  pay  25  per  cent,  more  to 
the  laborers;  and  that  has  been  one  of  the  great  benefits  of  this 
centralization  o-f  manufacture. 

Q.  Why  was  it,  then,  when  you  increased  your  facilities  that 
you  found  it  necessary,  as  you  stated,  to  dismantle  some  factories 
and  add  to  others;  why  was  it  that  you  did  not  add  to  the  factory 
which  you  then  owned  in  a place  where  labor  was  25  per  cent, 
cheaper  than  anywhere  else;  in  a place  where  rubber  goods  had 
been  manufactured  for  thirty  years,  according  to  your  testimony? 
A.  I did  not  state  that  they  had  been  manufactured  there  for 
thirty  years. 

Q.  I understood  you  to  say  that  that  company  had  been  in 
operation  for  thirty  years  under  one  name?  A.  I didn’t  so  tes- 
tify; we  had  large  plants  of  machinery  at  other  points;  and 
perhaps  in  some  cases  advantages  of  location  in  connection  with 
transportation  facilities;  and  after  taking  the  matter  into  con- 


No.  40.] 


617 


sideration  the  United  States  Rubber  Company  determined  that 
it  was  better  to  develop  and  enlarge  its  larger  properties. 

Q.  Notwithstanding  labor  was  25  per  cent,  dearer?  A.  Not- 
withstanding labor  was  25  per  cent,  dearer;  for  instance,  a plant 
which  we  have  enlarged  cost  originally  $1,300,000;  the  cost  of 
the  plant  at  Setauket  may  have  been  $150,000 ; it  was  found  more 
advantageous  to  develop  the  plant  which  cost  $1,300,000;  fur- 
thermore, our  objective  point  is  higher  quality. 

Mr.  Lexow:  I understand.  We  have  had  that  a number  of 
times.  We  don’t  want  you  to  advertise  your  goods  here  too 
often. 

Q.  What  was  the  price  of  labor  in  1S91  as  compared  with  the 
price  of  labor  within  the  last  six  months  in  the  factories  owned 
or  controlled  by  the  United  States  Rubber  Company?  A.  I am 
informed  by  those  best  able  to  give  information,  that  the  wages 
are  the  same  to-day  as  before  the  organization  of  the  United 
States  Rubber  Company. 

Q.  Then,  the  economy  which  was,  as  you  say,  the  main  object 
of  centralization,  has  not  redounded  to  the  benefit  of  the  laborer? 
A.  In  my  judgment,  it  has. 

Q.  Can  you  say  whether  it  is  or  has  not?  A.  I think  it  has. 

Q.  It  has  not  increased  the  wages?  A.  No,  sir;  but  it  has 
redounded  to  the  benefit  of  labor,  from  the  fact  that  during  the 
periods  of  depression  which  have  prevailed,  owing  to  the  want 
of  confidence  and  on  account  of  the  uncertainties  in  the  financial 
and  business  world,  I think  that  if  it  had  not  brought  about 
these  advantages  that  competition  in  manufacture  in  order  to 
meet  the  conditions  of  depression,  the  price  of  labor  would  have 
declined  the  same  as  has  been  the  case  at  Setauket. 

By  Mr.  McCarren: 

Q.  Has  it  furnished  steadier  employment  for  labor?  A.  To 
some  extent;  I think  that  the  organization,  the  larger  organiza- 
tion, has  idealized  the  wisdom  of  keeping  together  the  labor  it 
has  taken  so  many  years  to  educate  in  this  industry;  owing  to  the 
depressed  times  there  has  been  a reduced  consumption;  in  refer- 


618 


[Senate, 


ence  to  the  capacity  for  manufacture;  if  we  had  good  times — 
what  the  rubber  men  call  a “ good  winter,”  that  is,  plenty  of 
snow,  we  might  have  run  our  factories  to  their  full  capacity;  or 
as  near  thereto  as  the  business  would  warrant;  we  have  to  have 
extra  capacity  in  this  business  in  order  to  provide  for  the  un- 
usual conditions  of  seasons;  and  also  to  be  ready  for  an  improve- 
ment in  the  business  of  the  country,  what  the  business  world 
is  looking  for. 

Q.  That  does  not  answer  the  question;  please  repeat  Senator 
McCarren’s  question;  the  following  question  was  repeated.  “Has 
it  furnished  steadier  employment  for  labor?  ” A.  I think  on  the 
whole,  to  some  extent  it  has. 

By  Mr.  Lexow: 

Q.  Are  not  more  men  out  of  employment  to-day  than  there 
were  in  1892  before  the  organization  went  into  operation?  A. 
Eighteen  hundred  and  ninety-two  was  a prosperous  year;  1896 
has  been  a year  of  depression ; for  that  reason  I think  that  there 
are  not  as  many  men  employed  in  the  industry  as  in  the  year  of 
prosperity,  1892. 

Q.  Then,  we  will  compare  1898;  were  there  as  many  men  em- 
ployed in  1893  as  there  were  in  1892?  A.  Eighteen  hundred  and 
ninety-three  was  a year  of  depression;  it  was  a year  of  panic;  I 
think  that  our  business,  like  all  other  manufacturing  businesses, 
was  affected  by  the  depression  in  1893  when  the  silver  question 
was  being  agitated. 

Q.  So  you  substantially  admit  the  proposition  that  since  1892 
there  has  not  been  as  much  labor  employed  by  the  United  States 
Rubber  Company  as  there  was  employed  prior  to  the  organiza- 
tion of  that  company  by  the  independent  companies  now  com- 
posing it?  A.  I admit  that  we  have  suffered  from  bad  times. 

Q.  We  understand  that  as  one  reason;  I am  asking  for  the 
fact?  A.  I have  so  stated. 

Q.  It  is  true?  A.  I will  state  that  I think  there  were  more 
laborers  employed  in  1892  than  during  the  period  of  depression 
in  1892,  93-96. 


No.  40.] 


619 


Q.  Eighteen  hundred  and  ninety-five,  1896?  A.  Eighteen  hun- 
dred and  ninety-three,  1894,  1895. 

By  Mr.  McCarren: 

Q.  In  other  words,  the  Cleveland  administration?  A.  It  is 
convenient  for  me  to  make  that  reference. 

Mr.  Lexow: 

Q.  Now,  periods  of  depression  called  for  decreased  price  to 
meet  the  lessened  demand,  did  they  not?  I am  putting  that  ques- 
tion to  you  as  a business  man?  A.  It  depends — 

Mr.  Lexow:  I mean  that  would  be  the  normal  consequences? 
A.  In  times  of  depression  it  may  be. 

Q.  Were  normal  conditions  to  obtain  instead  of  forced  and 
extraordinary  conditions,  the  price  of  goods  would  come  down 
under  the  lessoned  demand;  is  that  true?  A.  I would  have  to 
explain  of  an  extraordinary  condition  that  has  prevailed  in  this 
industry. 

Q.  I am  speaking  of  industries  in  general;  is  that  true  as  a 
general  proposition;  the  stenographer  will  please  repeat  the  ques- 
tion? 

(Question  repeated.) 

A.  As  a general  economical  principle  I think  that  is  true. 

Q.  You  say  that  you  are  the  most  extensive  importer  or  ex- 
porter in  the  country?  A.  I said  one  of  the  largest  buyers  of 
manufactured  goods  for  export  to  foreign  countries. 

Q.  Isn’t  the  proposition  that  I have  made  heretofore,  one  of 
universal  application?  A.  Yes;  in  general,  you  can  buy  cheaper 
in  times  of  depression. 

Q.  How  is  it  then  that  under  the  operations  of  the  United 
States  Rubber  Company,  in  violation  of  this  rule  which  you  say 
is  of  universal  application,  the  price  of  the  manufactured  product 
has  increased  to  the  consumer,  while  labor  was  discharged  and 
factories  closed  down?  A.  I do  not  admit  that  the  price  has  in- 
creased. 

Q.  Do  you  dispute  it?  A.  I have  stated  that  there  exists  a 


620  [Senate, 

complex  situation  owing  to  the  fact  that  we  have  improved  the 
quality — 

Mr.  Lexow  (interrupting):  Why? 

A.  In  this  industry  extraordinary  conditions  have  prevailed; 
in  the  first  place,  Mr.  Chairman,  the  bicycle  came  into  very  ex- 
tensive use  in  the  spring  of  1892  or  in  the  spring  of  1893;  there 
was  an  industry  that  formerly  consumed  a few  hundred  tons  of 
rubber;  owing  to  the  great  demand  for  bicycle  tires  there  has 
been  a consumption  of  thousands  of  tons  of  rubber  for  that  in- 
dustry; that  has  had  a bearing. 

Q.  To  what  extent?  A.  That  would  have  to  be  determined 
by  long  calculations;  to  a considerable  extent. 

Q.  Would  the  increase  in  the  price  of  Para  rubber  have  justi- 
fied an  increase  of  from  8 to  10  per  cent,  if  justified  at  all?  A. 
You  asked  me  why  in  one  question;  I desire  to  answer  that. 

Q.  Then  you  have  not  finished  your  answer.  The  stenographer 
will  please  strike  out  the  last  answer.  I will  put  the  question 
later. 

Mr.  Flint  (continuing):  The  United  States  Rubber  Company 
sells  articles  that  are  patented,  and  also  articles  that  are  repre- 
sented very  largely  by  trade  marks;  consequently,  a general 
economical  question  that  might  apply  to  the  sale  of  staples  like 
wrheat,  cotton,  sugar,  coffee,  etc.,  might  not  apply  in  the  same 
degree  to  the  product  of  factories  that  are  putting  out  goods 
under  patents  and  trade  marks. 

Q.  Does  that  cover  the  whole  extraordinary  situation?  The 
stenographer  will  please  repeat  my  last  question? 

(Question  repeated). 

Q.  You  are  a great  importer,  you  ought  to  know.  A.  I have  been 
one  of  the  largest  of  crude  rubber.  It  has  a bearing  that  crude 
rubber  would  not  have  upon  a variety  of  manufactured  goods. 
That  is  a complex  question  that  I cannot  answer,  because  that 
involves  the  knowledge  of  a manufacturer  who  knows  the  de- 
tails. 

Q.  You  have  been  a member  of  your  firm  thirty  years?  Is  it 
not  a fact  that  when  you  spoke  about  thirty  thousand  you  meant 


No.  40.] 


621 


to  say  shoe  lasts?  A.  I meant  thirty  thousand  different  shoes 
in  addition  to  other  products. 

Q.  Different  fashions?  A.  Fashions,  styles,  qualities,  etc. 

By  Mr.  McCarren: 

Q.  Do  you  mean  of  one  texture.  A.  No;  that  would  include  two 
qualities. 

By  Mr.  Lexow: 

Q.  Excuse,  if  you  can,  the  system  that  in  violation  of  natural 
economical  law,  in  a period  of  depression,  of  the  closing  of  fac- 
tories, the  discharge  of  workmen,  creates  a situation  whereby 
you  can  increase  to  the  consumer  your  products  by  from  20  to 
44  per  cent.?  A.  I do  not  know  of  any  such  increase;  there- 
fore, I cannot  work  it  out. 

Q.  Do  you  admit  that  if  it  is  shown  that  under  those  condi- 
tions the  Fluted  States  Bubber  Company  increased  its  price  from 
20  to  44  per  cent.,  that  a system  which  would  permit  of  that 
should  not  be  tolerated?  A.  That  is  a very  complex  question 
that  only  men  who  have  had  large  experience  in  legislation  can 
deal  with.  I know  this — 

Mr.  Lexow  (interrupting):  All  right.  We  will  leave  that. 

By  Mr.  McCarren : 

Q.  To  what  extent  does  manufactured  goods  deteriorate  or 
depreciate  in  value  if  they  are  not  sold?  A.  They  deteriorate 
very  largely;  they  deteriorate  in  many  ways;  in  the  first  place, 
the  change  of  style;  in  the  second  place,  the  fact  of  their  being 
old  goods:  and  the  result  of  it  is  that  a very  large  amount  of 
goods  have  been  sold  during  the  past  year;  perhaps  a quarter 
of  the  product  of  the  FTnited  States  Bubber  Conpany  has  been 
sold  at  lower  prices  than  have  ever  prevailed  in  the  history  of 
the  rubber  trade  in  connection  with  the  disposing  of  goods  that 
were  not  in  the  latest  fashion;  the  general  desire  to  wear  the 
“pointed  toes”  had  an  effect;  so  that  in  considering  the  cost  of 
our  goods  we  have  to  take  into  calculation  every  year  these 
questions;  we  also  have  to  have  large  auction  sales  and  must 


622  [Senate, 

sacrifice  very  large  quantities  of  goods  in  order  to  keep  our  stocK 
up  to  date. 

Q.  Is  that  one  of  the  reasons  for  the  reduction  of  the  price  to 
the  consumer?  A.  The  reason  for  the  reduction  of  the  price 
list  which  circulates  among  the  retailers  was  with  a view  of 
putting  out  a lower  price  list  which,  through  the  realization  of 
economy,  we  would  ultimately  hope  to  realize. 

By  Mr.  Lexow : 

Q.  You  have  answered  every  question  except  the  question  put 
by  Mr.  McCarren.  A.  In  referring  to  this  large  sale  of  goods, 
consisting  perhaps  of  one  quantity  of  our  product,  it  was  depre- 
ciation in  style,  and  for  other  reasons  during  the  period  when 
goods  were  being  held  by  the  manufacturer. 

By  Mr.  McCarren. 

Q.  What  I want  to  bring  out  is,  whether  in  cases  where  you 
have  an  excess  of  many  articles,  if  your  apprehension  of  the  de- 
terioration or  depreciation  of  the  manufactured  goods  will  force 
you  to  sell?  A.  We  make  sales  in  order  to  keep  our  stock  up  to 
the  latest  point  of  quality  and  style;  we  sell  enormous  quanti- 
ties of  goods  verj  much  below  the  price  of  high  quality  goods  in 
order  to  place  goods  that  are  going  out  of  style;  they  do  not 
deteriorate  in  wearing  quality;  they  deteriorate  owing  to  the 
change  of  style. 

Q.  What  I want  to  get  at  is,  does  that  force  a sale  of  your 
surplus  stock?  A.  It  does. 

By  Mr.  Lexow: 

Q.  Are  you  not  under  contract  with  your  factors  not  to  under- 
sell the  price  fixed  by  your  concern  from  year  to  year?  Don’t  you 
from  the  31st  of  March  of  each  year  have  an  agreement  with 
your  factors  according  to  which,  for  the  whole  of  that  year,  you 
fix  a certain  price  upon  your  rubber  goods?  Is  that  the  fact  or 
not?  A.  In  answer  to  that  I would  say  that  I desire  to  produce 
for  the  committee  the  memorandum  of  agreement  of  sales  which 
gives  all  the  facts;  it  is  an  agreement  with  which  I am  not  famil- 


No.  40.] 


623 


iar;  I sent  for  it  in  order  that  it  might  be  here  and  put  in  the 
testimony. 

Q.  That  is  a copy  of  the  same  paper  I handed  you  day  before 
yesterday?  Do  you  not,  according  to  that  agreement,  fix  the 
price  for  all  material  in  the  hands  of  your  factors  for  each  year 
on  the  31st  of  March  for  the  succeeding  year?  A.  Mr.  Chairman, 
in  that  agreement  you  have  all  the  conditions;  as  I stated,  I 
am  not  familiar  with  that  branch  of  the  business;  but  I testify 
that  that  is  the  agreement  in  use  by  the  United  States  Rubber 
Company. 

Q.  How  can  you  account  for  it,  that  notwithstanding  the  in- 
troduction  of  economies  that  you  have  suggested  here  were  the 
main  purposes  of  the  centralization,  that  immediately  after  that 
centralization  you  have  increased  the  price  of  your  product,  that 
that  increase  has  obtained  from  that  time  until  now?  A.  I have 
stated  that  the  rubber  industry  is  entirely  different  from  that 
of  most  of  the  other  consolidations,  that  it  takes  much  more 
time  to  realize  the  economies  owing  to  the  variety  of  output. 

Q.  Mr.  Searles  has  stated  here  that  it  might  take  more  than 
fifteen  years  to  realize  the  advantages  of  the  American  Sugar 
Refining  Company’s  economies?  Rut  you  say  that  it  would  take 
more  in  the  rubber  combination  than  that?  A.  I stated  that  it 
might  take  a hundred  years  to  reach  the  last  economy,  and  even 
longer  than  that;  but  that  the  economies  cannot  be  realized  in 
the  manufacture  of  a great  variety  of  products  in  anything  like 
as  short  a time  as  they  could  be  realized  in  a hundred  other 
products;  in  one  instance  I know  where  a large  percentage  of 
economies  have  been  realized  in  five  years;  but  that  was  an  in- 
stance where  there  was  one  product  being  turned  out. 

Q.  Now,  in  reference  to  your  ultimate  economy  that  you  cannot 
state  as  occurring  within  100  years,  is  it  not  a fact  that  while  the 
consumer  will  not  have  the  benefit  from  it  you  are  still  able  to  pay 
your  full  8 per  cent,  upon  the  preferred  stock  and  at  least  divi- 
dends of  12  per  cent,  upon  your  common  stock?  A.  On  general 
principles — do  you  mean  the  United  States  Rubber  Company — I 
felt  that  I am  under  obligation  to  earn  what  money  I can  for  the 
6,000  stockholders. 


624 


[Senate, 


Q.  Is  that  considered  fair — I mean  is  that  considered  by  you 
gentlemen  Who  make  these  consolidations  as  a fair  and  reason- 
able dividend  upon  the  preferred  and  common  shares,  which  in 
connection  with  a reasonable  amount  for  a surplus,  should  be 
earned  by  these  industrial  associations  before  the  public  can  get 
the  advantage  of  the  economies  from  centralization  and  consoli- 
dation? A.  Well — I can’t  remember  all  that — 

Mr.  Lexow  (interrupting):  The  stenographer  will  repeat  the 
question. 

(Question  repeated.) 

A.  As  a matter  of  intelligent  management  it  is  in  the  business 
interest  of  the  6,000  stockholders  that  the  compauy  should  study 
the  interests  of  the  consumer  in  every  way  that  will  result  in  giv- 
ing them  better  goods,  better  quality  of  goods  and  styles  and 
meeting  their  wants  in  order  to  extend  the  volume  of  its  business; 
it  is  through  such  enlargement  of  the  volume  of  business  that 
the  greatest  economies  are  reached;  we  have  been  at  a disadvan- 
tage for  the  last  four  years  because  we  have  not  been  able  to  run 
our  factories  to  full  capacity;  it  has  made  an  enormous  difference 
in  the  cost  of  the  production  of  goods;  if  we  are  running  at  full 
capacity  we  could  manufacture  much  cheaper;  it  is  in  the  interest 
of  the  trustee  to  manufacture  and  sell  his  goods  so*  as  to  increase 
the  consumption,  and  while  at  first  jhat  may  not  result  in  the 
largest  dividends  to  the  stockholders  the  ultimate  result  will  be 
to  the  benefit  of  the  stockholders  and  to  the  benefit  of  the  con- 
sumer. 

Mr.  Lexow:  The  stenographer  will  repeat  my  last  question. 

(Question  repeated.) 

Q.  Now,  Mr.  Flint,  please  answer  that  question?  A.  The  best 
answer  to  that  is  to  state  to  you  the  facts;  you  ask  my  views  as  to 
the  payment  of  dividends  of  12  per  cent,  and  I state  to  you  that 
the  United  States  Rubber  Company  has  only  paid  a little  over  1 
per  cent,  on  its  common  stock  since  the  concern  was  organized. 

Q.  I have  not  asked  that.  A.  That  shows  the  policy;  instead 
of  the  company  paying  large  dividends  it  has  paid  only  a little 
over  1 per  cent,  per  annum  upon  its  common  stock. 


No.  40.] 


625 


Q.  Notwithstanding  the  increase  in  the  price  of  the  product  to 
the  consumer?  (No  answer.) 

Q.  Then  there  was  no  value  in  that  general  stock  which  should 
have  permitted  the  issue  on  that  basis,  on  the  basis  of  its  fair 
earning  capacity  ? A.  Simmons  Committee  report — 

Mr.  Lexow  (interrupting):  We  have  the  evidence  here  from 
the  American  Sugar  Refining  Company  that  it  is  capitalized  on 
its  fair  and  reasonable  earning  capacity;  I ask  whether  that  same 
proposition  applied  to  the  United  States  Rubber  Company,  and 
whether  in  view  of  its  experience  the  capitalization  as  made 
has  squared  with  that  proposition?  A.  I answered  that  when 
the  Simmons  Committee  recommended  the  purchase  of  this 
property— it  was  in  the  fall  of  1S92,  during  a period  of  great  pros- 
perity; but  since  the  organization,  or  since  that  proposal,  we  have 
had  two  panics,  general  want  of  confidence  and  general  distress; 
men  of  enterprise  have  been  contracted  and  business  has  suf- 
fered— the  prejudice  of  the  wage  earners  and  all  others  in  the 
land. 

Q.  Notwithstanding  that  you  increase  the  price  of  your  prod- 
uct? A.  I have  already  testified  on  that  point. 

Q.  May  that  not  have  had  some  influence  upon  the  earning  ca- 
pacity of  the  company?  A.  It  is  natural  that  we  should  have 
managed  the  business  to  what  we  considered  the  best  advantage; 
and  I have  stated  that  we  paid  only  a little  over  1 per  cent,  on  the 
stock. 

Q.  Isn't  that  one  of  the  reasons  for  the  situation  which  you 
have  disclosed,  that  you  have  capitalized  your  company  upon  the 
basis  of  value  in  the  form  of  stock  certificates  issued,  attributed 
to  the  properties  which  you  not  only  closed  after  the  combination, 
but  which  were  designed  to  be  closed  and  thereby  avoided  com- 
petition? A.  That  is  not  the  case. 

Q.  How  much  of  the  capital  stock  of  your  company  has  been  is- 
sued for  properties  which  were  closed?  (Witness  makes  compu- 
tations.) A.  Less  than  2 per  cent,  of  the  total  capitalization  of 
the  United  States  Rubber  Company. 

Q.  Is  now  represented  by  properties  which  are  closed;  do  you 
40 


626  [Senate. 

mean  to  say  that?  A.  I mean  to  say  that  the  present  capitaliza- 
tion of  the  United  States  Rubber  Company  which  was  issued  for 
factories  which  had  been  closed  will  not  amount  to  2 per  cent,  of 
the  total  capitalization  of  the  United  States  Rubber  Company; 
and  that  the  machinery  in  the  principal  factories  has  been  re- 
moved to  other  plants  in  order  to  increase  the  capacity  of  such 
plants  and  to  secure  consequent  economies. 

Q.  Do  you  mean  to  say  that  prior  to  this  combination  the  prop- 
erties forming  it  were  then  indicating  an  earning  capacity  which 
justified  the  issuance  of  the  general  stock  of  the  company  as 
made?  A.  That  is  a matter  that  was  devolved  upon  the  Sim- 
mons Committee  to  take  into  consideration;  as  I have  stated— 

Mr.  Lexow  (interrupting):  To  put  it  plainly,  isn’t  the  fact  that 
the  entire  general  stock  of  the  company  is  what  is  familiarly 
known  as  “water?”  You  know  what  the  term  implies,  don’t  you? 
A.  Not  as  a specific  condition;  I have  already  stated  the  basis  of 
the  issue;  how  it  was  done;  they  were  conservative  men;  one  of 
the  most  conservative  men  in  New  York  was  chairman  of  the  com- 
mittee; and  the  issue  of  the  stock  paid  was  for  the  purpose  of 
quick  capital  trade-marks;  we  have,  for  instance,  the  United 
States  Rubber  Company,  has  a working  capital  of  $12,000,000, 
among  other  items. 

Q.  In  cash?  A.  In  what  are  known  as  quick  assets;  realizable 
assets;  we  have  a large  number  of  plants. 

Q.  I ammot  questioning  you  or  doubting  the  financial  standing 
or  independence  of  your  company;  I assume  it  is  all  right;  we  are 
not  here  for  that  purpose;  is  it  not  a fact  that  in  the  issuance  of 
the  general  stock  a somewhat  similar  custom  has  been  observed 
as  existed  in  the  case  of  other  combinations;  that  is  to  say,  that 
it  represents  nothing  but  water,  which  afterwards  was  accepted 
by  the  directors  to  be  developed  into  an  earning  capacity  suffi- 
cient to  beableto  secure  dividends,  reasonabledividends,  upon  that 
amount;  is  that  not  true?  A.  I haven’t  any  interest,  and  never 
have  had,  in  so-called  industrials  outside  of  the  United  States 
Rubber  Company;  I can  answer  for  the  United  States  Rubber 
Company. 


No.  40.] 


627 


Q.  Limit  your  answer  to  that?  A.  It  was  for  trade  marks,  etc. 

Q.  Trade  marks  of  the  Setauket  Company?  A.  I wouldn’t  con- 
sider those  of  great  value. 

Q.  And  the  good  will  of  the  various  companies  represented  in 
the  consoldation?  A.  I think  the  word  good  will  is  the  general 
expression. 

Q.  That  covers  the  proposition?  A.  That  largely  covers  plants, 
trade  marks,  business  franchises,  organizations. 

Q.  That  is  the  basis  of  the  issuance  of  all  of  the  general  stock 
of  this  company?  A.  As  I have  before  stated — 

Mr.  Lexow  (interrupting):  Isn’t  it;  can’t  you  state?  A.  I was 
not  on  the  committee. 

Q.  Have  you  that  report  here  now?  A.  (Witness  hands  docu- 
ment to  Mr.  Lexow.) 

Mr.  Lexow:  The  stenographer  will  please  mark  this  document 
“Exhibit  A”  of  this  data  and  incorporate  it  in  the  testimony  of 
Mr.  Flint. 

Q.  From  your  knowledge  as  a business  man,  engaged  in  busi- 
ness pursuits,  is  it  not  true,  that  it  is  just  this  tendency  to  issue 
a large  amount  of  the  capital  stock  of  a company  representing 
what  is  called  good  will,  that  has  brought  these  industrial  asso- 
ciations into  the  repute  in  which  they  now  stand?  Is  that  not 
true,  Mr.  Flint?  A.  Like  all — 

Mr.  Lexow  (interrupting) : Is  it  not?  A.  I will  have  to  ask  for 
a division  of  the  question;  in  the  first  place,  the  question  as  to 
the  repute  in  which  they  do  stand,  I think  they  are  like  individu- 
als; some  stand  well  and  some  do  not;  I think  the  United  States 
Eubber  Company  stands  well ; wThen  that  issue  was  made  it  was 
made  for  businesses  that  had  been  running  for  50  years  or  more; 
and  the  fact  of  it  is  that  the  trade  marks,  patents  and  business 
organizations  are  quite  as  valuable  intrinsically  as  bricks  and 
mortar;  the  fact  of  it  is  that  a factor  that  has  no  organization  in 
its  business  is  of  little  value. 

Q.  We  understand  that;  isn’t  this  part  of  a general  system  of 
evolution  which  is  manifesting  itself?  A.  There  is  no  doubt 


I 


628  [Senate, 

about  that;  during  the  last  year  in  England  there  has  been  a capi- 
talization to  the  amount  of  $700,000,000. 

Q.  If  you  will  only  answer  that  question?  A.  It  is  the  general 
tendency  of  the  age. 

Q.  Isn't  it  the  fact  that  those  engaged  in  these  industrial  pur- 
suits are  utilizing  that  evolution  for  the  purpose  of  increasing 
the  nominal  values  of  their  properties  with  a view  of  its  distribu- 
tion among  the  public  at  large? 

Mr.  Lexow:  Stenographer  will  please  repeat  the  question. 

(Question  repeated.) 

A.  They  are  using  it  for  the  purpose  of  increasing  actual  val- 
ues; and  it  is  natural  that  men  as  they  get  on  in  age  should  desire 
to  distribute  their  interests  in  these  old  enterprises,  inasmuch  as 
they  cannot  live  to  continue  the  management;  that  is  one  of 
the  strongest  arguments  in  favor  of  this  method. 

Q.  I understand  that  there  is  some  strength  in  that  argument; 
isn’t  it  a fact  that  those  who  have  in  the  past  held  these  indus- 
trial pursuits  in  a few  hands  have  capitalized  them  upon  the  basis 
of  a supposed  good  will  very  largely  in  excess  of  the  original  in- 
vestment, and  after  such  capitalization  are  willing  to  permit  the 
public  to  share  with  them  in  the  enterprise;  isn’t  that  the  fact? 

(Question  repeated.) 

Q.  Is  it  the  fact?  A.  In  our  case,  the  issue,  as  I believe,  has 
been  on  actual  values. 

Q.  You  accept  good  will  as  actual  no  matter  whether  it  is  one 
million  or  a half  million?  A.  Whatever  an  impartial  party  puts 
it  after  looking  into  the  value  of  the  business,  I consider  its  actual 
value. 

Mr.  Lexow:  The  stenographer  will  please  repeat  my  question. 

The  following  question  was  repeated: 

“Isn’t  it  a fact  that  those  who  have  in  the  past  held  these 
industrial  pursuits  in  a few  hands  have  capitalized  them  upon  the 
basis  of  a supposed  good  will  very  largely  in  excess  of  the  origi- 
nal investment,  and  after  such  capitalization  are  willing  to  per- 
mit the  public  to  share  with  them  in  the  enterprise?  Isn't  that 
the  fact?  A.  In  answer  to  another  part  of  that  question;  I have 


Xo.  40.] 


629 


stated  tliat  I believed  there  has  been  a large  and  very  wide  dis- 
tribution of  interests  in  these  industrial  companies;  there  cer- 
tainly has  in  ours. 

Q.  Why  is  it  that  there  has  been  no  general  distribution  of 
these  properties  represented  by  shares  or  otherwise  until  they 
had  been  capitalized  at  enormous  advances?  A.  It  is  practically 
impossible  to  sell  the  stock  in  an  isolated  manufacturing  com- 
pany; there  is  no  general  market  for  it;  furthermore — 

Mr.  Lexow  (interrupting) : Then,  is  it  for  the  purpose  of  distrib- 
uting the  stock  that  these  industrial  enterprises  are  thus  organ- 
ized and  capitalized?  A.  I was  going  on  to  state — 

Mr.  Lexow  (interrupting) : Please  answer  that  question. 

(Question  repeated.) 

A.  The  value  of  these  properties  are  enhanced  by  centralization 
through  more  economical  manufacturing  and  otherwise  as  I have 
explained. 

Q.  If  that  is  the  case,  why  don’t  the  investors  hold  the  stock 
instead  of  distributing  it  after  adding,  as  vou  sav,  to  its  value, 
to  the  general  public?  A.  I infer  that  it  is  for  the  reason  that 
they  do  not  want  to  have  too  many  eggs  in  one  basket. 

Q.  Why  is  it,  Mr.  Flint,  that  it  is  immediately  following  this 
increased  issue  of  nominal  values  that  the  public  is  permitted  to 
share,  in  the  enterprise?  A.  From  the  fact  that  through  consolida- 
tion it  has  increased  value  and  from  the  fact  that  the  parties 
have  been  unable  to  dispose  of  their  interest  heretofore  at  actual 
value;  by  listing  the  securities  the  securities  become  generally 
known  and  can  be  sold  from  hour  to  hour;  that  in  itself  gives  the 
securities  an  additional  value. 

Q.  That  is  to  say,  Mr.  Flint,  that  is  is  a changing  of  legitimate 
industrial  pursuits  into  speculation?  A.  Xo;  parties  may  specu- 
late in  shares,  but — 

Mr.  Lexow  (interrupting) : Isn’t  that  the  object  of  these  concen- 
trations and  consolidations?  A.  I am  not  familiar — - 

Mr.  Lexow  (interrupting):  Xow,  is.it? 

A.  I will  answer  your  question;  I am  not  familiar  with  the  con- 
ditions existing  in  other  industrial  enterprises,  as  I have  no 
interest  in  them. 


630 


[Senate, 


Q.  Then,  explain  how  it  is  that  the  owners  of  the  original  prop- 
erties represented  by  this  consolidation  amounted  to  300  and  in 
less  than  five  years  you  have  built  up  the  stockholding  to  6,000? 
A.  I desire  to  explain  that  in  the  case  of  the  United  States  Rub- 
ber Company  that  the  present  members  of  the  executive  com- 
mittee hold  about  $10,000,000  of  the  stock  of  that  corporation; 
the  rest  of  that  stock  has  been  disposed  of  by  parties  desiring  to 
dispose  of  it. 

Q.  By  those  whose  properties  were  capitulated  in  the  manner 
stated  by  you  in  this  consolidation;  they  received  the  stock  and 
then  disposed  of  it;  now,  is  that  true  or  not?  A.  It  is  not  true 
in  general;  that  is  not  true — 

Mr.  Lexow  (interrupting):  Is  it  the  fact?  A.  The  fact  is 
this;  that  in  one  case  there  has  been  one  party  who  has  made  a 
very  large  sale  of  the  stock,  Mr.  Banigan  made  a large  sale  of 
the  stock  which  he  had;  but  the  men  who  are  now  managing 
the  United  States  Rubber  Company  and  composing  the  executive 
committee  have  not  reduced  their  holdings;  the  members  of  the 
executive  committee  have  not  speculated  in  the  stock;  I can  state 
from  knowledge  that  there  has  been  no  speculation  on  the  part 
of  the  members  of  the  executive  committee,  six  in  number;  I also 
state  that  the  members  of  that  committee  hold  about  as  much 
stock  as  they  ever  have  held. 

Q.  I didn’t  put  that  question;  I don’t  want  to  inquire  into  per- 
sonal affairs?  A.  I stated  from  the  fact  that  this  is  one  of  the 
industrials  that  I know  of  and  I am  not  familiar  with  general 
conditions. 

Q.  The  fact  is  then,  that  of  the  $39,650,000  of  the  capital 
stock  issued  originally  the  insiders  still  hold  $10,000,000  and 
those  who  were  originally  on  the  inside  have  disposed  of  $29,- 
650,000  of  the  stock?  A.  I have  stated  that  all  the  original 
large  holders,  the  men  who  originally  held  the  stock  in  these 
companies,  now,  substantially  hold  all  the  stock  they  originally 
held. 

Q.  You  refer  to  the  executive  committee?  A.  One  other  party 
who  has  a very  large  holding;  but  those  holdings  have  not  been 


so.  40.] 


631 


lisposed  of;  and  the  best  evidence  of  their  belief  in  the  home 
companies  is  the  present  large  holdings  of  the  men  who  are  run- 
ning this  business. 

Q.  Isn’t  it  a fact  that  immediately  after  the  organization  of 
this  consolidation  effort  was  made  to  distribute  this  stock  among 
the  public,  excluding  from  the  question  yourself  and  the  other 
members  of  the  executive  committee  that  you  have  mentioned 
as  retaining  their  stock?  A.  There  was  a certain  amount  of 
stock  offered  for  the  purpose  of  securing  additional  working  capi- 
tal; but  no  concerted  effort  was  made  for  distribution  by  the 
greater  number  of  large  holders,  as  evidenced  by  the  fact  that 
only  one  large  holder  has  disposed  of  his  holdings. 

Q.  And  that  is  the  general  purpose  of  these  consolidations, 
industrial  consolidations,  is  it  not,  under  the  pretence  of  sup- 
posed economies  flowing  from  the  concentration  and  consolida- 
tion, to  secure  a public  interest  in  your  enterprise  by  an  invest- 
ing public?  A.  I can  only  answer  for  the  United  States  Rubber 
Company. 

Q.  I am  asking  that;  the  stenographer  will  please  repeat  the 
question;  (question  repeated)?  A.  No. 

Q.  You  say  “no?”  A.  I say  “under  the  pretence.” 

Q.  Under  guise,  then?  A.  I cannot  accept  the  word  guise; 
the  trouble — 

Mr.  Lexow  (interrupting):  Under  the  color?  A.  I cannot 
accept  that. 

Q.  Well,  upon  the  strength  of,  will  that  satisfy  you;  I do  not 
want  to  put  a discreditable  sense  to  the  word;  the  stenographer 
will  repeat  the  question  as  amended;  (question  repeated  as 
amended). 

“ Q.  And  that  is  the  general  purpose  of  these  consolidations, 
industrial  consolidations,  is  it  not,  under  the  strength  of  sup- 
posed economies  flowing  from  the  concentration  and  consolida- 
tion, to  secure  a public  interest  in  your  enterprises  by  an  invest- 
ing public?  ” A.  The  word  “ supposed  ” “ economies  ” puts  your 
question  in  a position  so  that  I cannot  answer  categorically. 


632  [Senate, 

Q.  In  place  of  “supposed”  put  “assume.”  A.  Assumed  is  not 
strong  enough;  they  are  actual  economies. 

Q.  On  the  strength  of  the  proposed  economies;  put  the  word 
“proposed;”  (the  question  was  repeated  in  the  following  lan- 
guage). 

“Q.  And  that  is  the  general  purpose  of  these  consolidations,  in- 
dustrial consolidations,  is  it  not,  upon  the  strength  of  proposed 
economies  flowing  from  the  concentration  and  consolidation,  to 
secure  a public  interest  in  your  enterprises  by  an  investing- 
public.” 

Mr.  Lexow:  I don’t  want  to  admit  in  my  questions  that  there 
are  actual  economies  until  the  consumer  recognizes  the  exist- 
ence of  such  economies  as  a fact.  The  stockholders  may  see  it, 
but  there  are  two  parties  to  get  the  benefit.  The  wmrd  “pro- 
posed” will  suit  your  purpose  probably  just  as  well.  The  ste- 
nographer will  repeat  the  question  as  amended. 

(Question  repeated). 

A.  I could  not  subscribe  to  the  idea  that  it  is  a general  pur- 
pose; it  is  undoubtedly  one  of  the  purposes  to  give  the  stock 
a market  value;  and  on  the  part  of  some  parties  desiring  to  dis- 
tribute their  interest  it  is  an  element  that  they  consider  the  op- 
portunity in  case  of  death,  or  for  other  reasons  that  their  stock 
could  be  disposed  of;  if  you  could  put  one  of  the — 

Mr.  Lexow  (interrupting):  Is  that  last  statement  of  yours 
true?  A.  Making  the  stock  more  realizable. 

Q.  Give  us  a case  in  existence  as  a corporation  before  con- 
solidation? A.  It  being  isolated. 

Q.  Therefore,  in  the  making  of  these  consolidations  there  en- 
ters as  an  element  of  substantial  strength  a desire  to  sell  the 
securities  of  the  corporation  to  the  general  public?  A.  There 
enters  a desire  to  put  their  property  into  marketable,  realizable 
value,  realizable  form;  to-day  an  isolated  property,  if  it  had  to 
be  consolidated  suddenly,  might  not  bring  60  per  cent,  of  its 
value.  If  that  same  property  be  represented  by  a listed  security 
which  is  generally7  known,  perhaps  its  full  value  or  very  nearly 
its  full  value  could  be  obtained. 


Ko.  40.] 


633 


Q.  Then  to  the  industrial  feature  of  the  enterprise  is  added 
as  one  of  the  important  elements  the  ability  to  sell  and  dispose 
of  certificates  of  stock  representing  the  properties  in  the  mar- 
ket? A.  That  is  undoubtedly  an  element. 

Q.  Of  substantial  value?  A.  Of  substantial  value. 

Q.  A purpose?  A.  A purpose. 

Q.  And  that  purpose  enters  into  the  volume  of  stock  issued? 
A.  The  stock — 

Mr.  Lexow  (interrupting):  You  understand  the  question?  A. 
I will  answer  it;  the  stock  should  represent  the  actual  value  of 
the  property;  and  I infer  that  the  Simmons  committee  in  recom- 
mending this  issue  took  into  consideration  the  actual  values  of 
the  property  at  the  time. 

Q.  And  in  doing  so  figured  the  good  will  of  the  consolidated 
companies  at  $20,000,000?  A.  I was  not  a member  of  the  com- 
mittee. 

Q.  Is  that  the  fact?  A.  I don’t  know. 

Q.  When  you  went  into  that  company  didn’t  you  understand 
that  the  common  stock  of  that  company  had  been  issued  for 
what  is  generally  known  as  good  will,  wdiick  common  stock  rep- 
resents about  $20,000,000?  A.  I understand,  Mr.  Chairman,  that 
a very  large  element  of  value  wras — and  I knew  it  to  be  a fact, 
what  is  generally  called  “good  will;”  the  trade  marks,  organiza- 
tions, etc. 

Mr.  Lexow:  The  stenographer  will  please  repeat  the  ques- 
tion. 

(Question  repeated). 

A.  I know  that  the  common  stock  was  issued  to  a very  large 
extent  for  the  “good  will;”  I mean  stock;  I didn’t  say  common 
stock;  the  Simmons  committee  recommended  an  issue  for  all 
those  properties,  a round  amount;  I would  say  unhesitatingly, 
although  not  a member  of  the  committee,  that  they  must  have 
considered  the  good  will;  as  it  really  is  a very  large  element  of 
value. 

Q.  I will  put  that  question  in  another  way:  Lumping  the 
transaction,  isn’t  it  a fact  that  for  every  share  of  the  preferred 


there  was  issued  as  a bonus  representing  “good  will”  one  share 
of  the  common  stock  or  general  stock?  A.  As  you  will  see  by 
examining  the  Simmons  report,  there  was  a round  amount  of  the 
stock  for  all  the  properties;  and  that  represented,  Mr.  Chair- 
man,— that  report  contains  substantially  the  facts  in  regard  to 
the  issue. 

Q.  Cannot  you  answer  the  question  any  clearer  than  that? 
Is  it  possible  that  you,  as  treasurer  of  this  company,  don't  know 
to-day  the  principle  upon  which  its  stock  was  issued?  A.  I have 
stated  the  principle. 

Q.  And  don’t  you  know  anything  further  than  that  with  ref- 
erence to  the  principles  underlying  the  issue  of  the  stock?  A.  I 
have  already  handed  in  the  report  covering  the  full  transactions. 

Q.  Do  you  mean  to  say  what  is  contained  in  this  report  is  all 
that  you  know  about  the  transaction?  A.  I have  knowledge  of 
the  details;  but  as  to  the  plan  of  organization  we  had  the  very 
best  counsel  to  advise  us;  we  had  several  thoroughly  well  in- 
formed men  and  they  made  that  report. 

Mr.  Lexow:  We  have  had  that  a number  of  times?  A.  That 
report,  Mr.  Chairman,  covers  the  whole  position,  that  a round 
amount,  $20,000,000  was  issued  for  the  specific  properties,  includ- 
ing “good  will.” 

Q.  $26,000,000?  A.  In  round  figures  over  $20,000,000. 

Q.  Do  you  know  how  much  of  that  represented  good  will?  A. 
I don’t  know;  I haven’t  an  accurate  knowledge. 

Q.  Do  you  know  from  any  of  the  transactions  made  substan- 
tially what  the  policy  was,  the  policy  of  the  company  in  the  is- 
suance of  the  stock  in  purchase  of  “good  will”?  A.  There  could 
not  have  been  any  policy. 

Q.  You  bought  the  Woonsocket  property,  didn’t  you?  A.  Yes; 
the  United  States  Rubber  Company. 

Q.  What  was  the  capital  stock  of  that  company?  A.  I gave 
that  to  you  yesterday;  but  for  the  purpose  of  this  question  it  was 
less,  very  much  less  than  the  amount  issued  for  it. 

Q.  Do  you  liyiow  how  much  it  was  that  was  issued  to  the  Woon- 
socket Company  for  its  assumed  “good  will”?  A.  I will  fur- 
nish— i 


No.  40.] 


635 


Q.  Do  you  know?  A.  I don’t  know;  but  I can  furnish  a copy 
of  the  figures;  a statement  of  them. 

Q.  Have  you  them?  A.  I haven’t  them  with  me. 

Q.  Will  you  bring  them  with  you  after  the  recess?  A.  I will 
endeavor  to  do  so. 

Q.  Could  you  let  me  have  them  this  afternoon?  (No  answer.) 

By  Mr.  Mazet: 

Q.  Isn’t  it  a fact  that  to  every  subscriber  or  stockholder  to 
whom  preferred  stock  was  issued  an  equal  amount  of  common 
stock  was  issued?  A.  It  is  not  the  fact. 

Q.  Was  the  proportion  of  the  preferred  and  common  stock 
equal  to  the  capitalization  of  each?  A.  No;  in  round  figures  the 
present  capital  is  $40,000,000,  common;  there  is  less  of  one  kind 
than  that  of  the  other;  there  is  a difference  of  perhaps  half  a mil- 
lion dollars. 

By  Mr.  Lexow: 

Q.  Stockholders  wdio  hold  the  stock;  are  they  divided  or  do  the 
holders  of  the  preferred  shares  hold  common  as  well?  A.  In 
some  instances. 

Q.  What  is  the  difference?  A.  I don’t  know;  I haven’t  any 
accurate  figures— three  thousand  preferred  stockholders  in  round 
numbers  and  three  thousand  common;  in  some  cases  parties  hold 
both  preferred  and  common  stock. 

By  Mr.  Mazet: 

Q.  When  the  stock  was  originally  issued  the  original  issue  was 
both  common  and  preferred  stock  to  all  of  them;  a proportion  of 
preferred  and  a proportion  of  common  stock?  A.  There  was  a 
round  amount,  as  you  will  see  by  the  report;  they  recommended 
buying  this  large  number  of  properties  enumerated  for  a certain 
number  of  shares  of  preferred  stock  and  a certain  number  of 
shares  of  common  stock;  it  was  not  in  equal  amounts;  it  was  a 
general  recommendation  that  the  properties  should  be  taken  for 
a certain  number  of  shares  of  preferred  and  a certain  number  of 
shares  of  common. 


630 


[Senate, 


By  Mr.  Lexow: 

Q.  You  stated,  didn’t  you,  that  attached  to  this  report  of  the 
“appraisal  committee”  were  schedules  showing  these  matters 
covering  about  three  thousand  pages?  A.  I stated  that  any  de- 
tails on  which  that  report  was  based  would  cover  say  three  thou- 
sand pages  in  the  way  of  experts’  reports  on  machinery  and  on 
trade  marks,  etc.;  they  were  perhaps  detailed;  there  may  have 
been  perhaps  ten  persons  employed  in  making  up  this  data  on 
which  the  Simmons  recommendations  were  based;  all  that  data 
has  never  been  in  the  possession  of  the  United  States  Rubber 
Company. 

By  Mr.  Mazet: 

Q.  Isn’t  it  a fact  that  the  amount  of  preferred  stock  that  was 
issued  in  payment  of  the  price  of  these  several  properties  repre- 
sented the  actual  value  and  cost  of  them,  and  that  the  common 
stock  was  issued  as  a bonus  in  addition  thereto?  A.  The  Sim- 
mons committee  report  gives  all  that;  I was  not  a member  of 
the  committee. 

Q.  Have  you  no  knowledge  on  the  subject?  A.  I was  not  a 
director  of  the  company. 

Q.  Have  you  no  knowledge  on  the  subject?  A.  I haven’t  suffi- 
cient to  give  an  answer. 

By  Mr.  Lexow: 

Q.  What  is  your  full  name?  A.  Charles  Ranlett  Flint. 

Q.  Why  didn’t  you  produce  the  schedules  in  connection  with  the 
report  of  the  committee?  A.  I was  not  able  to  obtain  them;  I 
didn't  have  them  and  have  not  been  able  to  obtain  them;  I fur- 
nished the  report  which  is  in  the  archives  of  the  United  States 
Rubber  Company;  but  the  other  data,  as  I have  explained,  is  not 
in  the  possession  Of  the  United  States  Rubber  Company;  if  the 
committee  desires  to  have  detailed  information  I will  endeavor  to 
secure  it. 

Q.  Do  you  mean  to  say  that  the  schedules  are  not  in  the  posses- 
sion of  the  United  States  Rubber  Company?  A.  Not  that  I know 


No.  40.] 


637 


of;  I don't  remember  of  their  being;  I know  that  the  data  on 
which  that  report  was  made  up  is  not  in  the  possession  of  the 
United  States  Rubber  Company;  but  in  case  of  data  being  desired 
I shall  be  glad  to  obtain  it. 

By  Mr.  Mazet: 

Q.  You  are  able  to  obtain  it?  A.  I don’t  know,  but  I shall  cer- 
tainly endeavor. 

By  Mr.  Warner: 

Q.  You  have  a key  to  the  safe  deposit  bos?  A.  That  is  only  ac- 
cessible and  can  only  be  entered  by  two  officers  at  a time;  no  one 
person  has  access  to  the  deposit  bos  in  New  Brunswick;  there 
must  be  two  officers;  I think  that  is  a provision  of  the  by-laws. 

By  Mr.  Mazet : ( 

Q.  How  was  this  copy  of  the  report  obtained?  A.  That  was 
not  in  the  deposit;  I sent  for  it;  I don’t  know  how  it  was  obtained; 
it  was  just  handed  to  me  by  Mr.  Davies. 

Q.  Was  it  in  the  original  deposit — was  it  originally  deposited? 
A.  The  original  is  in  the  archives  of  the  company. 

Q.  Is  in  this  deposit  vault?  A.  I don't  know;  I don’t  have 
have  charge  of  such  documents;  the  documents  of  that  kind  are 
in  charge  of  the  secretary,  Samuel  P.  Colt. 

Q.  Do  you  know  whether  this  copy  was  made  from  the  origi- 
nal? A.  There  is  every  reason  why  I should  so  state;  I am  will- 
ing to  testify  that  that  is  a correct  copy  of  the  report,  a full  copy. 

By  Mr.  Warner : 

Q.  Who  is  the  other  person  besides  yourself  that  has  a key  to 
the  box?  A.  Robert  D.  Evans,  the  president;  there  is  a vice-presi- 
dent, Mr.  James  B.  Ford;  there  is  one  other  officer  I forget  now. 

Q.  These  gentlemen  live  here  in  New  York?  A.  (No  answer.) 

By  Mr.  Lexow: 

Q.  Do  you  mean  Mr.  Ford?  A.  I infer  he  has  a key  to  the  box; 
I have  never  been  there  and  have  never  seen  the  box;  I don’t 


■638’  [Senate, 

know  where  the  key  is;  that  has  always  been  attended  to  by  the 
assistant  treasurer. 

Mr.  Lexow:  We  will  stand  adjourned  until  quarter  after 
two  o’clock  when  we  will  take  up  the  National  Wall  Paper  Com- 
pany; Mr.  Flint  will  be  here  to-morrow  morning;  also,  all  the  wit- 
nesses in  connection  with  the  United  States  Rubber  Company 
will  be  here  to-morrow  morning  at  ten  o’clock. 

The  following  are  copies  of  the  exhibits  referred  to  in  the  above 
testimony  of  Mr.  Flint. 

To  the  Board  of  Directors  of  the  United  States  Rubber  Com- 
pany: 

Your  committee  appointed  to  enter  into  negotiations  with 
Messrs.  H.  B.  Hollins  & Co.,  and  to  conduct  and  complete  the 
same,  as  set  forth  in  the  resolution  of  your  board  appointing 
such  committee  passed  July  14th,  1892,  respectfully  report  as 
follows: 

After  negotiations  with  Messrs.  Hollins  & Co.  pursuant  to  our 
instructions,  we  received  from  them  and  now  submit  to  your 
board  the  following  proposition: 

To  Messrs.  J.  Edward  Simmons,  M.  C.  Martin  and  John  I.  Water- 

burv,  a Committee  of  the  Board  of  Directors  of  the  United 

States  Rubber  Company: 

FIRST. 

1.  We  will  transfer  and  deliver  to  your  company  shares  of  the 
capital  stock  of  certain  other  rubber  manufacturing  corpora- 
tions, as  follows: 

Six  thousand,  two  hundred  and  ninety-two  shares  of  the  stock 
of  the  American  Rubber  Company,  a Massachusetts  corporation, 
whose  capital  stock  consists  of  10,000  shares  of  the  par  value  of 
$100  each. 

Twenty-two  thousand,  nine  hundred  and  ninety-seven  shares 
of  stock  of  the  L.  Candee  & Company,  a Connecticut  corpora- 
tion, whose  capital  stock  consists  of  24,000  shares  of  the  par 
value  of  $25  each. 


No.  40.] 


639 


Forty  thousand  shares  of  the  stock  of  the  Goodyear’s  Metallic 
Rubber  Shoe  Company,  a Connecticut  corporation,  whose  total 
capital  stock  consists  of  40,000  shares  of  the  par  value  of  $25 
each. 

One  thousand  and  one  shares  of  the  stock  of  the  Meyer  Rub- 
ber Company,  a New  Jersey  corporation,  whose  capital  stock 
consists  of  2,000  shares  of  the  par  value  of  $100  each. 

Two  thousand,  nine  hundred,  sixty-seven  and  one-half  shares 
of  the  stock  of  the  Lycoming  Rubber  Company,  a Pennsylvania 
corporation,  whose  total  capital  stock  consists  of  4,000  shares 
of  the  par  value  of  $100  each. 

Three  thousand  shares  of  the  stock  of  the  Boston  Rubber  Com- 
pany, a Massachusetts  corporation,  whose  total  capital  stock  con- 
sists of  3,000  shares  of  the  par  value  of  $100  each. 

Two  thousand,  seven  hundred  and  forty-five  shares  of  the  stock 
of  the  New  Brunswick  Rubber  Company,  a New  Jersey  corpora- 
tion, whose  total  capital  stock  consists  of  3,000  shares  of  the  par 
value  of  $100  each. 

Seven  thousand,  two  hundred  and  forty-five  shares  of  the  stock 
of  the  National  India  Rubber  Company,  a Rhode  Island  corpora- 
tion, whose  total  capital  stock  consists  of  7,500  shares,  of  which 
5,000  are  preferred  shares  and  2,500  common. 

One  thousand,  two  hundred  and  fifty-one  shares  of  the  Brook- 
haven  Rubber  Company,  a West  Virginia  corporation,  -whose  to- 
tal capital  stock  consists  of  2,500  shares  of  the  par  value  of  $100 
each.  Also 

One  thousand,  five  hundred  and  ten  shares  of  the  Rubber  Man- 
ufacturers’ Selling  Company,  a Connecticut  corporation,  v-hose 
total  capital  stock  consists  of  3,000  shares  of  the  par  value  of 
$100  each. 

2.  We  will  also  produce  the  conveyance,  transfer  and  delivery 
to  your  company  of  the  entire  factory,  tenements  and  all  other 
buildings  and  all  lands  and  real  estate  on  -which  the  same  are 
erected,  situate  in  the  village  of  South  Framingham,  in  the  town 
of  Framingham,  county  of  Middlesex,  commonwealth  of  Massa- 
chusetts, now  or  formerly  constituting  or  owned  and  used  as  part 


640 


[Sex  ate, 


of,  or  in  connection  with  the  plant  of  the  Para  Rubber  Shoe  Com- 
pany, a Massachusetts  corporation,  together  with  all  tools,  lasts, 
machinery  and  fixtures  forming  part  of  or  used  in  connection  with 
said  plant,  and  also  the  good  will  of  the  business  of  said  Para 
Shoe  Company. 

3.  We  will  also  procure  the  proper  assignment  and  delivery 
to  your  company  of  two  certain  mortgages  now  liens  upon  the 
plant  and  property  of  the  Colchester  Rubber  Company,  a Con- 
necticut corporation,  doing  business  at  Colchester,  Conn.,  both 
dated  August  21st,  1891,  securing  the  payment  of  $100,000  and 
$50,000  respectively,  with  interest  on  said  principal  sums  at  6 
per  cent,  per  annum,  and  both  recorded  in  the  office  of  the  town 
clerk  of  Colchester,  Conn.,  in  Colchester  Land  Records,  Volume 
34,  pages  363  and  364  and  pages  363  and  366  respectively,  on  the 
14th  day  of  September,  1891. 

4.  We  will  subscribe  for  and  take  forthwith,  at  par,  and  pay  for 
in  cash,  preferred  stock  of  your  company  to  the  amount  of  one 
million  dollars. 

5.  In  order  to  the  more  complete  establishment  in  your  com- 
pany of  the  good  will  and  full  value  of  the  business  of  the  sev- 
eral manufacturing  concerns,  interests  in  which  we  have  offered 
as  above  to  sell  and  transfer  to  your  company,  we  will  procure 
from  each  of  the  following  named  persons  the  execution  of  his 
agreement  in  writing  with  your  company,  that  he  will  not  at 
any  time  after  executing  such  agreement  during  such  period  as 
may  be  agreed,  either  directly  or  indirectly,  engage  or  be  in 
any  manner  whatsoever  interested  in  the  manufacture  or  sals 
of  rubber  goods  in  any  one  or  more  of  the  States  composing  the 
United  States  of  America,  except  in  the  States  of  Nevada,  Idaho 
and  Montana,  unless  your  company  consents  thereto  in  writing. 


Name.  Office. 

Henry  L.  Hotchkiss President  L.  Candee  & Co. 

Charles  L.  Johnson .Treasurer  L.  Candee  & Co. 

Samuel  N.  Williams Treasurer  Lycoming  Rubber  Co. 

M.  C.  Martin President  New  Jersey  Rubber  Shoe  Co. 

Samuel  P.  Colt President  National  India  Rubber  Co. 


Jo.  40.]  641 

jeorge  A.  Lewis.  .President  Goodyear  Metallic  Rubber  Shoe  Co. 

lames  P.  Langdon President  New  Brunswick  Rubber  Co. 

tames  Deshler Secretary  New  Jersey  Rubber  Shoe  Co. 

Jeorge  H.  Hood President  of  the  Boston  Rubber  Co. 


We  submit  herewith  a form  of  contract  with  your  company, 
the  execution  of  which  we  are  willing  to  undertake  to  procure  as 
above  stated  by  each  of  the  above  named  persons. 

6.  We  will  also  devote  our  best  efforts  hereafter  if  and  when 
thereunto  requested  by  your  company  from  time  to  time,  towards 
the  purchase  or  other  acquisition  by  or  for  the  benefit  of  your 
company,  of  the  manufacturing  plants  or  of  interests  therein, 
of  rubber  manufacturing  corporations  doing  business  within  the 
United  States  or  Canada,  other  than  the  corporations  above 
named,  and  also  towards  the  acquisition  of  additional  interests 
in  those  corporations  which  are  above  named;  your  company  to 
be  the  sole  beneficiary  of  each  such  purchase  or  acquisition  and 
to  become  and  remain  the  sole  owner  of  any  plant  or  interest 
so  hereafter  acquired  by  us,  and  no  profit  or  compensation  aris- 
ing out  of  any  future  purchase  or  acquisition  to  be  derived  or 
detained  by  us,  other  than  the  general  compensation  reserved  to 
us  as  herein  below  mentioned. 

SECOND. 

In  consideration  of  the  foregoing,  we  are  to  receive  in  payment, 
and  your  company  is  to  transfer  and  deliver  to  us: 

A.  Four  hundred  and  twenty-eight  thousand  and  sixty-four 
dollars  and  thirty-four  cents  in  cash  payable  the  10th  day  of  Sep- 
tember, 1892. 

B.  Ten  million  fourteen  thousand  six  hundred  dollars  par 
value  in  the  preferred  stock  of  your  company;  this  amount,  in- 
cluding the  $1,000,000  in  such  stock  to  be  subscribed  for  by  us 
as  above. 

C.  Ten  million,  six  hundred  and  sixty-nine  thousand  seven  hun- 
dred dollars  par  value  in  the  general  stock  of  your  company. 

41 


642  .[Senate  i 

D.  Cash  to  the  amount  of  5 per  cent,  of  the  par  value  of  sc 
much  of  the  capital  stock  of  your  company,  general  and  pre- 
ferred, as  may  be  issued  at  any  time,  or  from  time  to  time,  after 
issue  is  made  by  your  company,  pursuant  to  the  terms  of  this 
proposition;  it  being  understood  and  agreed,  however,  that  as 
each  such  cash  payment  shall  become  due  and  be  received  by 
us,  we  will,  in  case  your  company  so  elects,  subscribe  and  pay  for 
at  par  shares  of  the  general  capital  stock  of  your  company  to  the 
amount  of  such  payment. 

E.  Pursuant  to  Subdivision  6 of  our  foregoing  offer,  your  com- 
pany will  contract  with  us  in  substantially  the  form  following: 

Memorandum  of  agreement  made  this day  of 

1892,  between  the  United  States  Rubber  Company,  a New  Jersey 
corporation,  hereafter  called  the  “ company,”  party  of  the  first 
part,  and  H.  B.  Hollins  & Company,  a co-partnership,  of  the  city 
and  State  of  New  York,  hereafter  called  the  “ Bankers  ” party  of 
the  second  part,  witnesseth: 

Whereas:  The  bankers  have  performed  valuable  services  for 
the  company  as  set  forth  in  their  proposition,  dated  1892,  made 
to  and  accepted  by  the  company;  and 

Whereas:  The  Company  is  desirous  to  avail  itself  of  the  ser- 
vices of  the  bankers  hereafter,  and  also  to  make  compensation 
to  them  for  their  services,  past  and  future;  and 

Whereas:  The  bankers  are  willing  to  perform  services  for  the 
company  hereafter,  and  when  requested  by  it,  as  hereinafter 
mentioned. 

Now,  therefore,  in  consideration  of  the  premises  and  of  the 
agreement  herein  contained,  and  of  the  sum  of  one  dollar,  law- 
ful money  of  the  United  States  of  America  by  each  of  the  parties 
hereto,  to  the  other  in  hand  paid,  I’eceipt  'whereof  is  by  each 
hereby  acknowledged,  it  is  agreed  as  follows: 

First.  The  bankers  shall  and  will  hereafter  as  and  when  there- 
unto requested  by  the  company,  devote  their  best  efforts  to  the 
purchase  or  other  acquisition  by  or  for  the  benefit  of  the  com- 
pany of  rubber  manufacturing  plants  and  properties,  or  interests 


No.  40.] 


643 


therein  situated  in  the  United  States  or  Canada,  the  company  to 
be  the  sole  beneficiary  of  each  purchase  or  acquisition,  and  to 
become  and  remain  the  sole  owner  of  any  plant  or  interest  so 
acquired,  and  no  profit  or  compensation  arising  out  of  any  such 
purchase  or  acquisition  by  or  through  the  bankers,  shall  be  de- 
rived or  retained  by  them  except  as  hereinafter  mentioned. 

Second.  The  company  agrees  to  and  will  from  time  to  time 
hereafter  make  payment  to  the  bankers,  as  compensation  for 
their  services  heretofore  performed,  and  as  well  for  those  which 
may  be  performed  hereunder,  of  cash  to  the  amount  of  5 per 
cent,  of  the  par  value  of  all  shares,  preferred  and  general,  of  the 
capital  stock  of  the  company,  which  may  at  any  time  hereafter, 
be  issued,  in  excess  of  the  present  outstanding  amount  of  the 
capital  stock  of  the  company,  to  wit:  $11,219,600  in  preferred 
and  $11,874,700  in  general  shares,  whether  such  additional  issues 
be  made  for  cash  in  payment  for  additional  properties  or  inter- 
ests, acquired  through  the  bankers,  or  otherwise. 

Third.  The  bankers  agree  that  as  each  cash  payment  shall 
become  due  to,  and  be  received  by  them,  as  above  mentioned, 
they  will,  in  case  the  company  so  elects,  subscribe  and  pay  for 
at  par,  shares  of  the  general  capital  stock  of  the  company,  to  the 
amount  of  such  payment. 

Witness,  the  corporate  name  of  the  company  hereunto  sub- 
scribed by  its  president  and  its  corporate  seal  hereunto  affixed 
and  attested  by  its  secretary,  and  the  co-partnership  name  of  the 
bankers  hereunto  subscribed  by one  of  the  mem- 

I 

bers  of  the  said  co-partnership,  on  the  day  and  year  first  above 
written. 

Very  respectfully, 

(Signed.)  H.  B.  HOLLINS  & CO. 


Sealed  and  delivered  in 
the  presence  of 


644 


[Senate, 


The  various  matters  treated  of  in  the  foregoing  proposition 
were  fully  considered  and  discussed  by  your  committee  among 
themselves  and  with  Messrs.  H.  B.  Hollins  & Company  before  the 
proposition  assumed  its  final  form. 

In  considering  these  matters,  your  committee  availed  them- 
selves of  the  special  knowledge  of  experts  familiar  with  the  plant 
and  business  of  each  of  the  various  concerns,  interests  in  which 
are  now  offered  for  sale  to  this  company  by  H.  B.  Hollins  & Co. 

We  have  also  examined  certain  reports  made  by  Messrs. 
Charles  S.  Smith  Henry  W.  Cannon  and  Charles  H.  Dalton,  who, 
with  the  assistance  of  experts,  have  fully  and  carefully  appraised 
for  Messrs.  H.  B.  Hollins  & Co.,  the  plants  of  each  of  the  corpora- 
tions whose  shares  of  stock  are  now  offered  by  Hollins  & Com- 
pany to  this  company.  Each  of  these  plants  was  personally  in- 
spected by  the  appraisers  above  named,  as  well  as  by  the  experts 
who  assisted  them.  We  have  had  the  benefit  of  personal  consul- 
tation with  these  appraisers  and  experts.  One  of  the  latter,  Mr. 
E.  F.  Bickford,  has  been  for  upwards  of  twenty  years  practically 
in  charge  of  the  factories  of  the  Boston  Rubber  Shoe  Company. 
Another,  Mr.  Charles  Whittier,  is  the  president  of  the  Whittier 
Machine  Company,  one  of  the  leading  manufacturers  of  boilers 
and  of  rubber  and  other  machinery.  The  third,  Mr.  George  Bar- 
rus,  is  a mechanical  engineer  of  standing  and  experience.  These 
gentlemen,  as  well  as  the  appraisers,  expressed  to  us  their  con- 
viction that  the  actual  consolidated  value  of  the  interests  now 
offered  to  you  company  by  Messrs.  H.  B.  Hollins  & Company  tak- 
ing into  consideration  the  advantages  which  will  naturally  flow 
from  the  acquisition  by  one  company  of  the  several  interests  now 
offered,  which  may  hereafter  be  ’operated  harmoniously  in  com- 
bination, having  the  benefit  of  secret  processes  in  use  by  the  sev- 
eral concerns  together  with  the  benefit  of  their  good  will  is  more 
than  twice  their  value  as  based  upon  the  aggregate  value  of  the 
several  plants,  with  machinery,  tools,  fixtures,  as  appraised  for 
Messrs.  H.  B.  Hollins  & Co.,  plus  the  present  amount  of  other  as- 
sets of  each  concern  over  liabilities  as  ascertained  for  Messrs.  H‘. 
B.  Hollins  & Company  by  expert  accountants  and  guaranteed. 


No.  40.] 


045 


Your  committee  found  that  the  price  fixed  by  Messrs.  H.  B.  Hol- 
lins & Company  upon  the  interests  now  offered  by  them  to  you  is 
within  the  estimated  value  of  these  interests  as  so  expressed  to 
us  as  above.  It  was  deemed  best,  however,  to  supplement  these 
opinions  by  those  of  competent  and  disinterested  persons,  having 
no  connection  with  this  company,  or  with  Messrs.  H.  B.  Hollins  & 
Company,  or  with  any  one  or  more  of  the  manufacturing  compan- 
ies. interests  in  which  are  the  subject  of  the  offer  now  under  con- 
sideration. 

Your  committee  therefore  submitted  the  necessary  facts  and 
figures  to  Mr.  John  H.  Cheever,  president  of  the  New  York  Belt- 
ing and  Packing  Company,  the  largest  manufacturer  in  this  coun- 
try of  mechanical  rubber  goods,  Mr.  E.  Thomas  Sawyer,  president 
of  the  Easthampton  Rubber  .Thread  Company,  and  Henry  C. 
Morse,  treasurer  of  the  Rever  Rubber  Company,  of  Boston.  These 
gentlemen  have  been  engaged  in  the  manufacture  of  rubber 
goods,  other  than  boots  and  shoes,  for  many  years,  and  are  busi- 
ness men  of  high  standing  and  great  experience. 

Your  committee’s  examination  has  shown  that  this  business 
has  been  built  up  under  most  difficult  conditions  involving  the 
outlay  of  large  capital  for  its  establishment  and  continuance,  as 
well  as  great  experience  and  special  knowledge  of  manufacture, 
and  that  as  now  successfully  established  it  is  protected  wholly 
by  trade  marks  and  partly  by  patents;  and  further,  that  there  is 
scarcely  one  of  the  several  concerns  which  has  not  as  against  the 
others,  one  or  more  important  trade  secrets  now  to  be  disclosed 
for  the  common  benefit. 

The  advantages  to  be  derived  from  such  a communication 
alone,  will,  in  our  opinion,  result  in  the  saving  of  very  large 
amounts  annually,  while  furnishing  as  cheap  if  not  a cheaper 
product  to  the  consumer. 

Our  examination  further  shows  that  there  is,  in  this  field  of 
manufacture  less  opportunity  than  in  almost  any  other  for  the 
operations  of  new  concerns,  whether  organized  or  equipped  to 
manufacture  in  good  faith,  or  for  a guerilla  warfare  upon  vested 
interests,  with  the  design  of  coercing  the  established  industry 


646 


[Senate, 


into  purchasing  them,  not  on  the  basis  of  what  they  are  worth, 
but  upon  an  estimate  of  the  injury  they  may  be  able  to  do. 

It  is  the  opinion  of  your  committee  that  the  proposition  of 
Messrs.  H.  B.  Hollins  & Company  is  one,  acceptance  of  which  by 
this  company,  will  enure  to  its  great  advantage  and  your  com- 
mittee, therefore  recommends  the  acceptance  of  the  proposition 
as  made. 

Sept.  6,  1892.  Respectfully  submitted, 

j J.  EDWARD  SIMMONS, 

M.  C.  MARTIN, 

; JOHN  I.  WATERBURY. 

MEMORANDUM  OF  AGREEMENT. 

Between  the  United  States  Rubber  Company,  selling  agent, 

hereinafter  called  The  Company,  and of 

hereinafter  called  The  Purchaser,  whereby 

rubber  boots  and  shoes  (except  tennis,  which  are  not  included  in 
this  agreement)  sold  by  The  Company  are  purchased  by  the  said 

subject  to  the  following  terms,  discounts 

and  conditions: 

Gross  Price  List  Season  1896-1897,  Ending  March  31,  1897. 
First  Discounts.  First  Quality  Brands : American,  Boston-Bell, 
Candee,  Lycoming,  Meyer,  New  Brunswick,  United  States  Rubber 
Company,  Wales-Goodyear  and  Woonsocket,  at  15  and  8 per  cent, 
•discount  from  above  stipulated  gross  price  list. 

Second  Quality  Brands:  Para,  Neptune,  Federal,  Keystone, 
Essex,  Jersey,  Connecticut  and  Rhode  Island,  15,  12  and  8 per 
cent,  discount  from  above  stipulated  gross  price  list. 

Third  Quality  Brand:  Columbia,  15,  12,  12  and  8 per  cent,  dis- 
count from  above  stipulated  gross  price  list. 

Cash  discount  of  8 per  cent,  per  annum  to  be  allowed  for  pre- 
payment. Interest,  6 per  cent,  per  annum,  will  be  charged  on 
overdue  accounts.  It  being  understood  that  the  agreement  by 


No.  40.] 


647 


the  company  to  deliver  under  this  contract  is  limited  to  the  fol- 
lowing brands:. 

First  Quality 


Second  Quality 


Third  Quality 


Second — Terms. — Deliveries  of  all  goods  made  hereunder  to 
November  1 will  be  payable  December  15,  1896;  deliveries  in  No- 
vember payable  January  15,  1897 ; deliveries  in  December  payable 
February  15,  1897 ; deliveries  in  January  payable  March  15,  1897 ; 
deliveries  in  February  payable  April  15, 1897 ; deliveries  in  March 
payable  May  15,  1897.  The  company  shall  have  the  right  to  call 
for,  and  purchaser  agrees  to  give  upon  such  call,  cash  or  notes 
acceptable  to  the  company  for  the  net  value  of  the  goods  deliv- 
ered under  this  contract  before  the  accounts  therefor  are  due. 

Third. — The  purchaser  agrees  to  be  governed  in  his  selling 
price  and  terms  by  the  instructions  of  the  company,  and  hereby 
promises  not  to  depart  from  or  evade,  by  any  direct  or  indirect 
means,  all  the  conditions  set  forth  in  Section  Fourth,  Selling 
Price.  It  is  also  understood  and  agreed  that  these  conditions,  for 
sale  of  these  goods  by  purchaser,  apply  to  all  on  hand  April  1, 
1896,  as  well  as  to  present  or  future  purchases  under  this  con- 
tract. The  company,  on  its  part,  agrees  that  if  any  change  is 
made  in  the  selling  price  immediate  notice  shall  be  given.  And 
the  said  purchaser,  in  case  of  his  failure  at  any  time  to  faithfully 
observe  all  the  terms  and  conditions  of  this  contract,  or  any  con- 
tact made  with  the  company,  hereby  consents  to  the  cancelling 
by  the  company  of  all  its  unfilled  orders  then  in  the  hands  of  the 
company,  and  in  case  of  such  default  on  the  part  of  said  pur- 


648 


[Senate, 


chaser  the  company  also  hereby  reserves  the  right  to  cancel  all 
said  purchaser’s  orders  then  unfilled,  and  in  case  of  such  cancel- 
lation the  accounts  of  said  purchaser  with  the  company  shall 
thereupon  become  immediately  due  and  payable. 

Fourth — Selling  Price. — Until  further  notice  the  prices  and 
terms  fixed  by  the  company  for  the  sale  by  the  said  purchaser  of 
the  within  named  goods  (except  to  jobbers  as  per  Article  Seventh) 
are  as  follows: 

Discounts. — First  Quality  Brands,  15  per  cent.;  Second  Quality 
Brands,  15  and  12  per  cent.;  and  Third  Quality,  15,  12  and  12  per 
cent,  from  gross  price  list  of  1896-1897. 

Terms. — Bills  for  delivery  between  April  1 and  October  31, 

1896,  both  inclusive,  shall  be  dated  not  later  than  November  1, 
net  thirty  days,  1 per  cent  off  for  cash  in  ten  days. 

If  paid  prior  to  November  10,  8 per  cent  per  annum  to  Novem- 
ber 10,  and  the  above  mentioned  1 per  cent,  may  be  allowed. 

If  paid  between  November  10  and  December  1,  8 per  cent,  per 
annum  only  may  be  allowed. 

Bills  for  deliveries  between  November  1,  1896,  and  March  31, 

1897,  both  inclusive,  shall  be  payable,  net,  thirty  days  from  date 
of  shipment,  or  1 per  cent  off  for  cash  in  ten  days. 

Freight. — Actual  freight  may  be  allowed  by  said  purchaser 
from  any  point  to  any  other  point  of  railroad  or  steamboat  deliv- 
ery at  his  own  cost  and  expense. 

Fifth — Liability  as  to  Orders. — The  company  will  not  be  obli- 
gated to  'deliver  more  goods  than  contracted  for  in  this  agree- 
ment, notwithstanding  it  may  have  received  and  acknowledged 
orders  which  exceed  amount  of  cases  contracted  for  in  this  agree- 
ment. It  is  also  mutually  agreed,  in  case  of  labor  strikes,  fire  or 
other  casualty  that  may  curtail  or  stop  the  production  of  goods 
contracted  for,  that  the  company  shall  not  be  held  responsible 
for  non-fulfillment  of  orders  beyond  the  capacity  to  produce,  hav- 
ing reference  to  the  whole  business,  and,  on  the  other  hand, 
should  fire  or  other  casualty  overtake  the  business  of  said  pur- 
chaser, then  the  company  will  cancel  his  orders,  if  he  so  desires. 


No.  40.] 


049 


In  contracting  for  certain  number  of  cases  the  company  does  not 
obligate  itself  to  supply  all  in  the  particular  style  of  boots  and 
shoes  which  the  orders  detailed  may  call  for,  but  only  such  quan- 
tities of  the  particular  styles  embraced  in  the  orders  detailed  as 
the  company  can  supply,  having  reference  to  the  capacity  to  pro- 
duce and  its  obligation  to  all  of  its  customers.  Two  weeks’  no- 
tice of  any  changes  by  the  purchaser  in  detailed  orders  is  required 
to  cover  goods  in  process  of  manufacture. 

Sixth — Guarantee. — In  consideration  of  the  faithful  per- 
formance of  this  contract  on  the  part  of  the  purchaser,  the  com- 
pany hereby  guarantees  that  in  case  it  shall,  prior  to  December 
1st,  next,  reduce  the  selling  price  to  retailers  below  the  price 
herein  named,  a corresponding  reduction  shall  be  made  to  said 
purchaser  ou  all  goods  shipped  or  delivered  to  him  prior  to  that 
date.  But  in  case  any  reduction  is  made  in  the  price  to  retailers 
between  December  1st,  1896,  and  March  31st,  1897,  both  inclu- 
sive, then  the  said  purchaser  shall  be  entitled  to  a corresponding 
reduction  only  on  goods  actually  on  hand  in  his  own  store  at  the 
time  of  such  reduction,  a statement  of  which  he  shall  furnish, 
under  oath,  if  desired.  It  being  understood  that  this  guarantee 
shall  not  be  affected  by  the  sale  of  out-of-style,  damaged  or  im- 
perfect goods,  and  that  the  company  reserves  to  itself  entire 
freedom  as  to  the  classification  of  dealers  to  whom  it  may  sell  its 
goods  direct  as  jobbers. 

Seventh — Exchange  of  Goods. — Nothing  in  this  agreement 
shall  prevent  customers  of  the  said  company  from  exchanging 
with  each  other  or  purchasing  from  each  other,  at  prices  mutu- 
ally agreed  upon,  and  with  written  approval  of  the  said  com- 
pany, its  goods  may  be  exchanged  with,  or  sold  to  other  jobbers, 
provided  such  goods  bought,  sold  or  exchanged,  shall  not  be  re- 
sold at  any  better  discounts  or  terms  than  are  stipulated  in  this 
agreement. 

Eighth. — Damaged  or  out-of-style  goods  which  cannot  be  sold 
at  full  discounts,  may  be  disposed  of  at  reduced  prices,  with  the 
consent  of  the  company,  upon  sending  to  the  company  a list  of 
such  unsalable  goods.  To  avoid  any  confusion  with  discounts  on 
standard  styles,  all  damaged  and  out-of-style  goods  must  be  sold 


650  [Senate, 

at  net  prices.  The  company  may  sell  damaged  or  out-of-style 
goods  at  reduced  net  prices. 

Ninth — Orders. — It  is  understood  and  agreed  that  all  the  fore- 
going conditions  are  to  apply  to  all  goods  purchased  by  the 


said of  the  company,  for  the  season  ending  March 

31st,  1897,  excepting  that  the  discounts  named  in  Section  1 ap- 
ply only  to cases,  the  detailed  order  of  which  the 


said  purchaser  promises  to  give  immediately  upon  request.  In 
case  the  said  purchaser  shall  fail  to  send  in  detailed  orders  for 
the  goods  herein  contracted  for,  within  fifteen  days  after  re- 
ceipt of  such  request,  in  writing,  then  the  company  shall  be  re- 
leased from  the  delivery  of  any  and  all  goods  not  so  ordered  in 
detail. 

All  orders  unfilled  March  31st,  1897,  will  be  understood  as 
cancelled  at  that  date.  The  company  cannot  undertake  to  mark 
or  ship  goods  to  the  purchaser’s  customers. 

Tenth — N.  B. — It  is  hereby  understood  and  agreed  to  that  this 
contract  is  absolutely  between  the  seller  and  the  purchaser,  and 
annuls,  cancels  and  obliterates  any  and  all  contracts,  agree- 
ments, understandings  or  practices  heretofore  in  vogue,  under 
which  the  purchaser  has  heretofore  bought  goods  of  the  brands 
herein  contracted  for,  and  it  is  distinctly  understood  that  no 
other  contract,  agreement,  understanding  or  previous  practice 
prevails  in  respect  to  the  subject  matter  of  this  contract,  ex- 
cept those  herein  specifically  provided. 

Dated  at this  first  day  of  April,  1896. 


(This  contract  is  not  binding  until 
approved  by  Director  of  Sales.) 
Approved: 


Director  of  Sales. 


No.  40.] 


651 


SUPPLEMENTARY  AGREEMENT. 

The  United  States  Rubber  Company,  selling  agent,  hereinafter 
called  The  Company,  in  consideration  of  a certain  agreement  be- 


tween it  and , hereinafter  called  The  Purchaser, 

dated  at April  1st,  1896,  hereby  covenants  and 


agrees  wTith  said  purchaser,  that  if  said  purchaser  shall  have 
well  and  faithfully  kept  and  performed  all  the  undertakings  on 
his  part,  to  be  performed  in  said  agreement  contained,  and  shall 
not  have  directly  or  indirectly  violated  the  same  or  any  provi- 
sion thereof  while  it  continues  in  force,  The  Company  will,  as 
soon  after  the  first  day  of  April,  1897,  as  The  Company  is  satis- 
fied that  said  agreement  has  been  faithfully  kept  and  performed 
by  said  Purchaser,  and  account  settled  in  full,  pay  or  credit  him 
with  7 per  cent,  on  the  net  amount  of  his  purchases  under  said 
agreement. 

This  7 per  cent,  shall  form  no  part  of  settlement  between  The 
Company  and  said  Purchaser,  but  it  is  to  be  regarded  purely  in 
the  light  of  a rebate,  and  payable  only  subject  to  the  conditions 
herein  stated. 

Provided,  howmver,  that  if,  in  the  opinion  of  The  Company, 
which  is  to  be  final  and  conclusive,  said  agreement  shall  have 
been  in  any  material  respect  violated  by  said  Purchaser,  he  shall 
not  be  entitled  to  said  rebate  of  7 per  cent.,  but  shall  pay  for  all 
goods  purchased  by  him  under  said  agreement,  upon  the  terms 
and  at  the  discounts  therein  mentioned,  without  further  discount 
or  rebate. 

It  is  mutually  understood  that  any  freight  or  cash  discount 
made  by  said  Purchaser,  other  than  as  stipulated  in  said  agree- 
ment, shall  be  deemed  a violation  of  its  terms  as  completely  and 
to  the  same  extent  as  a concession  in  terms  or  discount. 


652 


[SENATE) 


And  it  is  also  nutually  understood  that  said  Purchaser  is  to 
be  held  responsible  for  any  violation  of  said  agreement  by  his 
employes. 

Dated , this  first  day  of  April,  1896. 


(This  contract  is  not  binding  until 
approved  by  Director  of  Sales.) 
Approved: 


Director  of  Sales. 


AFTERNOON  SESSION,  COMMON  COUNCIL  CHAMBER, 
NEW  YORK,  FEBRUARY  18,  1897,  2.30,  P.  M. 

Mr.  Lexow:  Mr.  Henry  O.  Havermeyer  will  please  take  the 
stand. 

Havemeyer,  Henry  O.,  recalled. 

Examined  by  Mr.  Lexow: 

Q.  This  document  that  I hand  you  is  a correct  copy  of  an 
agreement  that  was  made  between  the  Knight  concern  and  the 
American  Sugar  Refining  Company,  under  which  the  Knight 
Company  sold  its  property  to  the  American  Sugar  Refining  Com- 
pany of  New  Jersey.  A.  It  is.  (Marked  Exhibit  2,  February,  1887.) 

Q.  Is  the  paper  that  I now  hand  you  a correct  copy  of  the  con- 
tract of  sale  of  the  Delaware  Refining  Company  to  John  E. 
Searles  as  representative  of  the  American  Sugar  Refining  Com- 
pany? A.  It  is.  (Marked  Exhibit  3,  February  18,  1897.) 

Q.  Is  this  a correct  copy  of  the  resolution  passed  by  the  board 
of  directors  of  the  American  Sugar  Refining  Company,  March  10, 


No.  40.] 


G53 


1892.  whereby  they  authorized  the  issue  of  capital  stock  in  pur- 
chase of  the  Franklin  Sugar  Refining  Company,  the  E.  C.  Knight 
Company,  the  Delaware  Sugar  Refining  Company,  and  the 
Spreckles  Sugar  Refining  Company?  A.  It  is.  (Marked  Exhibit 
4,  February  18,  1897.) 

Q.  Is  this  a statement  of  the  amount  of  taxes  paid  to  the  Sta.te 
of  New  York  by  the  American  Sugar  Refining  Company  from 
the  year  1891  down  to  and  including  the  year  1896?  A.  It  is. 
(Marked  Exhibit  5,  February  18,  1897.) 

Q.  Do  I understand,  Mr.  Havemeyer,  that  the  figures  con- 
tained in  this  last  statement,  marked  Exhibit  No.  5,  is  a correct 
statement  of  all  the  taxes  paid  by  the  American  Sugar  Refining 
Company  to  the  State  of  New  York  during  those  years?  A. 
Yes,  sir. 

Q.  Representing  taxes  on  real  estate  and  personal  property 
included?  A.  Yes,  sir. 

Q.  The  Brooklyn  item  of  $457,260.65,  does  that  represent 
merely  the  taxes  paid  upon  the  real  property  of  the  company 
situate  in  the  city  of  Brooklyn?  A.  Yes,  sir. 

Q.  And  the  item  of  $33,615.54,  does  that  represent  the  tax 
levied  by  the  State  upon  such  personal  property  or  assets  of  the 
corporation  as  were  employed  in  the  State  of  New  York?  A. 
It  does. 

Mr.  J.  E.  Parsons:  And  the  lease-hold  property,  which  consti- 
tutes the  office  of  the  company. 

Q.  That  is  to  say,  that  this  item  of  $33,615.54  includes  the 
lease-hold  or  office  property  of  the  corporation  in  addition  to 
all  the  tax  levied  upon  the  corporation  upon  that  part  of  its  capi- 
tal stock  which  is  in  use  in  the  State  of  New  York?  A.  That  is 
correct. 

Q.  Is  the  statement  made  by  Mr.  Searles  that  the  factory  prop- 
erty of  your  corporation  in  the  city  of  Brooklyn  represented  a 
total  producing  capacity  of  20,000  barrels  per  day?  A.  I think 
that  is  correct. 

Q.  What  proportion  does  that  producing  capacity  represent  as 


654 


[Senate, 


compared  with  the  total  producing  capacity  of  all  corporations 
owned  by  you  and  situated  elsewhere?  A.  About  one-half. 

Q.  Doesn’t  it  follow  from  that  statement  that  one-half  of  the 
capital  of  the  American  Sugar  Refining  Company  is  in  use  in 
the  State  of  New  York?  A.  Not  necessarily. 

Q.  Doesn’t  your  capital  follow  your  producing  capacity?  A. 
Not  necessarily. 

Q.  While  not  necessarily,  is  it  a fact  that  it  does?  A.  I doubt 
it. 

Q.  You  doubt  it?  A.  Yes,  sir. 

Q.  On  what  proposition  do  you  doubt  it?  A.  A great  deal  of 
the  capital  might  be  invested  in  raw  sugar  that  might  be  in 
another  State. 

Q.  Do  your  investments  in  raw  sugar  principally  consist  in 
stores  situated  upon  your  Brooklyn  properties?  A.  I don’t  think 
we  have  the  relative  storage  capacity  in  Brooklyn  that  we  have 
elsewhere. 

Q.  As  a matter  of  fact  though,  without  reference  to  the  capa- 
city of  the  particular  stores,  isn’t  it  a fact  that  the  principal 
stores  of  raw  sugar  that  you  have  are  located  on  your  Brooklyn 
properties?  A.  I have  already  stated  that  I do  not  think  they 
are. 

Q.  Have  you  any  knowledge  on  the  subject?  A.  Yes,  sir. 

Q.  What  proportion  is  obtained  in  storage  elsewhere,  on  the 
average?  A.  I should  say  that  in  Boston  we  had  fully  as  much 
storage  as  in  Brooklyn,  and  in  Philadelphia  twice  as  much;  I 
have  stated  that  one-half  of  the  business  was  done  in  Williams- 
burg; when  you  come  to  storage  capacity  that  is  a matter  of 
square  feet  of  area;  I think,  as  I have  stated,  that  Philadelphia 
exceeds  it  twice. 

Q.  I am  speaking  now  of  actual  storage?  A.  Storage  capacity 
is  the  same  thing. 

Q.  Not  necessarily;  you  may  have  capacity  that  you  don’t  use; 
I am  speaking  of  the  amount  of  raw  material  that  you  keep  on 
storage;  how  does  that  compare  with  the  amount,  so  far  as  Wil- 
liamsburg is  concerned,  with  the  amount  that  you  keep  on  storage 


No.  40.] 


653 


in  other  localities;  I am  speaking  of  general  values?  A.  It  is 
impossible  for  me  to  tell  you  exactly  the  relative  amount  that  we 
keep  on  storage;  I have  told  you  that  one-half  of  the  melting  ca- 
pacity was  done  in  Brooklyn,  which  naturally  carries  with  it  one- 
half  of  the  total  amount  of  sugar  received  and  disbursed;  we 
might  have  four  times  as  much  sugar  in  Philadelphia  as  in  New 
York. 

Q.  One  half,  therefore,  of  your  business  in  refining  is  done  in 
the  State  of  New  York?  A.  About  that. 

Q.  How  comes  it  that  you  do  not  pay  to  the  State  of  New  York 
taxes  upon  the  authorized  $30,000,000  of  the  capital  stock?  A.  I 
don’t  see  any  relation  between  the  amount  of  business  done  and 
the  relation  of  taxation  to  capital  stock;  we  might  have  nine- 
tenths  of  our  capital  in  Philadelphia  and  do  all  the  business  in 
New  York. 

Q.  You  know,  don’t  you,  that  the  laws  of  the  State  of  New 
York  lay  a tax  upon  that  part  of  the  capital  stock  of  a corpora- 
tion which  is  used  within  the  limits  of  the  State;  that  is  a fact; 
you  know  that,  don’t  you?  A.  I have  an  indefinite  knowledge  of 
what  the  law  requires  in  that  particular;  we  rely  entirely  upon 
Mr.  Parsons  for  a consideration  of  those  matters. 

Q.  The  only  document  that  has  not  been  produced  with  refer- 
ence to  which  inquiry  was  made  by  this  committee,  is  the  original 
deed  of  the  Trust,  of  the  Sugar  Trust,  and  the  figures  which  it 
contains  showing  the  amounts  apportioned  between  the  various 
companies  forming  that  Trust  of  the  certificates  of  the  so-called 
Sugar  Trust;  Mr.  Searles  has  testified  that  he  does  not  know 
where  that  paper  is;  do  you,  Mr.  Havemeyer,  know  where  it  is? 
A.  I do  not;  the  last  that  I saw  of  that  deed  was  at  the  time  of 
the  State  investigation,  known  as  the  Arnold  Investigation,  Mr. 
Arnold  being  the  presiding  officer;  the  deed  was  produced  and 
Mr.  Parsons,  who  had  it  in  his  possession;  was  allowed  to  cut  out 
the  distribution  of  those  certificates;  and  I know  it  was  done. 

Q.  Then,  at  that  time,  if  my  memory  serves  me  right — it  was  in 
1888?  A.  I think  it  was  some  time  ago. 

Q.  Between  1888  and  1889?  A.  I believe  so. 


G56 


[Senate, 


Q.  The  figures  inquired  for  by  this  committee  were,  by  permis- 
sion of  that  committee,  cut  from  the  original  record?  A.  Yes, 
sir. 

Q.  Were  you  present  when  that  was  done,  Mr.  Havemeyer?  A. 
I was  not  present;  Mr.  Parsons  told  me  and  subsequently  I saw  it 
published  in  all  the  daily  papers,  that  those  figures  had  been  cut 
out  of  that  document. 

Q.  Have  you  seen  that  document  since  the  day  when  those  fig- 
ures were  erased?  A.  No,  sir;  I have  not. 

Q.  Have  you  heard  of  its  existence  anywhere?  A.  I have  not. 

Q.  Was  the  document  itself  surrendered  to  the  keeping  of  the 
committee?  A.  I think  it  was  not;  it  was  returned  by  the  com- 
mittee to  counsel. 

Q.  Might  I ask  you,  Mr.  Parsons,  whether  that  was  before  or 
after  the  time  that  the  document  was  admitted  in  evidence  in  the 
North  River  Sugar  Refining  case? 

Mr.  Parsons:  I don’t  want  to  testify  as  to  my  recollection  of  it; 
but  I think  it  can  be  easily  supplied. 

Q.  Y"ou  remember  the  time  it  was  put  in  evidence,  don’t  you, 
Mr.  Havemeyer?  A.  No,  sir. 

Mr.  Parsons : The  record  in  that  case  was  put  in  evidence  here 
in  this  investigation. 

Mr.  Havemeyer:  I think  the  North  River  case  was  later  than 
the  Arnold  investigation;  but  I am  not  clear  enough  on  that  to 
make  a statement. 

Q.  You  have  stated  here  now  that  those  figures  wer-e  cut  from 
the  original  Trust  deed  at  the  time  of  the  Arnold  investigation, 
so-called?  A.  Yes.  f 

Q.  The  testimony  of  Mr.  Searles  goes  to  show  that  by  consent, 
on  the  introduction  of  that  deed  in  the  North  River  Sugar  Refin- 
ing case,  the  figures  were  cut  from  the  record  in  that  case;  now, 
have  you  refreshed  your  recollection  in  that  regard?  Do  you  still 
say  that  those  figures  were  cut  out  at  the  time  of  the  Arnold  in- 
vestigation? A.  I do  ; I say  they  were  cut  out  at  the  time  of  the 
Arnold  investigation,  irrespective  of  what  occurred  before  or 
afterward. 


No.  40.] 


657 


Q.  Who  had  been  the  custodian  of  that  instrument  previous  to 
that  time?  A.  Mr.  Parsons. 

Q.  And  at  the  time  of  the  trial  of  the  North  River  case?  A. 
Mr.  Parsons. 

Q.  And  when  you  last  saw  that  deed,  or  knew  of  its  existence, 
in  whose  hands  or  custody  was  it?  A.  Mr.  Parsons. 

Q.  Were  the  figures  that  had  been  cut  out  at  the  time  of  the 
Arnold  investigation  erased  in  the  deed  afterward?  A.  Never 
to  my  knowledge, 

Q.  Do  you  know  of  anybody  else  that  had  the  right  of  control 
or  custody  of  that  deed  except  Mr.  Parsons?  A.  By  the  terms  of 
the  deed  he  was  the  custodian  of  it. 

Q.  Why  was  it,  Mr.  Havemeyer,  that  you  and  your  associates 
were  so  solicitious  in  reference  to  the  secrecy  or  non-discovery  of 
these  particular  items?  A.  I had  no  secrecy  about  it;  there  were 
a hundred  and  one  people  that  were  parties  to  that  deed  and  they 
put  it  into  the  custody  of  Mr.  Parsons  on  certain  conditions,  and 
I presume  that  he  respected  their  wishes. 

Q.  Inasmuch  as  those  figures  formed  so  substantial  an  item  or 
provision  in  that  agreement  how  does  it  come  that  you  have  so 
completely  forgotten  it?  A.  It  became  an  executed  contract  and 
that  was  the  end  of  it;  the  proper  thing  would  have  been  to  de- 
stroy the  deed;  instead  of  that  it  was  kept  and  it  has  kept  up  this 
fuss  and  turmoil  ever  since;  that  is  my  private  judgment,  bear  in 
mind;  I am  not  expressing  the  judgment  of  anybody  else;  we 
agreed  to  do  certain  things  and  those  things  were  accomplished; 
and  then  the  deed  should  have  gone  out  of  existence. 

Q.  What  was  there  surrounding  that  deed  that  seemed  to  make 
it  necessary  to  destroy  it?  A.  I saw  nothing  about  it  that  made 
it  necessary  to  destroy  it. 

Q.  You  give  the  opinion  that  it  should  have  been  destroyed; 
was  that  your  individual  opinion?  A.  It  was;  at  the  time  I 
thought  it  should  have  been  destroyed;  it  was  on  the  basis  of  that 
deed  that  all  this  hostile  legislation  was  attempted  and  the  inter- 
ference of  the  courts;  and  all  this  fuss  and  interference  has  been 
swept  away  by  a decision  of  the  Supreme  Court  of  the  United 


42 


658  [Senate, 

States;  it  never  would  have  occurred  if  that  deed  had  not  been  the 
basis  of  it  all. 

Q.  What  do  you  mean  by  being  swept  aside  by  the  Supreme 
Court  of  the  United  States?  A.  I presumed  that  you  were  fa- 
miliar with  reference  to  what  occurred  in  relation  to  sugar;  first 
one  judge  decided  that  it  was  a “criminal  monopoly”;  they  had  an 
Appellate  Court  confirm  the  decision ; then  we  had  interference 
in  other  States  in  the  matter ; but  when  it  reached  the  power  that 
decides  forever  they  swept  all  that  stuff  out  of  existence  and  put 
us  in  a legal  position;  all  of  which,  allow  me  to  say,  arose  from 
that  deed,  which,  had  it  not  been  in  existence,  would  not  have 
given  occasion  for  this  persecution. 

Q.  Prosecution?  A.  Persecution;  they  are  very  much  allied 
at  the  present  day. 

Q.  Inasmuch  as  the  Supreme  Court  of  the  United  States  had 
decided  that  you  are  not  a monopoly  the  production  of  that  deed 
rather  benefited  you,  did  it  not?  A.  I don’t  think  that  it  did;  the 
Supreme  Court  took  the  fact ; it  didn’t  take  the  deed. 

Q.  Who  ever  told  you,  Mr.  Havemeyer,  that  the  Supreme  Court 
of  the  United  States  had  declared  that  the  system  under  which 
you  transacted  business  did  not  constitute  a monopoly?  A.  I 
say  that  in  all  legal  matters  we  are  governed  by  our  counsel. 

Q.  You  simply  reflected  his  views  in  that  statement?  Q.  I am 
giving  my  opinion. 

Q.  Without  knowing  whether  or  not  the  Supreme  Court  of  the 
United  States  passed  directly  on  the  question  of  monopoly  or  di- 
rectly on  questions  of  jurisdiction  in  that  case?  A.  The  Supreme 
Court  passed  directly  upon  monopoly  and  held  it  was  a fact  that 
the  American  Sugar  Refining  Company  was  not  a monopoly. 

Q.  Did  you  receive  that  from  your  counsel?  A.  I received  it 
from  the  decision. 

Q.  As  a judgment  upon  that  decision?  A.  Yes,  sir. 

Q.  As  his  judgment?  A.  Yes,  sir. 

Q.  Then  you  are  not  reflecting  your  own  views?  A.  I am;  like- 
wise my  own  views. 

Q.  To  what  part  of  that  decision  do  you  refer  in  which  the 


No.  40.] 


059 


United  States  Court  has  held  as  you  state?  A.  It  held,  as  I 
understand,  that  there  could  be  no  monopoly  without  restriction; 
the  American  Sugar  Refining  Company  restricted  nobody  from 
coming  into  the  business;  how  could  we  be  a monopoly? 

Q.  Do  you  mean  to  say  that  the  Supreme  Court  held,  upon  the 
facts  established  in  that  case,  that  there  was  no  monopoly  in  your 
system  of  doing  business?  A.  Yes,  sir;  and' having  all  the  facts 
in  the  case  they  decided  as  they  did. 

Mr.  Lexow:  That  is  a matter  of  opinion. 

By  Mr.  Warner: 

Q.  Do  I understand  you  to  say  that  this  paper,  or  this  data, 
that  was  cut  out  of  the  North  River  case  has  been  destroyed?  A. 
I am  not  aware  that  it  has. 

Q.  Didn’t  you  say  that  it  was  submitted  in  the  North  River 
case?  A.  This  mutilated  deed;  my  testimony  was  that  it  was  cut 
out  in  the  Arnold  investigation,  the  part  that  related  to  the  dis- 
tribution of  shares  was  cut  out;  I don’t  see  how  it  could  appear 
in  the  North  River  case;  I don’t  believe  that  it  did,  nor  in  any 
other  case. 

Q.  You  say  that  the  papers  that  were  cut  out  have  been  de- 
stroyed? A.  I don’t  know  anything  about  it. 

Q.  Will  you  swear  that  they  have  not?  A.  I swear  that  I don’t 
know. 

Q.  Why  do  you  swear  that  it  would  have  been  well  if  that 
paper  had  been  destroyed?  A.  All  this  litigation  and  all  this 
fuss  about  trusts  was  based  upon  that  deed;  if  that  deed  had  not 
been  produced  there  would  have  been  nothing  to  fight  about  or 
investigate. 

Q.  That  was  the  only  document  out  of  those  that  came  into 
your  possession  that  was  not  kept;  if  the  figures  were  cut  out 
why  do  you  say  that  it  would  have  been  well  if  that  document 
had  been  destroyed?  A.  You  mean  the  deed  before  it  was  cut? 

Q.  Well,  this  deed  that  you  claim  has  caused  you  so  much 
trouble;  you  said  it  would  have  been  well  if  that  deed  had  been 


660  ■ [Senate. 

destroyed?  A.  If  it  bad  been  there  would  have  been  no  excuse 
for  investigating  committees  or  for  litigation. 

Q.  Was  it  by  reason  of  the  fact  that  other  papers  were  de- 
stroyed that  gave  you  the  idea  that  it  would  have  been  well  if 
this  deed  bad  also  been  destroyed?  A.  That  bad  no  significance; 
it  bad  no  significance  in  the  matter;  I presume  that  it  was  with 
that  view  that  your  predecessor  put  the  question. 

Q.  Where  is  the  original  minute  book?  A.  In  New  Jersey. 

Q.  With  the  proceedings  of  the  Board  of  Trustees  of  the  Trust? 
A.  I don’t  think  those  books  are  in  existence. 

Q.  They  have  been  destroyed?  A.  I think  they  went  out  of  ex- 
istence in  1891. 

Q.  Don’t  you  know  that  they  were  destroyed?  A.  I don’t  know 
anything  about  it. 

Q.  You  won’t  swear  that  they  have  not  been  destroyed?  A.  I 
won’t  swear  to  anything  I don’t  know;  I am  very  particular  about 
my  oath. 

Q.  Your  company  is  not  particularly  anxious  to  have  those 
books  put  in  evidence?  A.  I don’t  think  that  the  company  has 
those  books. 

Q.  You  say  that  you  “don’t  think?”  A.  I don’t  know  that  they 
have;  I don’t  know  anything  about  those  books;  I am  sure  that  if 
I did  know  about  them  I would  tell. 

Q.  Doesn’t  it  seem  a little  peculiar  that  all  the  minute  books, 
the  stock  certificate  books  and  the  stubs  of  this  original  Trust 
were  destroyed  or  have  suddenly  gone  out  of  being  where  no  one 
can  get  at  them?  A.  I don’t  think  so;  those  companies  each  had 
their  own  books;  when  the  companies  were  dissolved  the  books 
went  to  the  owners. 

Q.  What  became  of  the  minutes  of  the  trustees  of  the  Trust? 
They  kept  minutes,  didn’t  they?  A.  The  books  belonged  to  those 
separate  companies. 

Q.  What  became  of  the  minute  books?  A.  I don’t  know  any- 
thing about  any  books;  the  Trust  didn’t  operate  these  refineries; 
each  separate  company  had  a board  which  operate  its  own  re- 
finery. 


No.  40.] 


661 


Q.  Did  they  keep  a record  of  their  proceedings?  A.  I wouldn’t 
say  that  they  did. 

Q.  Did  they  destroy  the  record  after  each  meeting?  A.  Oh, 

no. 

Q.  After  they  were  read?  A.  No,  sir. 

By  Mr.  Lexow : 

Q.  Mr.  Searles  stated  on  the  stand  here  that  an  investigation 
such  as  this  operated  to  destroy  or  impair  confidence  in  the  prop- 
erty of  the  American  Sugar  Refining  Company.  Do  you  share 
that  opinion  with  him?  A.  Well,  my  answer  would  have  to  be 
rather  lengthy. 

Q.  Can  you  not  answer  either  “yes”  or  “no”?  A.  I could  not. 

Q.  I want  to  ask  you  this  question:  Do  you  believe  that  the 
value  of  any  property  honestly  conducted  has  anything  to  fear 
from  an  investigation,  no  matter  how  rigorous  or  searching?  A. 
I do;  but  you  will  allow  me  in  this  connection  to  make  a state- 
ment; there  has  been  an  apprehension  on  the  public  mind  that 
there  would  be  some  interference  by  the  State  of  New  York  with 
the  sugar  interest;  I mean  with  the  actual  melting  and  refining 
of  sugar  in  this  State;  and  as  a result  they  have  advanced  the 
price  of  sugar  one-eighth  cent  per  pound  to  the  consumer;  of 
course  this  investigation  may  be  beneficial  ultimately,  but  its 
immediate  effect  has  been  injurious  to  the  consumer;  I think 
New  York  State  occupies  a foremost  position  in  the  Union;  and 
you  will  have  this  trouble  in  all  the  other  States  which  have  not 
the  discretion  of  the  Legislature  of  this  State;  it  will  operate  to 
the  ruin  and  disaster  of  property  and  manufacturing  interests 
of  the  different  States. 

Q.  Would  you  be  kind  enough  to  explain  how  this  investigation 
can  by  any  method  be  tortured  into  an  instrument  to  advance  the 
price  of  sugar?  A.  Apprehension  on  the  part  of  the  public  that 
there  will  be  a strike  against  the  sugar  industry,  half  of  which 
is  conducted  in  New  York,  has  lead  the  people  of  the  United 
States  dealing  in  sugar  to  buy  very  extensively;  that  has  pro- 
duced an  inordinate  demand;  that  inordinate  demand  has  ad 
vanced  the  price;  it  will  probably  recede. 


662 


[Senate. 


Q.  It  could  not  have  advanced,  Mr.  Havemeyer,  except  that 
your  factors,  operating  under  your  arrangements,  have  increased 
the  price  of  your  sugar  to.  the  consumer?  A.  No,  sir;  probably 
they  have  not  put  the  price  up  yet. 

Q.  How,  then,  has  the  price  of  sugar  increased?  A.  By  the 
inordinate  demand. 

Q.  Which  must  necessarily  have  largely  benefited,  instead  of 
injured,  the  American  Sugar  Refining  Company?  A.  I dare  say 
that  pecuniarily  the  immediate  effect  of  this  investigation  will 
be  to  the  benefit  of  the  treasury  of  the  American  Sugar  Refining 
Company. 

Q.  Then  you  don’t  agree  with  the  proposition  urged  by  Mr. 
Searles  that  investigations  of  this  kind  are  destructive  of  the  in- 
terests of  the  American  Sugar  Refining  Company?  A.  I certain- 
ly do  not;  we  invite  the  fullest  investigation;  the  immediate  ef- 
fect is  rather  injurious  to  the  public;  but  I am  quite  confident 
that  the  ultimate  effect  will  be  beneficial  to  the  public. 

Q.  How  do  you  hold  that  it  has  been  prejudicial  to  the  public 
when  you  are  the  producer  and  distributor  of  80  per  cent,  of 
the  entire  product  of  the  United  States;  your  factor  must  have 
put  up  the  price  of  it  to  the  consumer?  A.  It  has  given  rise  to 
apprehension  in  the  sugar  market  and  everybody  dealing  in  it 
buys  twice  as  much  as  they  need;  and  the  result  is  that  the 
holders  of  raw  sugar  demand  more.  We  have  to  meet  that  ad- 
vance and  we  have)  to  exact  it  out  of  the  consumer. 

Q.  Do  the  raw  sugar  interests  claim  more  from  you?  A.  Un- 
doubtedly. 

Q.  8fo  that  as  a matter  of  fact,  in  the  first  instance,  you  have 
to  pay  more  for  the  product  as  the  result  of  this  investigation? 
A.  Yes,  sir;  that  is  the  way  it  has  worked  in  this  case. 

Q.  Mr.  Searles  has  stated  that  the  power  of  concentrated  de- 
velopment by  -*our  organization  has  been  such  as  to  force  down 
the  price  of  sugar  by  one  cent  per  pound;  do  you  now  maintain 
that,  notwithstanding  that  power  of  concentration  and  develop- 
ment— that  power  of  concentrated  capital — an  investigation  of 
this  kind  can  put  up  the  price  of  sugar  by  one-eighth  of  a cent 


No.  40.] 


063 


per  pound?  A.  I tiiii  k it  has  somewhat;  I think  it  has  put  down 
the  raw  by  about  one- sixteenth. 

Q.  If  Mr.  Searles’  statement  is  correct,  do  you  agree  with  him 
in  his  statement  that  by  reason  of  your  combination  of  capital 
you  are  able  to  force  down  the  price  of  raw  sugar  by  one-half  to 
one  cent  per  pound:  do  you  agree  with  that  statement?  A.  1 do 
not. 

Q Then,  in  your  judgment,  your  combination  of  capital  has 
not  had  the  effect  of  reducing  the  price  of  the  raw  material  by 
one  cent  per  pound?  A.  I don’t  think  that  it  has  had  the  effect 
of  producing  that — I don’t  think  it  has  much  effect  or  much 
power. 

By  Mr.  McCarren. 

Q.  Have  you  any  knowledge  of  the  amount  of  freight — the 
percentage  of  freight  that  goes  from  the  city  of  Brooklyn  as  the 
result  of  the  sugar  refining  business  in  that  city;  I mean  by  that, 
the  percentage  of  freight  of  the  whole  port  of  New  York?  A.  1 
think  that  40  per  cent,  of  the  entire  wTest  bound  freight  goes  from 
Brooklyn;  and  of  that  I should  say  90  per  cent,  comes  from  the 
sugar  business;  there  is  not  a more  valuable  industry  in  the  State 
of  New  York  than  that  of  the  sugar  industry. 

Q.  Have  you  any  knowledge  of  the  amount  of  labor  actually 
interested  in  the  sugar  industry  in  the  city  of  Brooklyn  employed 
in  the  handling  and  distribution  of  sugar,  as  compared  with 
other  distributing  points?  To  make  the  question  more  clear — 
A.  There  is  ten  times  as  much  labor  rejuired  in  handling. 

Q.  Explain  why?  A.  The  refineries  in  different  localities  are 
located  on  the  line  of  railroads  and  the  cars  come  right  into  the 
storehouses  and  the  sugar  is  loaded  directly  into  the  car;  in 
Brooklyn  it  requires  at  least  ten  times  more  men;  there  is  more 
labor;  there  is  more  labor  entering  into  the  production  of  sugar 
in  the  city  of  Brooklyn  than  in  any  other  city  in  the  Union;  and 
New  York  State  should  be  the  last  one  to  interfere  with  that  in- 
dustry. 

Q.  TV  as  there  any  necessity  for  a further  existence  of  this  doc- 


664  [Senate, 

ument  that  was  extracted  from  the  paper  put  in  evidence  in  the 
Arnold  investigation?  A.  No,  sir. 

Q.  Were  you  served  with  a subpoena  duces  tecum  with  refer- 
ence to  this  particular  document?  A.  Yes,  sir. 

Q.  Have  you  that  subpoena  in  your  pocket?  A.  I was  ordered 
to  bring  the  deed.  * 

By  Mr.  Warner: 

Q.  Were  you  ordered  to  bring  the  minute  book?  A.  I was  or- 
dered to  bring  extracts,  which  I did  bring;  I have  complied  with 
every  request  of  this  committee  most  willingly  and  cordially. 

Q.  We  don’t  want  to  take  any  unnecessary  advantage  of  you. 

By  Mr.  Lexow : 

Q.  There  is  nothing  in  that  subpoena  requiring  you  to  produce 
the  original  Trust  deed;  you  have  produced  the  other  documents 
required  by  this  committee?  A.  I have  only  to  say  with  refer- 
ence to  that  deed  that  I do  not  believe  it  is  in  existence;  I have 
not  seen  it  since  the  Arnold  investigation;  there  has  never  been 
but  one  custodian,  and  that  custodian  has  been  Mr.  Parsons. 

J.  E.  Parsons,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  You  were  the  custodian  of  the  Trust  deed  that  has  been  re- 
ferred to  in  the  examination  of  Mr.  Havemeyer?  A.  I was  not 
the  legal  nor  official  custodian  of  the  Trust  deed;  I think  that  if 
you  will  examine  the  document  you  will  find  that  the  official  cus- 
todian of  the  paper  is  the  President  of  the  Board  of  Trustees;  but 
as  occasion  required  the  document  was  in  my  custody  from  the 
fact  that  I was  counsel  of  the  American  Sugar  Refining  Company; 
and  on  any  occasion  when  the  document  was  before  an  investi- 
gating committee  or  inquired  for  it  was  in  my  possession  as  coun- 
sel of  the  American  Sugar  Refining  Company. 

Q.  You  have  heard  the  testimony  of  Mr.  Havemeyer  in  regard 
to  it,  that  there  was  cut  out  of  the  document  several  items  show- 
ing the  distribution  of  certificates  of  the  Sugar  Trust  after  the 


No.  40.] 


6G5 


various  properties  were  absorbed;  you  have  heard  this  testimony 
on  that  point?  A.  I have. 

Q.  Do  you  say  that  your  own  knowledge  of  the  facts  agree  with 
his  statement  on  that  subject?  A.  The  subject  had  gone  entirely 
out  of  my  recollection  until  reference  was  made  to  it  upon  this 
investigation;  Mr.  Havemeyer  sent  to  me  a clipping  from  a con- 
temporaneous newspaper  of  the  proceedings  by  the  Arnold  In- 
vestigating Committee  and  that  recalled  to  me  what  Mr.  Have- 
meyer has  testified  to. 

Q.  Is  that  your  present  recollection?  A.  That  is  my  present 
recollection. 

Q.  What  became  of  that  portion  of  the  original  deed  wdiicli  was 
thus  erased  or  extracted?  A.  I have  no  recollection  of  seeing  the 
parts  of  the  paper  or  any  portion  of  it  from  that  time  down  to 
this;  I think  that  I ought  to  say  that  at  that  time  it  was  claimed 
that  that  was  evidence  of  transactions  which  were  asserted  by 
those  who  were  attacking  the  refining  company  as  an  illegal  com- 
pany; there  was  every  reason  why  that  paper  should  not  have 
been  preserved;  the  statement  had  been  cut  out  of  the  instrument; 
the  various  constituent  companies  had  been  purchased  by  the 
American  Sugar  Refining  Company  and  there  was  no  further  rea- 
son or  purpose  which  would  warrant  the  preservation  of  that 
paper. 

Q.  Have  you  any  knowledge  to-day  of  the  present  existence  of 
that  paper  or  where  it  is  to  be  found?  A.  I have  not. 

Q.  Have  you  any  knowledge  of  the  fact  that  it  is  not  in  exist- 
ence and  cannot  be  found?  A.  I wouldn’t  like  to  say  that  I have 
that  knowledge;  I have  no  recollection  of  ever  having  had  my  at- 
tention called  to  it  from  the  time  of  that  investigation  down  to 
the  present  investigation. 

Q.  Does  the  copy  of  the  so-called  Sugar  Trust  agreement,  with 
the  exception  of  the  figures  referred  to  in  the  appeal  book  in  the 
North  River  Sugar  Refining  Company  case,  contain  an  accurate 
statement  of- the  original  deed?  A.  I have  every  reason  to  be- 
lieve that  it  does;  I have  no  doubt  but  that  statement  was  fur- 
nished by  me  at  the  time;  although  I have  not  made  recent  ob- 
servation I am  quite  willing  to  assume  that  the  copy  is  accurate. 


666 


[Senate, 


Q.  Do  you  wish  to  be  understood  by  this  committee  that  the 
non-production  of  this  Sugar  Trust  deed  is  not  due  to  any  desire 
to  evade  or  prevent  this  committee  from  securing  its  production, 
but  that  it  has  either  disappeared  or  been  destroyed?  A.  I have 
no  wish  upon  the  subject;  I state  the  facts  and  the  rest  is  infer- 
ence. 

Q.  Is  that  the  inference  that  you  wish  drawn  from  the  fact 
that  you  have?  A.  I have  no  wish  upon  the  subject,  Mr.  Chair- 
man; there  was  a time  when  I would  have  felt  that  I had  no  right 
to  be  instrumental  in  the  promulgation  of  that  document  in  the 
form  in  which  it  existed  or  in  any  form;  I suppose  that  I would 
have  violated  my  professional  obligations  if  I had  been  instru- 
mental in  making  that  public  after  it  came  into  my  possession; 
but  so  far  as  that  paper  came  into  the  possession  of  the  various 
investigating  committees  and  into  the  North  River  Sugar  Refin- 
ing case,  of  course  that  obligation  ceased  and  since  then  I have 
had  no  wish  upon  the  subject. 

By  Mr.  Warner: 

Q.  You  were  subpoenaed  to  produce  the  minute  book  of  the 
directors  of  the  company?  A.  I was  not;  I have  already  stated 
that  I was  not  subpoenaed. 

Q.  Do  the  directors  of  the  company  refuse  to  allow  the  secre- 
tary of  the  company  to  produce  the  minute  book  before  the  com- 
mittee? A.  The  directors  have  taken  no  action  upon  the  sub- 
ject of  which  I know;  the  committee  requested  certain  informa- 
tion from  the  minute  book;  the  presentation  of  that  information 
was  considered  at  a meeting  held  yesterday  and  that  information 
has  been  furnished ; and  I have  heard  the  statement  here,  that  so 
far  as  any  request  has  been  made,  it  has  been  complied  with; 
that  is  all  I know  upon  the  subject. 

Q.  In  order  that  there  may  be  no  misunderstanding,  Mr.  Have- 
meyer  was  subpoenaed  to  produce  the  minute  book  and  he  has 
not  done  so.  A.  You  asked  whether  I had  been  subpoenaed. 

Q.  You  said  that  you  would  produce  all  the  document;  that 


No.  40.] 


667 


there  may  be  no  misunderstanding,  Mr.  Havemeyer  has  been  sub- 
poenaed to  produce  the  minute  book?  A.  I interpret  the  sub- 
poena served  differently  from  the  interpretation  that  you  put 
upon  it. 

By  Mr.  Lexow: 

Q.  As  I understand  the  situation,  Mr.  Parsons,  prior  to  the 
service  of  this  subpoena,  you  asked  whether  it  would  be  sufficient 
instead  of  producing  the  book  itself,  to  produce  sworn  copies  of 
that  memoranda  which  was  connected  with  the  subject  matter 
about  which  we  inquired,  and  that  we  stated  that  would  be  suffi- 
cient; the  copies  have  been  presented  and  the  subpoena  has  been 
complied  with;  and  the  only  question  is  to  the  production  of  this 
deed  of  trust,  and  that  will  stand  upon  the  record  as  made;  those 
who  have  been  subpoenaed  may  be  excused  upon  the  ground  that 
it  no  longer  exists;  it  is  a question  of  fact  and  law  that  will 
follow  from  a perusal  of  the  testimony. 

The  undersigned  Edward  C.  Knight  and  Edward  C.  Knight, 
Jr.,  being  the  sole  owners  of  the  entire  capital  stock  of  the  E.  C. 
Knight  Company  comprising  the  entire  plant  used  by  said  com- 
pany and  the  firm  of  E.  C.  Knight  & Company,  in  the  carrying 
on  the  business  of  sugar  refining  in  the  city  of  Philadelphia  and 
comprising  the  property  described  in  a general  way  as  follows: 

The  two  blocks  of  ground  bounded  by  Delaware  avenue,  Bain- 
bridge  street,  Penn  street  and  South  street,  with  the  exception 
of  that  portion  of  block  on  Penn  street  and  Bainbridge  street 
owned  by  the  Franklin  Sugar  Refining  Company,  (but  to  include 
the  lot  on  the  corner  of  Penn  street  and  South  street  not  now 
owned  by  said  company,  but  to  be  purchased  by  them  and  de- 
livered with  the  before  named  property)  together  with  lot  on 
Penn  street  running  to  Front  street  and  two  piers  and  the  bulk- 
head connected  with  same  opposite  said  property,  together  with 
all  appurtenance  including  whatever  has  been  used  in  connection 
with,  or  as  part  of,  the  before  named  refinery,  hereby  agree  in 
consideration  of  the  sum  of  one  dollar  to  each  of  them  in  hand 
paid,  to  sell  to  John  E.  Searles,  Jr.,  for  account  of  whom  it  may 


668 


[Senate, 


concern  all  the  above-named  property  for  the  sum  of  $2,050,000 
in  the  stock  of  the  American  Sugar  Refining  Company,  one-half 
common  and  one-half  preferred,  upon  condition  that  the  requi- 
site assents  to  the  $25,000,000  increase  of  the  capital  of  the  com- 
pany are  obtained  and  upon  the  following  terms  and  conditions. 

1.  The  sale  shall  be  consummated  on  or  before  March  31st,  at 
the  option  as  to  time  of  the  purchaser,  if  the  assents  are  obtained 
and  if  not  as  soon  thereafter  as  they  are  obtained. 

2.  The  title  to  the  real  property  shall  be  a good  title  in  fee  free 
from  all  liens  and  encumbrances,  except  taxes  of  1892. 

3.  With  the  sale  shall  be  included  all  bone-black  in  use,  trade- 
marks and  patent  rights  belonging  to  the  said  company  or  said 
firm  and  used  in  connection  with  said  refinery. 

3.  The  sale  shall  be  consummated  either  by  a deed  conveying 
the  property  or  by  a transfer  of  the  stock  of  the  E.  C.  Knight 
Company,  or  both,  at  the  option  of  the  purchaser;  if  by  transfer 
of  stock,  the  seller  shall  guarantee  the  buyer  against  all  debts 
and  liabilities  of  the  company  and  shall  have  the  right  to  with- 
draw and  retain  all  property  not  coming  within  the  foregoing  de- 
scription. 

5.  It  is  a further  condition  of  this  sale  that  the  purchaser  shall 
also  purchase  at  their  cash  value  on  the  day  of  the  consummation 
of  the  sale  all  raw  and  refined  sugars,  including  sugars  in  process, 
and  all  new  supplies,  such  as  barrels,  new  filter  bags,  fuel,  etc., 
and  shall  assume  all  contracts  of  the  said  E.  C.  Knight  Company 
or  E.  C.  Knight  & Co.,  for  raw  sugars,  barrels,  bone-black  and 
such  other  supplies  as  are  contracted  for  delivery  during  the  year 
1892. 

6.  Mr.  Searles  for  account  as  aforesaid  hereby  agrees  upon  the 
the  foregoing  conditions  to  make  the  said  purchase.  From  the 
time  that  the  sale  shall  be  consummated  Messrs.  Knight  shall  for 
30  days  continue  if  desired  to  carry  on  the  business  for  account  of 
the*  purchaser. 

Philadelphia,  March  4,  A.  D.,  1892. 

E.  C.  KNIGHT, 

E.  C.  KNIGHT,  JR., 
JNO.  E.  SEARLES,  Jr. 


No.  40.] 


669 


The  undersigned  stockholders  of  the  Delaware  Sugar  Refinery 
in  consideration  of  the  sum  of  one  dollar  to  each  of  them  in  hand 
paid,  hereby  agree  with  John  E.  Searles,  Jr.,  for  account  of  whom 
it  may  concern,  to  exchange  the  number  of  shares  of  Delaware 
Sugar  Refinery  stock  set  opposite  their  respective  names,  for 
shares  in  the  American  Sugar  Refinery  Company,  they  to  receive 
for  each  and  said  shares  of  the  Delaware  Sugar  Refinery  (said 
shares  being  of  the  par  value  of  one  thousand  dollars  each)  twen- 
ty-two and  one-half  shares  of  the  stock  of  the  American  Sugar 
Refining  Company,  one-half  each  in  common  and  preferred  stock, 
the  stock  of  both  companies  to  be  full  paid  and  lion-assessable 
upon  the  following  terms  and  conditions: 

1.  The  said  Delaware  Sugar  Refinery  stock  is  guaranteed  by 
the  sellers  to  comprise  the  entire  plant  used  by  said  company 
in  the  carrying  on  of  the  business  of  sugar  refining  in  the  city  of 
Philadelphia  and  comprising  the  property  described  in  a general 
way  as  follows: 

The  buildings  and  sheds  and  lot  of  ground  bounded  by  Reed, 
Swanson  and  Meadow  streets  and  the  Penn.  R.  R.  Co.’s  yard,  and 
all  the  machinery  and  apparatus  contained  therein,  known  as 
“The  Delaware  Sugar  House,”  together  with  all  the  appurte- 
nances including  whatever  has  been  used  in  connection  with,  or 
as  part  of,  the  before  named  refinery. 

2.  The  sale  shall  be  consummated  on  or  before  March  31,  at  the 
option  as  to  time  of  the  purchaser,  if  the  necessary  assents  of  the 
stockholders  of  the  Delaware  Sugar  House  are  obtained,  and  if 
not,  as  soon  thereafter  as  they  are  obtained. 

3.  The  title  to  the  real  property  shall  be  a good  title  in  fee  free 
from  all  incumbrances,  except  a ground  rent  of  $1,200  per  annum 
which  is  to  be  assumed  by  the  purchaser. 

4.  The  sale  shall  include  all  bone-black,  trade  marks  and  pat- 
ent rights  belonging  to  the  said  company  and  used  in  connection 
with  the  said  refinery. 

5.  The  sellers  shall  guarantee  the  buyer  against  all  debts  and 
liabilities  of  the  company  and  shall  have  the  right  to  withdraw 


670  [Senate, 

and  retain  all  property  not  coming  within  the  foregoing  descrip- 
tion. 

6.  It  is  a further  condition  of  this  sale  that  the  purchaser  shall 
also  purchase,  at  their  cash  value  on  the  day  of  the  consummation 
of  the  sale,  all  raw  and  refined  sugars,  including  sugars  in  process 
and  all  new  supplies  such  as  barrels,  new  filter  bags,  fuel,  etc., 
and  shall  assume  all  contracts  of  the  said  company  for  raw 
sugars,  barrels,  bone-black  and  such  other  supplies  as  are  con- 
tracted for  delivery  during  the  year  1892;  also  a contract  for  the 
sale  of  empty  bags  for  1892  and  1893  and  a lease  of  a lot  west  of 
Swanson  street  until  July,  1893,  at  $2,000  per  annum. 

7.  It  is  further  agreed  by  the  sellers  that  from  the  time  that 
the  sale  shall  be  consummated  George  R.  Bunker  shall  for  thirty 
days  continue,  if  desired,  to  carry  on  the  business  for  account  of 
the  purchaser. 

8.  Mr.  Searles  for  account  as  aforesaid  hereby  agrees  upon  the 
foregoing  conditions,  to  make  the  said  exchange  subject  only  to 
the  condition  that  the  requisite  assents  to  the  $25,000,000  increase 
of  the  capital  stock  of  the  American  Sugar  Refining  Company  are 
obtained. 


J.  Vaughn  Merrick 35  shares 

W.  H.  Merrick,  per  J.  V.  Merrick,  Attorney 35  shares 

The  Philadelphia  Trust,  Safe  Deposit  and  Insurance 
Company,  trustees  under  the  will  of  Jno.  E.  Cope, 
deceased,  W.  L.  Dubois,  Secretary  and  Treasurer. ...  30  shares 

Helen  T.  Cope,  per  J.  V.  Merrick 5 shares 

George  R.  Bunker 14  shares 

S.  Georgiana  Crabb,  by  Geo.  R.  Bunker 25  shares 

Cassine  G.  Wilson,  by  Geo.  R.  Bunker 12  shares 

Geo.  R.  Bunker,  guardian  of  Wilson  minors 11  shares 

Albert  Bunker 4 shares 

Estate  of  John  Birkbeck,  Herbert  Worth,  Executor. . . 22  shares 

R.  H.  Howell 4 shares 

Thos.  A.  Howell 4 shares 


No.  40.] 


671 


F.  H.  Howell,  by  T.  A.  Howell,  Attorney 4 shares 

Henry  B.  Howell 1 share 

Jas.  H.  Post 4 shares 

Accepted  on  conditions  stated  above 


JNO.  E.  SEARLES,  JR. 

Dated  Philadelphia,  March  8,  A.  D.  1892. 

THE  AMERICAN  SUGAR  REFINING  COMPANY. 

Extract  from  minutes  of  Board  of  Directors,  March  10,  1892: 

Resolved,  That  if  the  $25,000,000  increase  of  capital  is  assented 
to  as  required  by  law  the  company  will  purchase  the  real  estate 
and  plant,  either  by  conveyance  of  the  property  or  transfer  of 
the  stock,  of  the  following  refineries,  either,  any  or  all,  or  any  part 
of  either,  any  or  all,  at  prices  payable  in  stock,  half  common  and 
half  preferred,  not  to  exceed  the  following  rates: 


For  the  Franklin  Sugar  Refining  Company $10,000,000 

For  the  E.  C.  Knight  Company 2,050,000 

For  the  Delaware  Sugar  Refining  Company 472,500 

For  the  Spreckels  Sugar  Refining  Company 10,000,000 


I hereby  certify  the  above  to  be  a correct  extract  from  the  min- 
utes of  the  company. 

JOHN  E.  SEARLES,  Secretary. 

City  and  County  of  New  York,  ss: 

John  E.  Searles,  being  duly  sworn,  says:  I am  the  secretary  of 
the  American  Sugar  Refining  Company.  The  foregoing  is  a true 
extract  from  the  minute  book  of  the  company. 

JOHN  E.  SEARLES. 

Sworn  to  before  me  this  17th  day  of  February,  1897.  P.  Fox, 
Notary  Public,  N.  Y.  Co. 

Taxes  paid  by  the  American  Sugar  Refining  Company  in  New 
York,  1891  to  1896: 


672 


[Senate, 


New  York  city,  1891 $563.73 

New  York  city,  1892 4,529.73 

New  York  city,  1893 4,326.30 

New  York  city,  1894 6,353.32 

New  York  city,  1895 7,629.76 

New  York  city,  1896 10,212.70 


$33,615.54 

Brooklyn,  1891 $74,761.99 

Brooklyn,  1892 76,247.75 

Brooklyn,  1S93 78,157.90 

Brooklyn,  1894 72,717.00 

Brooklyn,  1895 78,041.66 

Brooklyn,  1896 77,334.35 


457,260.65 


Total $490,876.19 


City  and  County  of  New  York,  ss: 

Henry  O.  Havemeyer,  being  duly  sworn,  says : I am  tbe  Presi- 
dent of  the  American  Sugar  Refining  Company.  The  foregoing 
is  a statement  of  the  taxes  paid  by  that  company  in  the  State  of 
New  York.  I believe  that  it  is  a correct  statement. 

H.  O.  HAVEMEYER. 

Sworn  to  before  me  this  17th  day  of  February,  1897.  P.  Fox, 
Notary  Public,  N.  Y.  Co. 

New  York,  March  10,  1892. 

Gentlemen. — Having  heretofore  proposed  to  buy  the  refinery 
and  all  buildings,  wharves  and  plant  connected  with  the  es- 
tablishment of  the  Franklin  Sugar  Refining  Company,  of  which 
you  are  the  owners  of  all  the  stock,  in  order  that  we  might  take 
the  title  as  stockholders  of  the  corporation  which  owns  the  prop- 


G73 


jo.  40.] 

;ty  instead  of  directly  as  originally  proposed,  but  not  varying 
1 substance  the  property  intended  to  be  sold  and  that  intended 
ot  to  be  sold,  the  American  Sugar  Refining  Company  offers  to 
urchase  from  you  the  entire  capital  stock  of  the  Franklin  Com- 
any  for  the  sum  of  $10,000,000,  payable  in  shares  of  the  Ameri- 
an  Company  at  par,  one-half  common  and  one  half  preferred, 
‘rovided  that  the  consent  which  is  required  to  authorize  an  in- 
rease  in  the  capital  of  the  American  Company  of  $25,000,000  is 
btained.  This  offer,  subject  to  the  above  proviso,  is  to  become 
i binding  contract  upon  the  acceptance  of  the  same  by  Mr. 
Iharles  C.  Harrison  in  behalf  of  himself  and  his  associates, 
•wners  of  all  the  stock  of  the  Franklin  Sugar  Refining  Company, 
vhen  the  American  Company  will,  with  reasonable  despatch, 
Droceed  to  complete  the  required  consent  for  the  increase  of 
capital. 

jtfo  property  is  intended  to  pass  by  this  sale  of  shares  for 
jpl0,000,000  payable  in  shares  other  than  real  estate,  plant  and 
bone-black. 

The  title  to  the  real  property  of  the  Franklin  Company  shall 
be  marketable  and  clear  of  all  encumbrances  and  liens.  In- 
cluded in  this  property  is  a wharf,  the  title  to  which  stands  in 
the  name  of  William  W.  Frazier  (the  title  to  be  transferred  to 
the  Franklin  Company),  and  excluded  from  this  sale  is  the  title 
to  property  south  of  Almond  street  and  west  of  Swranson  street, 
and  two  houses  north  of  Bainbridge  street,  618  Swanson  street 
and  619  Penn  street  standing  in  the  name  of  the  Franklin  Com- 
pany, which  we  understand  to  have  been  placed  in  the  name  of 
that  company  by  mistake. 

The  bone-black  that  shall  have  been  received  at  the  refinery  on 
the  5th  of  March,  1892,  will  pass  as  property  of  the  Franklin 
Company  to  the  American  Company. 

All  running  contracts  connected  with  the  business  for  the  year 
1892,  or  any  part  of  it,  such  as  those  for  coal,  bone-black,  pack- 
ages, tight  or  slack,  blood-hauling  and  all  similar  contracts  for  sup- 
plies, will  be  assumed  and  preformed  by  the  American  Company, 

the  sellers  paying  all  liabilities  under  said  contract  so  far  as  the 
43 


G74 


[Senati 


same  shall  have  been  executed  by  delivery  or  performance,  am 
also  paying  wages  and  salaries  up  to  the  5th  of  March  instant 
which  is  to  be  the  day  on  which  the  transfer  takes  effect  if  this 
contract  is  completed,  the  account  of  stock  having  been  taken 
on  that  day.  There  will  also  pass  by  the  sale  the  lease  of  the 
city  wharf  at  the  foot  of  Almond  street  and  the  Philadelphia 
office  of  the  company  at  No.  101  South  Front  street.  The  Ameri- 
can Company  will  also  perform  all  existing  contracts  for  1892 
for  the  sale  of  empty  hogsheads,  bags  and  packages  or  things  of 
a similar  nature,  and  the  contract  with  C.  A.  Brinley  for  services. 
All  contracts  for  future  delivery  of  bone-black,  all  merchandise 
and  supplies  on  hand  or  contracted  for  use  in  the  refinery,  such 
as  raw  sugar,  will  be  performed  and  paid  by  the  American  Com- 
pany, the  price  of  that  on  hand  to  be  payable  as  of  March  5, 1892, 
at  cost,  and  the  price  for  future  deliveries  to  be  cost  as  required 
by  contracts  with  the  respective  sellers.  Refined  sugar  and 
sugar  in  the  process  of  manufacturing  will  be  paid  for  on  the 
basis  of  the  market  value  of  refined  sugar  at  the  close  of  business 
on  Saturday,  March  5,  1892,  when  an  account  of  stock  was  taken 
and  the  price  will  be  payable  as  of  that  day;  and  all  expenses, 
rents,  insurance  and  taxes  shall  be  apportioned  as  of  that  date. 

All  property  of  the  Franklin  Company  not  intended  to  pass  by 
the  sale  of  the  shares  shall  be  deemed  to  be  the  property  of  Mr. 
Harrison  and  his  associates  and  shall  be  transferred  to  them  by 
the  Franklin  Company  immediately.  Included  in  the  property 
which  is  thus  to  pass  to  Mr.  Harrison  and  his  associates  shall  be 
all  debts  due  the  Franklin  Company  and  all  bills,  notes,  open 
accounts,  banks  and  banker’s  deposits  and  securities,  and  all 
books  of  account,  records  and  the  minute  book  of  the  Franklin 
Company  and  a quantity  of  machinery  intended  for  experimental 
purpose;  those  are  to  be  retained  by  Mr.  Harrison  and  his  associ- 
ates as  their  property. 

Mr.  Harrison  and  his  associates  shall  pay  and  shall  protect 
the  Franklin  Company  against  all  the  debts  and  liabilities  of 
that  company  down  to  the  oth  of  March,  1892.  All  debts  and 
liabilities  which  shall  be  incurred  by  the  Franklin  Company  from 


STo.  40.] 


075 


md  after  that  date  shall  be  paid  by  the  American  Company;  and 
;hat  company  shall  protect  Mr.  Harrison  and  his  associates  from 
ill  liability  by  reason  thereof. 

f.  Taxes  on  the  real  property  of  the  Franklin  Company  for  the 
rear  1892  shall  be  apportioned  between  Mr.  Harrison  and  his  as- 
sociates and  the  purchaser  of  the  shares  to  the  5th  of  March, 
1892,  as  between  vendor  and  vendee.  Mr.  Harrison  and  his  asso- 
ciates will  continue  to  transact  the  business  of  the  Franklin  Com- 
pany, including  works  and  office  for  one  month  after  the  pur- 
chase money  is  payable  for  account  of  the  purchasers,  and  all 
the  business  from  and  after  the  fifth  of  March  will  be  conducted 
for  account  and  at  the  risk  of  the  purchasers.  But  until  the 
purchase  money  is  paid  Mr.  Harrison  and  his  associates  are  to 
have  the  right  to  keep  the  refinery  fully  supplied  with  all  things 
requisite  for  the  fullest  operation  of  the  same  and  to  continue 
the  business  of  selling  in  their  discretion.  After  the  payment  of 
the  purchase  money,  the  raw  sugar  will  be  supplied  by  the  Amer- 
ican Company  on  notice  of  the  requirements  by  the  managers 
of  the  Franklin  Company,  and  sales  made  as  directed  by  the 
American  Company,  and  all  then  existing  contracts  of  sale  will 
be  filled  by  the  American  Company  at  the  contract  prices;  and 
all  contracts  of  sale  made  after  that  time  will  be  filled  by  the 
American  Company  at  the  contract  prices. 

At  any  time  after  one  year  after  the  completion  of  this  pur- 
chase by  the  payment  of  the  purchase  money,  the  American  Com- 
pany will,  upon  thirty  days’ written  notice  from  Mr.  Harrison  and 
his  associates,  or  a majority  of  such  of  them  as  may  then  be  living, 
dissolve  the  Franklin  Company  and  surrender  its  present  char- 
ter, and  will  secure  the  performance  of  this  contract  by  stamp- 
ing upon  the  certificates  of  the  stock  of  the  Franklin  Company 
notice  that  the  same  are  subject  to  this  provision,  so  that  Mr. 
Harrison  and  his  associates  can  enforce  this  and  the  next  stip- 
ulation of  the  contract.  There  will  also  be  given  to  Mr.  Harri- 
son and  his  associates  a covenant  by  the  American  Company 
that  all  debts  incurred  by  the  Franklin  Company  or  obligations 
for  which  it  may  be  liable,  which  debts  and  obligations  shall  be 
created  or  incurred  after  the  acceptance  of  this  proposal  will  be 


676 


[Senate, 

discharged  and  extinguished  at  any  time  upon  request  of  Mr. 
Harrison  and  his  associates  or  any  of  them  representing  a major- 
ity in  interest  of  the  sellers. 

Until  payment  has  been  made  to  Mr.  Harrison  and  his  asso- 
ciates of  the  purchase  money  all  the  property  covered  by  this 
offer  and  the  proprietorship  of  the  same  shall  be  and  remain 
in  them,  and  they  shall  be  at  liberty  to  conduct  its  operations  as 
though  this  agreement  had  not  been  made.  All  said  operations, 
in  case  of  payment  as  herein  provided,  shall  be  at  the  risk  and 
for  account  of  the  American  Company. 

Within  ten  days  after  the  consent  to  the  increase  of  the  capital 
stock  of  the  American  Company  shall  have  been  obtained,  the 
purchase  money  which  will  be  due  as  of  the  5th  of  March,  1892, 
will  be  paid  by  the  American  Company,  and  at  the  same  time 
settlement  of  all  other  stipulations  in  this  contract  will  be  made 
and  the  amounts  due  to  or  by  Mr.  Harrison  and  his  associates 
will  be  paid  as  if  the  sale  had  been  completed  on  the  5th  of 
March,  1S92. 

If  the  American  Company  fail  in  obtaining  the  assent  to  the 
increase  of  capital  hereinbefore  provided  for  within  thirty  days 
from  the  time  this  offer  becomes  a contract,  Mr.  Harrison  and  his 
associates,  or  a majority  in  interest  of  them  who  shall  then  be 
living,  may  terminate  the  same  on  thirty  days’  written  notice  to 
the  American  Company,  unless  before  the  time  named  in  such 
notice  the  x\merican  Company  has  completed  the  payment  of  the 
ten  million  dollars  in  shares  as  above  stated. 

Whenever  the  American  Company  by  this  contract  agrees  that 
they  will  perform  a contract  that  has  been  made  by  the  Franklin 
Company  it  is  intended  that  the  American  Company  undertakes 
that  the  Franklin  Company  will  perform  the  contract. 

(Signed)  THE  AMERICAN  SUGAR  REFINING  CO. 

By  John  Searles,  Jr.,  Secretary. 

To  Mr.  Charles  C.  Harrison  and  others, 

10th  March,  1892.  We  accept  the  above. 

(Signed)  CHARLES  C.  HARRISON, 

For  self  and  associates. 


No.  40.] 


677 


Thursday,  Feb.  18th,  2.30  P.  M. 

Earn,  Henry,  being  duly  sworu,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  What  relation,  if  any,  have  you  to  the  National  Wall  Paper 
Company?  A.  I am  its  president. 

Q.  How  long  have  you  been  its  president?  A.  Since  the  lat- 
ter part  of  1892. 

Q.  Since  the  organization  of  the  company?  A.  No,  sir. 

Q.  When  was  it  organized?  A.  Organized  in  June,  1892. 

Q.  You  have  been  president  since  when?  A.  Since  November 
or  December,  1892. 

Q.  Who  was  the  first  president  of  the  company?  A.  A gentle- 
man named  Cory. 

Q.  You  succeeded  him?  A.  Yes,  sir. 

Q.  Were  you  one  of  the  original  incorporators?  A.  Yes,  sir. 

Q.  Were  you  one  of  the  original  directors?  A.  No,  sir. 

Q.  Did  any  company  that  you  were  connected  with  become 
part  of  that  consolidation  at  the  time  of  the  original  incorpora- 
tion of  the  company?  A.  Well,  the  National  Wall  Paper  Com- 
pany, after  it  was  formed,  purchased  the  business  with  which  1 
was  then  connected. 

Q.  What  company  was  that?  A.  That  was  the  Robert 
Graves  Company. 

Q.  What  other  businesses  did  it  purchase?  A.  Do  you  wish 
them  stated  in  detail?  (Witness  refers  to  paper.)  I wish  to  state 
right  here  that  these  were  not  all  acquired  at  one  time;  some  were 
acquired  at  that  time  and  some  subsequently. 

Q.  Perhaps  I can  help  you;  did  you  acquire  the  S.  E.  James 
Company?  A.  I cannot  remember  whether  that  was  the  first  one 
acquired;  they  acquired  a number  in  the  first  few  months  after 
the  incorporation  of  the  company;  among  them  was  included — 

Mr . Lexow  reads  list  of  companies  acquired  by  the  United 
States  Wall  Paper  Company.  Mr.  Burn  answered  in  the  affirma- 
tive as  each  name  was  called. 


078  [Senate, 

Q.  You  were  president  of  the  Robert  Graves  company?  A.  I 
was  manager  and  treasurer. 

Mr.  Lexow  continues  reading  names  of  companies  acquired; 
and  Mr.  Burn  answered  in  the  affirmative  as  the  name  of  each 
company  was  called. 

Q.  Any  others?  A.  Those  constituted  all  the  factories. 

Q.  Were  any  other  concerns,  firms  or  agencies  included  in  the 
consolidation?  A.  Yes;  we  also  purchased  the  S.  A.  Maxwell 
Company  of  Chicago. 

Q.  Any  others?  A.  Subsequent  to  the  purchase  of  the  majority 
of  these  factories,  we  purchased  the  factories  of  Janeway  & Car- 
penter, of  New  Brunswick,  N.  J.,  and  Creswell  & Co.,  of  Philadel- 
phia. 

Q.  Any  others?  A.  Still  later  on  we  purchased  the  Boucher 
Paper  Company,  of  Wisconsin. 

Q.  Any  others?  A.  Before  these  we  purchased  the  business  of 
M.  H.  Burgess  & Sons;  I think  that  constituted  the  entire  pur- 
chases. 

Q.  Added  together  that  includes  how  many  corporations,  agen- 
cies and  firms  all  engaged  in  the  manufacture  or  sale  of  wall 
paper?  A.  I make  it  28. 

Q.  And  purchased  or  acquired  within  what  period  of  time?  A. 
Within  three  years. 

Q.  Were  these  as  originally  constituted  actively  competing 
among  themselves  in  the  wall  paper  business  in  this  country? 
A.  Yes,  sir. 

Q.  What  territories  are  covered  by  the  respective  concerns 
thus  consolidated?  A.  They  canvass  the  entire  United  States  and 
part  of  Canada;  very  little  outside  of  that. 

Q.  Was  the  purpose  of  this  consolidation,  in  effect,  to  secure 
within  the  consolidation  the  interests  representing  that  branch 
of  industry  covering  the  entire  United  States  and  Canada?  A. 
Not  the  entire  industry;  no,  sir. 

Q.  So  far  as  you  could  acquire  it?  A.  No,  sir;  we  decline  to 
purchase  certain  factories  from  time  to  time. 

Q.  How  many  factories  competing  against  this  concern  of 


so.  40.] 


679 


yours,  or  among  themselves,  were  left  out  of  this  syndicate  or 
Consolidation  after  the  last  that  you  have  mentioned  had  been 
purchased;  how  many  were  left  out?  A.  About  17. 

Q.  What  proportion  of  the  trade  in  the  country  did  the  17  not 
made  part  of  this  consolidation  represent?  A.  I have  no  knowl- 
edge regarding  the  operations  of  our  competitors. 

Q.  Do  you  not  know  from  your  own  statistics  what  amount  of 
the  business  of  the  United  States  was  secured  inside  of  this  con- 
solidation by  this  combination  of  interests?  A.  No,  sir;  I have 
no  means  of  knowing  and  have  never  heard  an  estimate  of  what 
our  competitors  made;  I can  only  tell  about  the  capacity  by  the 
numbers  of  machines. 

Q.  You  can  tell?  A.  That  is  the  only  basis. 

Q.  You  judge  by  the  number  of  machines  in  operation  the 
amount  of  output  of  wall  paper;  what  amount  of  wall  paper  is 
controlled  within  this  organization  as  compared  with  that  com- 
peting against  it?  A.  About  60  or  65  per  cent. 

Q.  Are  you  underestimating  the  output  or  are  you  making  a 
liberal  estimate?  A.  I can  give  you  the  facts  and  you  may  draw 
your  own  conclusion;  there  are  about  188  machines  operated  by 
the  company  and  about  88  by  competitors. 

Q.  One  hundred  and  eighty-eight  as  against  eighty-eight?  A. 
Yes,  sir. 

Q.  Now,  these  1SS  were  operating  in  competition  against  each 
other  as  well  against  the  88  not  taken  into  the  combination  at  the 
time  or  immediately  preceding  the  combination  of  interests,  were 
they  not?  A.  Yes,  sir. 

Q.  What  is  the  amount  of  capital  of  this  National  Wall  Paper 
Company  that  was  authorized  by  your  certificate  of  incorporation 
on  the  one  hand  and  that  that  was  issued  for  the  last  factory 
that  you  have  acquired  on  the  other?  A.  The  original  issue  of 
stock  was  $14,000,000. 

Q.  What  was  the  authorized  capital  in  the  first  instance?  A. 
Fourteen  million;  it  was  subsequently  increased  to  $30,000,000. 

Q.  There  were  issued  of  that  for  the  last  purchases  about 
$27,000,000  or  $2S,000,000. 


680 


[Senate, 


Q.  And  now  outstanding?  A.  Yes,  sir. 

Q.  Is  the  stock  of  one  class  or  more  than  one  class?  A.  The 
capital  stock  is  all  of  one  class. 

Q.  Known  as  general  stock?  A.  As  common  stock. 

Q.  Organized  under  the  laws  of  what  State?  A.  Under 
the  laws  of  the  State  of  New  York;  I trust  we  will  have  con- 
sideration at  their  hands  in  consequence. 

Mr.  Lexow:  You  are  entitled  to  some  consideration  on  that 
account. 

A.  We  paid  $37,500  for  the  privilege. 

Q.  You  didn’t  believe  that  it  was  necessary  to  go  over  into  the 
State  of  New  Jersey  and  organize  there?  A.  No,  sir;  we  didn’t 
care  to  shirk  any  responsibilities;  we  were  engaged  in  a legiti- 
mate enterprise. 

Q.  Has  this  corporation  of  yours  any  other  class  of  security 
than  the  common  stock  that  you  have  referred  to?  A.  Yes; 
it  has  stock  called  debenture  stock. 

Q.  How  much  of  that?  A.  The  authorized  amount  was 

$8,000,000. 

Q.  How  much  issued?  A.  Seven  million  five  hundred  thou- 
sand dollars. 

Q.  This  debenture  stock  is  substantially  or  essentially  what  is 
known  as  preferred  stock?  A.  No;  it  is  in  the  nature  of  an  obli- 
gation bearing  interest,  at  the  rate  of  8 per  cent,  per  annum, 
provided  that  interest  is  earned. 

Q.  In  the  nature  of  a mortgage  upon  the  property?  A.  tNo, 
sir;  it  ranks  pari  passu  with  all  other  creditors. 

Q.  It  is  preferential  to of  the  company?  A.  No,  sir;  it 

stands  on  the  same  basis. 

Q.  What  was  this  $7,500,000  of  your  capital  stock  called  de- 
benture stock  issued  for?  A.  Mainly  for  the  assets  of  the  con- 
cern acquired. 

Q.  For  -what  is  known  as  tangible  assest?  A.  Tangible  assets; 
real  estate. 

Q.  Personal  property  other  than  what  is  known  as  “ good 
will?”  A.  Yes,  sir. 


NTo.  40.] 


081 


Q.  What  was  the  general  or  common  stock  of  the  corporation 
issued  for?  A.  It  was  issued  for  ‘‘good  will,”  patents,  trade 
marks,  etc. 

Q.  Was  there  any  division  made  at  the  time  of  the  issuance  of 
that  stock  between  that  which  was  issued  in  the  form  of  de- 
bentures and  that  which  was  issued  in  the  form  of  common 
stock?  A.  I suppose  you  mean  by  that  did  the  vendors  receive 
a portion  of  each  stock? 

Q.  Yes?  A.  They  did;  in  most  cases  they  did;  in  some  cases 
there  was  debenture  and  no  common  stock. 

Q.  Was  the  common  stock  issued  separately  from  the  issue  of 
debenture  stock  for  “good  will”  as  compared  to  the  tangible  prop- 
erty? A.  The  amount  of  common  stock  that  was  issued  bore  no 
relation  to  the  amount  of  debenture  that  was  issued  to  the 
vendors. 

Q.  There  was  no  proportion  between  the  two?  A.  No,  sir. 

Q.  You  figured  the  tangible  property  of  a certain  company  or 
firm  and  issued  for  that  tangible  property  the  debentures?  A. 
Yes,  sir. 

Q.  Then  you  figured  on  the  “good  will”  and  issued  for  that 
common  stock?  A.  No,  sir. 

Q.  Just  state  the  process  by  which  you  reached  the  amount  of 
common  stock  issued  for  “good  will?”  A.  We  calculated  the 
value  of  a business  by  its  earning  capacity;  we  multiplied  the 
net  profits  of  a certain  year  by  16  and  that  became  the  total 
issue  of  stock  to  the  concern  for  its  business;  from  that  total  we 
deducted  an  amount  for  tangible  assets;  for  that  we  issued  de- 
benture stock  and  for  the  balance  we  issued  common  stock. 

Q.  With  other  words,  you  capitalize  the  earning  power  of  each 
separate  concern  at  the  rate  of  6 per  cent,  and  fix  that  capital  so 
ascertained  as  the  basis  for  the  issuance  of  common  stock?  A. 
Of  common  and  debenture. 

Q.  Do  you  mean  that  the  earning  capacity  of  the  concern  was 
also  a basis  for  the  issuance  of  debenture  stock?  A.  It  was  ex- 
pected that  the  capitalization  of  the  concern,  in  basing  the  divi- 
dends on  the  debentures  and  on  the  common  stock,  would  yield 


682 


[Senate, 


the  same  amount  of  profit  to  the  vendor  as  it  had  done  in  previous 
years;  I could  best  answer  by  illustrating  a case;  we  will  assume 
that  a concern  had  been  earning  $50,000  per  year  as  profit;  multi- 
plying that  by  16  would  give  $800,000;  we  will  assume  that  the 
tangible  assets  of  that  concern  amounted  to  $400,000;  they  con- 
sequently receive  $400,000  in  debenture  and  $400,000  in  common 
stock. 

Q.  Then,  you  didn’t  estimate  the  issue  of  debenture  stock  with 
reference  to  the  earning  capacity  of  the  plant,  but  the  issue  of 
common  stock  in  that  connection?  A.  Yes;  I think  that  is  about 
right. 

Q.  You  estimated  on  the  proposed  tangible  assets  of  the  con- 
cern and  issued  debenture  stock  for  that;  you  then  estimated  the 
earning  capacity  of  the  plant  by  multiplying  its  profits  of  the  pre- 
vious year  by  16  and  that  formed  the  basis  for  an  issue  of  common 
stock,  deducting  the  amount  of  debenture  stock  from  the  total? 
A.  That  is  right. 

Q.  Was  that  rule  observed  in  each  case  in  the  issue  of  your 
common  stock?  A.  In  nearly  every  case;  when  we  came  to  in- 
vestigate some  of  the  concerns  we  found  that  they  had  made  no 
profit  and  were  not  entitled  to  common  stock,  and  they  were 
given  no  common  stock,  but  simply  given  debenture  stock  for  the 
tangible  assets. 

Q.  Whenever  you  found  that  no  actual  profit  had  been  made 
did  you  in  every  case  refuse  to  issue  common  stock?  A.  Most  de- 
cidedly. 

Q.  But  did  issue  the  full  amount  of  the  debenture  stock  cover- 
ing the  appraised  value  of  the  properties  of  that  non-productive 
concern?  A.  They  were  non-productive  of  profits;  they  certainly 
produced  wall  paper., 

Q.  I mean  that;  you  wish  to  be  understood  now  on  the  record 
as  having  followed  this  plan  or  system  without  departure?  A. 
Not  entirely;  in  a few  cases  we  issued  no  debenture  stock,  but 
paid  cash  for  the  assets,  or  part  cash  and  part  debenture  stock; 
and  possibly,  in  one  case  we  placed  an  estimate  on  the  value  of 
the  property  acquired — - 


No.  40.] 


G83 


Mr.  Lexow  (interrupting):  And  paid  for  it  in  cash?  A.  We 
might;  partly  in  cash. 

Q.  In  how  many  cases  did  you  make  that  distinction?  A.  I 
can  recall  only  one  case. 

Q.  What  case  was  that?  A.  M.  H.  Burg  & Sons  of  Buffalo, 
N.  T. 

Q.  Where  it  was  paid  for  in  cash?  A.  Partly  in  cash,  part  in 
debenture  and  part  in  common  stock. 

Q.  Do  you  wish  to  be  understood  as  stating  that  at  the  time  of 
the  issue  of  the  capital  stock,  according  to  the  figures  as  they  ap- 
peared upon  the  books  of  the  respective  companies,  they  indicated 
an  earning  capacity  in  the  form  of  actual  net  profit  of  the  amount 
of  stock  that  was  issued  for  them  or  in  purchase  of  their  proper- 
ties? A.  Positively;  the  results  were  ascertained  by  accounts; 
we  didn't  take  anybody’s  word  for  it;  we  made  a thorough  inves- 
tigation in  each  case. 

Q.  Do  you  mean  to  say  that  the  books  of  the  respective  con- 
cerns were  examined  and  their  actual  net  profits  determined  and 
the  stock  issued  in  compliance  with  the  plan  or  system  referred 
to  by  you  in  each  case  except  the  one  that  you  have  referred  to? 
A.  Yes,  sir. 

Q.  Have  you  a system  of  factors’  agreement?  A.  We  have  no 
agreement  known  as  factors’  agreements. 

Q.  Have  you  any  agreement  under  which  those  who  purchase 
your  goods  sell  them  to  the  public?  A.  Yes;  we  have  a few. 

Q.  A few?  A.  Yes. 

Q.  Don’t  you  operate  under  a system  of  agreements  which  are 
signed  by  those  who  handle  your  goods?  A.  Only  with  parties 
buying  above  a certain  amount  of  goods. 

Q.  What  does  that  amount  to?  A.  About  $10,000  a year. 

Q.  Is  there  any  fixed  rate  established  which  will  entitle  the 
seller  to  the  agreement  mentioned?  A.  No,  sir;  there  are  certain 
sections  of  the  country  where  it  is  to  our  interest  to  distribute 
our  goods  through  parties  of  this  kind  and  save  ourselves  the  ex- 
pense of  sending  salesmen  through  those  sections;  and  in  consid- 
eration of  that  we  give  those  parties  a discount. 


GS4 


[Senate, 


Q.  That  doesn’t  answer  my  question. 

(Question  repeated). 

Q.  Do  you  mean  a rebate?  A.  No,  sir;  it  is  an  absolute  dis- 
count from  the  face  of  the  bill. 

Q.  Have  you  a copy  of  that  agreement  with  you?  A.  No,  sir; 
I have  not. 

Q.  Will  you  be  able  to  furnish  this  committee  with  a copy  of 
such  an  agreement?  A.  Yes,  sir. 

Q.  Are  the  agreements  uniform  in  character?  A.  Yes;  uni- 
form in  character. 

Q.  And  operate  through  what  sections  of  the  country?  A. 
Well,  I don’t  know  that  I can  give  the  particular  sections  of  the 
country,  except  that  I presume  most  of  them  are  in  the  west. 

Q.  Don’t  you  know,  Mr.  Burn?  A.  I cannot  recall  them  all. 

Q.  Were  all  these  properties  that  were  taken  into  this  com- 
bination active  working  properties  at  the  time  of  their  acquisi- 
tion? A.  Yes,  sir. 

Q.  Are  all  of  them  actively  engaged  in  properties  to-day?  A. 
No,  sir;  the  smaller  ones  have  been  consolidated  with  large  fac- 
tories to  avoid  an  excessive  expense  for  management. 

Q.  How  many  then  going  concerns  or  subsequently  acquired 
concerns  in  operation  at  the  time  of  their  acquisition  have  been 
discontinued  or  stopped  by  the  National  Wall  Paper  Company? 
A.  About  ten. 

Q.  Forming  what  proportion  of  the  whole?  A.  In  percentage 
of  output,  perhaps  15  per  cent. 

Q.  Fifteen  per  cent,  of  the  whole?  A.  Yes,  sir. 

Q.  When  were  these  concerns  closed?  A.  We  consolidated 
four  of  them  immediately  upon  our  incorporation  and  the  others 
later  on. 

Q.  When  you  speak  of  consolidation,  what  do  you  mean?  A. 
I mean  transfer  of  the  machinery  to>  our  other  factories. 

Q.  Did  that  consolidation  increase,  limit,  or  restrict  the  pro- 
duction of  the  goods  theretofore  manufactured  in  the  respect- 
ive concerns?  A.  It  had  no  effect  whatever  upon  the  result,  ex- 


No.  40.] 


685 


cept  to  reduce  the  cost  of  management;  it  had  no  effect  upon  the 
output. 

Q.  Do  you  mean  to  say  that  immediately  after  the  organiza- 
tion of  the  National  Wall  Paper  Company  the  aggregate  optput 
of  your  concern  equalled  the  aggregate  output  of  the  independent 
concerns  before  consolidation?  A.  The  output  was  increased. 

Q.  Have  you  the  figures?  A.  I can  give  you  the  figures;  I can- 
not give  you  the  data  from  which  they  were  made  up. 

Q.  You  have  the  figures?  A.  They  are  embodied  in  an  affida- 
vit before  me. 

Q.  What  is  that  book  that  you  have  there?  A.  That  is  some 
evidence  in  one  of  the  suits  that  was  brought  to  maintain  the 
legality  of  our  agreements. 

Q.  Of  what  agreements?  A.  Of  our  agreements  with  the 
vendor. 

Q.  Of  the  respective  properties?  A.  Of  the  respective  bills  of 
sale,  you  might  say. 

Q.  Were  those  properties  undertaken  under  bills  of  sale  exe- 
cuted by  the  owners  of  the  independent  firms  or  companies?  A. 
YTes,  sir. 

Q.  What  are  the  figures  that  you  have  there?  A.  Well,  we  es- 
timated that  the  independent  concerns  had  made  about  10,000,- 
000  rolls  from  1891  to  1892,  and  our  books  indicated  that  we  had 
made  from  125,000,000  to  130,000,000  the  first  year  of  our  incor- 
poration. 

Q.  And  now?  A.  We  have  been  suffering  at  the  present  time 
from  the  depressed  condition  of  business,  but  I assume  that  we 
shall  probably  make  very  close  to  the  amount  this  year  that  the 
companies  made  prior  to  their  incorporation  by  the  National 
Wall  Paper  Company. 

Q.  Have  you  any  figures  showing  the  output  of  the  consoli- 
dated concerns  during  the  year  1896?  A.  Yes;  we  made  consid- 
erably in  excess  of  100,000,000  rolls. 

Q.  Have  you  the  actual  figures.  A.  No,  sir;  my  impression  Is 
that  there  was  about  120,000,000. 


686  [Senate,  j • 

Q.  Have  you  any  statement  that  will  show  those  figures.  A.  I 
have  none. 

Q.  Can  you  have  one  prepared  within  a reasonable  period  of 
time?  A.  Yes,  sir. 

Q.  How  long  will  it  take?  A.  Twenty-four  hours. 

Q.  Where  is  your  general  office  located.  A.  No.  416  Broome 
street. 

Q.  In  the  original  bills  of  sale  was  there  a stipulation  by  the 
seller  to  the  effect  that  he  should  not  engage  in  the  same  busi- 
ness in  competition  with  you  after  the  sale?  A.  Yes,  sir. 

Q.  Have  you  a form  of  the  bill  of  sale  there?  A.  I think  it  is 
embodied  in  this  document. 

Q.  Can  you  turn  to  it?  A.  Yes,  sir. 

(Mr.  Lexow  examines  document.)  The  stenographer  will  mark 
it  Exhibit  6,  page  40. 

Q.  Would  you  mind  our  putting  this  in  evidence?  A.  No,  sir. 

Q.  Was  that  form  of  bill  of  sale  executed  by  each  one  of  the 
competing  concerns  consolidated  under  one  management?  A. 
Yes,  sir. 

Q.  In  the  stoppage  of  the  various  concerns  that  were  consoli- 
dated into  others  did  you  discharge  labor?  A.  Not  to  any  ex- 
tent. 

Q.  To  what  extent?  A.  Very  trilling  extent;  I can  best  illus- 
trate that  point  by  stating  that  we  have  found  it  difficult  to  get 
sufficient  competent  labor  to  supply  our  wants. 

Q.  Without  reference  to  what  is  called  particularly  skilled  la- 
bor, didn’t  you,  in  many  of  those  various  consolidations,  dis- 
charge unskilled  labor?  A.  Very  little;  very  little,  indeed. 

Q.  To  what  extent?  A.  Oh,  I don’t  suppose  20  men  were 
thrown  out  of  employment. 

Q.  Have  you  within  20  men  employed  to-day  of  the  number  that 
were  employed  by  those  independent  concerns  prior  to  the  con- 
solidation? A.  I think  we  have  more. 

Q.  Do  you  mean  that  the  business  has  increased?  A.  Yes,  sir; 
consolidation  brought  about  an  increase  in  the  factories  that  we 
continued  to  operate;  they  were  increased  in  their  output  by  the 


No.  40.] 


G87 


placing  of  machinery  in  them  that  had  been  in  use  in  connection 
with  the  factories  that  were  closed. 

Q.  The  output  of  125,000,000  required  more  labor,  do  you  mean, 
than  100,000,000?  A.  Yes,  sir. 

Q.  What  was  the  effect  upon  the  price  of  the  product?  A.  The 
first  step  we  took  in  regard  to  the  prices  was  to  reduce  them  10 
per  cent.,  with  the  expectation  that  we  might  make  good  that  re- 
duction by  increased  product. 

Q.  What  is  the  effect  upon  the  prices  to-day?  A.  Do  you  mean 
in  the  way  of  lowering  or  raising  the  prices? 

Q.  How  do  the  prices  that  you  charge  for  your  goods  compare 
with  the  prices  charged  by  the  independent  factories  previously 
existing?  A.  I should  judge  from  20  to  25  per  cent,  lower. 

Q.  Is  there  any  lessening  in  the^amount  or  value  of  raw  ma- 
terial? A.  Slight. 

Q.  To  what  extent?  A.  Oh,  I cannot  remember  exactly;  per- 
haps 10  per  cent;  that  is  not  in  all  material;  a number  of  ma- 
terials have  advanced  in  price  and  are  higher  to-day  than  they 
were  at  the  time  the  company  wras  formed. 

Q.  Any  reduction  in  the  rate  of  wages?  A.  No,  sir;  instead  of 
that  the  same  wages  and  more  continuous  employment. 

Q.  Are  you  certain  about  that?  A.  I know  it. 

Q.  Have  you  any  statistics  going  to  show  the  amount  of  wages 
paid  as  compared  with  the  wages  paid  by  the  independent  con- 
cerns? A.  I have  to  say  this  in  regard  to  that;  before  the  incor- 
poration of  this  company  we  operated  our  factories  about  six  or 
seven  months  in  the  year;  that  under  agreement  with  the  labor 
unions  we  are  now  giving  those  men  employment  for  eleven 
months  and  paying  them  full  rates. 

Q.  Determined  by  a scale  fixed  by  the  labor  union?  A.  Yes, 
sir. 

Q.  In  every  case?  A.  Yes,  sir. 

Q.  Both  as  to  skilled  and  unskilled  labor?  A.  There  is  no 
union  of  unskilled  labor. 

Q.  That  refers  then  only  to  skilled  labor?  A.  Which  com- 
prises the  greater  number  of  our  employees. 


688 


[Senate, 


Q.  What  proportion  of  your  employees  is  represented  by  skilled 
labor?  A.  Outside  of  boys  and  girls,  I should  say  75  per  cent. 

Q.  What  proportion  of  boys  and  girls?  A.  I really  couldn’t 
say,  because  more  of  that  class  of  help  is  employed  in  some  fac- 
tories than  in  others. 

Q.  What,  in  your  judgment,  would  be  the  average?  A.  I don’t 
think  that  I could  answer  that  satisfactorily. 

Q.  How  many  men  have  you  altogether  in  the  employ  of  the 
National  Wall  Paper  Company?  A.  That  I couldn’t  tell  you  with- 
out making  a calculation. 

Q.  Can’t  you  make  it  now?  A.  I should  estimate,  roughly, 
about  5,000. 

Q.  Scattered  throughout  the  United  States  and  Canada?  A. 
Scattered  throughout  the  United  States. 

Q.  How  many  in  the  State  of  New  York?  A.  Well,  about  half 
of  that  number. 

Q.  About  2,500  in  the  State  of  New  York?  A.  Yes,  sir. 

Q.  Do  you  operate  in  the  State  of  New  York  under  a system  of 
agreements  with  the  sellers  of  your  product?  A.  In  perhaps  one 
or  two  cases  we  do. 

Q.  What  cases  are  those?  A.  They  are  jobbers  located  at  dif- 
ferent points  in  the  State. 

Q.  Jobbers?  A.  Yes,  sir. 

Q.  Have  they  an  association?  A.  No,  sir. 

Q.  The  jobbers  in  your  particular  trade?  A.  The  jobbers  of 
our  competitors  have  an  association,  but  we  have  not. 

Q.  There  is  one  operating  against  you,  you  claim,  in  this  State? 
A.  Yes,  sir;  there  are  two  organizations  operating  against  us. 

Q.  Under  agreements?  A.  I presume  so;  one  of  them  is  in- 
corporated and  the  other  is  not. 

Q.  What  is  the  name  of  the  incorporated  one?  A.  I couldn’t 
tell  you  the  name  just  now. 

Q.  Are  the  argreements  that  you  have,  the  system  established 
by  you,  similar  to  that,  which  operates  against  you?  A.  I don’t 
know  just  the  methods  that  our  contemporaries  use;  I don’t  know 
that  they  have  a system;  I only  know  that  the  wall  paper  jobbers 


No.  40.] 


689 


so-called,  have  an  organization  of  some  kind;  I presume  they  are 
associated  for  mutual  benefit. 

Q.  You  claim  that  you  are  not  a trust?  A.  No,  sir. 

Q.  The  agreement  that  you  have  with  the  sellers  of  your  pro- 
duct does  restrict  them  to  the  sale  of  your  product?  A.  Yes, 
sir. 

Q.  In  terms?  A.  In  terms,  yes;  practically  act  as  our  agents. 

Q.  Under  what  is  known  as  factors’  agreements?  A.  Well, 
I don’t  know  that  I quite  understand  what  that  is. 

Q.  Do  you  send  your  goods  to  them  on  consignment?  A.  No, 
sir. 

Q.  They  are  absolute  purchasers?  A.  Yes,  sir. 

Q.  And  pay  you  for  your  product  absolutely?  A.  Absolutely. 

Q.  With  an  underlying  agreement  restricting  them  to  the  sale 
of  your  product?  A.  Yes,  sir. 

Mr.  Lexow:  We  will  have  to  discontinue  your  testimony  until 
we  can  get  a copy  of  that  agreement,  Mr.  Burn.  Will  you  have 
one  here  by  10  o’clock  to-morrow  morning? 

Mr.  Burns:  Yes,  sir. 

Mr.  Lexow:  We  stand  adjourned  until  10  o’clock  to-morrow 
morning.  There  is  no  necessity  for  the  service  of  a subpoena. 

Mr.  Burns:  No,  sir;  I will  bring  it. 


TENTH  PUBLIC  HEARING,  MORNING  SESSION,  FRIDAY, 
FEBRUARY  19,  1897. 

Henry  Burn,  recalled. 

Examined  by  Mr.  Lexow: 

Q.  Have  you  brought  with  you  the  statistics  inquired  of?  A. 
Well,  I was  requested  to  bring  with  me  a copy  of  the  agreement 
we  made  with  jobbers.  1 

Q.  Have  you  that  with  you,  that  is  your  so-called  factors’ 
agreement?  A.  Well,  I don’t  regard  it  as  a factor  agreement, 
simply  an  agreement  to  handle  the  goods  of  the  company  at  a 
certain  discount  based  on  a certain  volume  of  business. 

44 


090 


[Senate, 


Q.  I read  clause  3 of  your  agreement:  “The  purchaser  ex- 
pressly guarantees  and  agrees  that  between  September  1,  1S96, 
and  June  30,  1897,” — blank  for  he,  or  she,  or  they — “ will  not 
purchase  or  acquire  any  wall  paper  or  hangings,  the  product  of 
any  person  or  corporation  other  than  the  company;”  has  that 
been  a part  of  your  agreements  ever  since  the  organization  of  the 
National  Wall  Paper  Company?  A.  No,  sir;  it  is  a form  we  have 
used  during  the  past  two  years  only,  and  that  is  the  only  contract 
that  we  ever  issued. 

Q.  That  you  ever  issued?  A.  Yes. 

Q.  Did  you  two  years  ago  have  any  other  contract  excepting 
the  one  which  I now  hold?  A.  No  contract;  no,  sir. 

Q.  Any  other  plan  or  system  of  transaction?  A.  Yes,  sir;  we 
had,  we  issued  an  option,  the  first  three  years  of  our  company’s 
formation,  entitling  the  dealer  who  purchased  all  of  his  goods 
from  the  company,  all  of  his  requirements  for  the  year;  we  issued 
an  option  to  the  trade,  and  to  those  who  availed  themselves 
of  it,  we  gave  a rebate  at  the  end  of  the  season,  varying  from  the 
first  year  of  10  per  cent,  to  the  last  two  years  of  20  per  cent. 

Q.  Is  that  system  still  in  operation?  A.  No,  sir. 

Q.  That  system  was  superceded  by  this?  A.  That  system 
was — yes,  sir. 

Q.  About  how  long  ago?  A.  Since  July  1,  1895. 

Q.  What  caused  a change  in  your  plan  or  system  of  opera- 
tions? A.  The  rebate  system  was  not  entirely  satisfactory  to 
all  of  our  customers;  we  desired  to  meet  their  views,  and 
abolished  it. 

Q.  You  did  not  abolish  it,  did  you,  until  after  you  had  driven 
a large  proportion  of  the  jobbers  of  the  country  out  of  the  busi- 
ness? A.  We  never  drove  a single  jobber  out  of  business. 

Q.  Isn’t  it  true  that  as  the  result  of  the  plan  or  system  that 
your  company  developed  two  years  ago  more  than  sixty  of  the 
largest  jobbers  in  the  country  were  compelled  to  close?  A.  It 
is  absolutely  untrue. 

Q.  Do  you  know  of  any  cases  where  they  were  constrained  to 
stop?  A.  I know  of  no  cases  where  they  were  constrained  to  go 
out  of  business. 


No.  40.] 


691 


Bv  Mr.  Mazet: 

Q.  Do  you  know  any  cases  where  they  did  go  out  of  business? 
A.  There  was  a few  cases  where  men  went  out  of  business  volun- 
tarily; some  cases  due  to  old  age  and  in  other  cases  owing  to  bad 
judgment. 

By  Mr.  Lexow : 

Q.  Did  in  the  other  cases  the  bad  judgment  consist  in  the  fact 
that  you  put  up  an  establishment  next  to  the  jobber  and  under- 
sold him  until  you  had  forced  him  out  of  the  business?  A.  No, 
sir. 

Q.  Did  that  not  occur  at  all?  A.  No,  sir. 

Q.  Jnno  individual  case?  A.  No,  sir. 

Q.  Positive  about  that,  Mr.  Burn?  A.  Yes,  sir. 

Q.  You  were  president  of  the  company  at  the  time?  A.  Yes, 
sir. 

Q.  Isn’t  it  true  that  the  change  in  system  that  was  introduced 
two  years  ago  was  due  to  the  fact  that  you  had  secured  control 
of  the  trade,  and  that  the  rebate  system  was  no  longer  necessary 
in  order  to  give  you  that  market  which  you  required?  A.  No,  sir. 

Q.  Did  you  give  jobbers,  then,  any  option  of  doing  business,  or 
option  either  to  sell  out  to  you  or  go  out  of  business?  A.  No,  sir; 
we  never  intimated  any  such  thing. 

Q.  In  no  case?  A.  In  no  single  case. 

Q.  Do  you  know  Mr.  Smith?  A.  I do;  very  well. 

Q.  Enos  B.  Smith?  A.  Yes,  sir. 

Q.  Did  you  give  him  the  option  either  to  sell  to  you  or  to  go  out 
of  business?  A.  No,  sir;  on  the  contrary,  Mr.  Smith  requested 
our  company  to  purchase  his  business,  which  we  very  reluctantly 
did;  I will  tell  you  the  transaction,  Mr.  Chairman,  if  you  like. 

Q.  Did  you  make  it  impossible  for  Mr.  Smith  to  compete?  A. 
No,  sir. 

Q.  Did  you  withdraw  your  deliveries  to  him  because  of  his  pur- 
chasing or  dealing  in  the  goods  of  competing  concerns?  A.  We 
have  never  withheld  any  goods  from  Mr.  Smith;  he  could  have 
had  all  the  goods  he  wanted  at  any  time. 


692 


[Senate, 


Q.  Is  that  your  side  of  the  transaction,  then,  Mr.  Burns?  A. 
Why,  in  the — at  the  end  of  our  first  years’  business  we  did  away 
with  all  special  discounts  to  jobbers;  or  in  other  words,  we  gave 
the  entire  trade  the  benefit  of  the  discounts  that  we  had  been  al- 
lowing the  jobbers  alone;  the  discount  that  Mr.  Smith  could  have 
obtained  the  second  year  was  identical  with  the  discount  that  he 
had  obtained  the  previous  year;  but  the  same  discounts  we  also 
gave  to  the  general  trade. 

Q.  What  was  the  reason,  Mr.  Burns;  explain  the  reason  why 
you  changed  the  system?  A.  Well,  we  did  it  to  win  public  favor. 

Q.  Wasn’t  it  because  you  found  the  jobbers  dealing  in  and  dis- 
posing of  the  product  of  competing  concerns?  A.  No,  sir;  be- 
cause under  their  agreements  with  us  they  could  not  do  so. 

Q.  But  did  you  find  that  they  did  do  so?  A.  No,  sir. 

Q.  And  that  they  had  carried  on  a struggle  against  you  all 
through  the  United  States?  A.  No,  sir;  I never  heard  of  any 
such  th:ng. 

Q.  Do  you  absolutely  deny  that;  is  that  a fact?  A.  I have  no 
knowledge  of  any  such  condition  of  affairs. 

Q.  Did  you  not  have  a struggle  with  the  jobbers  of  the  country? 
A.  When?/ 

Q.  Two  years  ago.  A.  Struggle? 

Q.  Yes?  A.  Not  that  I am  aware  of. 

Q.  They  giving  the  goods  of  competitors  a market  through 
their  establishments?  A.  Well,  if  they  were  all  killed  off  I don’t 
see  how  they  could  give  a market  to  the  goods  of  our  competi- 
tors. 

Q.  Didn’t  you  then  proceed  to  try  and  kill  them  off?  A.  No, 
sir. 

Q.  Wasn’t  that  the  reason  of  your  changing  the  system?  A. 
On  the  contrary,  we  tried  to  secure  their  business. 

Q.  Are  you  certain  with  reference  to  the  figures  that  you  gave 
yesterday  as  to  the  amount  of  wages  paid  and  the  number  of 
men  employed?  A.  Yes,  sir. 

Q.  Before  proceeding  with  that  line  of  inquiry — When  you  state 
that  you  gave  the  trade  the  same  discount  that  you  gave  the 


No.  40.] 


693 


jobber,  didn’t  that — isn’t  that  synonymous  with  destroying  the 
jobbers?  A.  No,  sir. 

Q.  How  can  the  jobber  live  if  you  give  the  general  trade  the 
same  discount  that  you  give  the  jobbers?  A.  The  jobber  isn’t 
compelled  to  sell  at  the  company’s  road  prices;  he  has  the  advan- 
tage of  locality  and  the  trade  tributary  to  the  city  in  which  he 
resides;  he  has  a better  opportunity  of  obtaining  that  than  the 
manufacturer. 

Q.  This  form  of  agreement  (showing  paper)  that  you  have  pro- 
duced here  this  morning,  is  that  the  general  form  in  use  through- 
out the  United  States?  A.  Yes,  sir. 

(Question  repeated). 

Q.  Now,  haven’t  you  a detailed  statement  of  the  amount  of 
labor  employed  and  the  wages  paid?  A.  No,  sir;  it  would  take 
at  least  two  weeks  to  prepare,  Mr.  Chairman. 

Q.  How  was  it  that  you  could  swear  on  the  stand  yesterday 
that  there  was  the  same  amount  of  labor  employed,  and  that 
as  good  wages  as  before  the  consolidation — A.  Well,  I know 
that  every  one  of  the  factories  is  fully  manned;  I know  that  we 
have  an  agreement  with  the  labor  unions  whereby  those  people 
are  employed  eleven  months  of  the  year. 

Q.  Do  you  mean  that  that  is  the  general  system?  A.  That  is 
the  system  prevailing  in  every  one  of  our  factories. 

Q.  Without  any  exception?  A.  Without  any  exception. 

Q.  Have  you  the  wage  list  from  the  factory  of  the  Badge  Wall 
Paper  Company  at  Kaukauna,  Wisconsin?  A.  That  is  one  of 
the  factories  that  is  closed. 

Q.  No  wages  paid  there?  A.  No,  sir;  no  wages  paid  there. 

Q.  How  many  men  were  employed  there?  A.  I can't  remember 
exactly,  but  it  was  a very  small  plant. 

Q.  Approximately?  A.  Probably  not  over  twenty. 

Q.  Skilled  or  unskilled?  A.  Some  skilled  and  some  unskilled. 

Q.  Are  your  figures  based  upon  any  wages  paid  in  the  facto- 
ries of  the  Bartholomew  Company?  A.  No,  sir;  that  factory  is 
one  of  those  I reported  yesterday  as  being  closed;  consolidated 
with  some  other  factories. 


694 


[Senate, 


Q.  How  many  men  were  employed  there?  A.  Possibly  fifty. 

Q.  Are  you  simply  guessing,  or  do  you  know?  A.  I am  judg- 
ing by  the  size  of  the  plant  and  probable  number  of  men  that 
would  be  maintained. 

Q.  The  number  of  machines  that  must  be  at  work?  A.  Yes, 
sir. 

Q.  Are  your  figures  based  upon  any  wages  paid  in  the  concern 
of  Leisler,  Middleton  & Hughes — I think?  A.  No,  sir;  that  was 
also  consolidated,  and  most  of  the  labor  of  the  consolidated  con- 
cerns was  absorbed  by  the  other  factories. 

Q.  How  many  men  were  employed  there?  A.  Possibly  forty. 

Q.  You  judge  that  from  the  number  of  machines  in  operation? 
A.  Yes,  sir. 

Q.  Were  your  figures  based  upon  the  wages  paid  in  J.  J.  Lind- 
say Company?  A.  Well,  I should  say  that  as  far  as  that  factory 
was  concerned,  we  transferred  to  it  the  business  of  another 
branch  whose  factory  was  destroyed  by  fire. 

Q.  Which  branch  was  that?  A.  That  was  the  Nevius  & Havi- 
land  branch. 

Q.  Nevius  & Haviland?  A.  Yes,  sir. 

Q.  Also  a New  York  city  concern?  A.  They  were  of  New 
York  city,  yes,  sir. 

Q.  The  last  three  that  I have  mentioned  were  all  New  York 
city  concerns,  all  that  were  closed,  were  they  not?  A.  The  Kau- 
kauna  was  not  a New  York  concern. 

Q.  I say  the  three,  and  that  was  the  fourth?  A.  Bartholo- 
mew, Leisler,  Middleton  & Hughes — 

Q.  And  J.  J.  Lindsay?  A.  That  was  located  in  Brooklyn. 

Q.  Is  it  located  there  now?  A.  Yes,  sir. 

Q.  In  operation  now?  A.  Yes,  sir. 

Q.  Under  that  name?  A.  Under  the  name  of  the  Nevius  & 
Haviland  branch. 

Q.  Where  was  the  Nevius  & Haviland  branch?  A.  They  were 
formerly  at  the  corner  of  Forty-second  street  and  Tenth  avenue 
— the  premises  were  destroyed  by  fire. 

Q.  In  New  York  city?  A.  Yes. 


No.  40.] 


095 


•WertZ, 

Q.  They  were  not,  that  branch  was  not  continued,  was  it,  ex- 
cept as  it  was  transferred  and  took  the  place  of  the  J.  J.  Lind- 
say Company?  A.  Well,  the  entire  establishment  of  the  Nevius 
& Haviland  branch  was  transferred  to  the  J.  J.  Lindsay  branch, 
and  the  help  from  the  Lindsay  branch  was  absorbed  by  our  Phil- 
adelphia factories. 

Q.  Philadelphia?  A.  Yes,  sir. 

Q.  Then  the  J.  J.  Lindsay  branch  that  absorbed  all  of  the  Ne- 
vius & Haviland  branch,  did  not  represent  more  than  either  one 
of  those  two  branches  in  the  way  of  labor?  A.  Not  in  this  State. 

Q.  So  you  closed  up  a New  York  factory  and  compelled  the 
workmen  to  go  to  Philadelphia?  A.  No;  we  didn’t  compel  them; 
they  had  the  option  of  working  in  some  of  our  factories  here; 
they  preferred  to  follow  Mr.  Lindsay,  who  became  manager  of 
one  of  the  Philadelphia  factories. 

Q.  It  was  a matter  of  preference,  you  say,  with  them?  A.  En- 
tirely. 

Q.  Are  you  now  stating  what  you  know  to  be  a fact?  A.  An 
absolute  fact. 

Q.  Are  your  figures  based  up — oh,  before  I get  to  that:  What 
Philadelphia  branch  did  you  reorganize  in  the  manner  indicated? 
A.  Well,  we  didn't  reorganize  any  branch  there;  simply  consti- 
tuted Mr.  Lindsay  as  manager  and  consolidated  his  branch  with 
one  of  the  factories  there. 

Q.  Which  one?  A.  I should  say  that  we  not  only  made  Mr. 
Lindsay  manager  of  the  branches  there,  but  his  son  also,  and  be- 
tween the  two  factories  the  help  was  transferred  to  those  fac- 
tories. 

Q.  Did  you  have  but  two  factories  in  Philadelphia?  A.  No,  sir; 
we  have  four. 

Q.  Now,  you  wish  to  be  understood  that  this  help  that  was  dis- 
charged in  the  city  of  New  York  was  spread  over  two  factories  in 
the  city  of  Philadelphia;  is  that  so?  A.  No,  sir;  I say  with  ref- 
erence to  the  employees  of  the  J.  J.  Lindsay  Company  branch 
that  they  were  mostly  absorbed  by  these  two  Philadelphia  fac- 
tories. 


09(5  [Senate, 

Q.  Now,  we  have  got  “mostly”  not  “wholly”;  to  what  extent 
were  they  absorbed?  A.  Well,  all  their  skilled  labor  was  trans- 
ferred, as  near  as  I can  remember. 

Q.  Are  you  guessing  now,  Mr.  Burn?  A.  No,  sir;  there  is  no 
guessing  about  any  of  my  answers,  Mr.  Chairman. 

Q.  You  say  as  near  as  you  can  remember?  A.  Yes,  sir. 

Q.  What  do  you  remember  about  it?  A.  I remember  that  the 
manager  coming  to  me  and  suggesting  that  he  be  allowed  to 
transfer  some  of  the  men  with  him  to  the  Philadelphia  factory; 
naturally  he  choose  the  best  men;  there  were  one  or  two  other 
factories  competing  for  the  same  men,  but  in  view  of  Mr.  Lind- 
say’s former  connection  with  them  we  gave  him  the  preference. 

Q.  To  what  extent  did  you  add  to  the  number  of  men  employed 
in  Philadelphia?  A.  I could  not  say;  simply  making  up  the 
complements  required  to  run  the  factories. 

Q.  So  the  Philadelphia  concerns  did  not  have  the  necessary 
number  of  men  to  run  their  factories?  A.  Not  in  every  case;  ex- 
perienced men — 

Q.  You  mean  you  weeded  out  men  that  you  thought  less  ex- 
perienced, and  sent  your  experienced  men  from  the  city  of  New 
York  to  take  their  places;  is  that  so?  A.  I mean  to  say  that  men 
resigned  from  our  factories  and  discharged  themselves,  seeking 
employment  where  perhaps  they  could  get  better  wages,  better 
opportunities  as  they  thought,  and  we  replaced  them  with  these 
men;  we  can’t  keep  our  men  in  bondage  working  there  forever. 

Q.  What  do  you  mean  by  keeping  your  men  “in  bondage  and 
working  forever”?  Do  you  consider  that  constant  employment  is 
the  kind  of  bondage  that  workmen  don’t  like  to  have?  A.  I mean 
to  say  that  a man  wants — that  as  labor  is  constituted  in  these 
days  he  doesn’t  remain  continuously  in  one  place  of  employment. 

Q.  Isn't  it  because  of  the  system  introduced  whereby  consolida- 
tions are  built  from  time  to  time  to  close  up  factories  in  various  dis- 
tricts? A.  Well,  I have  no  knowledge  regarding  the  operations 
of  other  lines  of  business  aside  from  my  own,  and  it  is  not  true  in 
respect  to  that. 

Q.  Does  your  estimate  of  wage  rate  proceed  upon  the  basis  of 


No.  40.] 


697 


the  wages  paid  in  the  Manhattan  Wall  Paper  Company?  A.  No, 
sir. 

Q.  Why  not?  A.  Because  that  is  one  of  the  factories  that  was 
closed  up,  embraced  in  the  number  that  I mentioned  yesterday. 

Q.  Or  any  figures  from  the  Wilson  & Fennemore  Company? 
A.  No,  sir;  it  has  no  bearing  on  my  figures. 

Q.  Was  that  also  a concern  that  was  closed  up  as  the  result  of 
the  organization?  A.  That  was  one  of  the  concerns  we  deemed  it 
expedient  to  close  up. 

Q.  Did  close  up?  A.  And  did  close  up;  we  have  run  it  from 
time  to  time  since. 

Q.  You  still  own  the  property?  A.  We  still  own  the  plant; 
yes,  sir. 

Q.  What  became  of  the  men  employed  in  that  plant?  A.  They 
— most  of  them — were  absorbed  by  other  factories  or  found  em- 
ployment. 

Q.  By  other  factories  of  yours?  A.  Not  necessarily,  no  sir. 

Q.  They  had  to  find  other  employment  upon  the  closing  of 
this  particular  plant?  A.  A few  of  them  did;  yes,  sir. 

Q.  Now  many  concerns  competed  against  you  at  the  time  of 
the  consolidation;  I don't  mean  now,  the  time  of  the  consolida- 
tion? A.  The  time  of  the  consolidation? 

Q.  How  many  did  you  leave  as  competitors  in  the  field?  A. 
About  seven. 

Q.  Against  how  many  consolidated?  A.  I should  have  said 
— either;  I think  the  factories  consolidated  amounted  to  24  or 
23,  I am  not  sure. 

Q.  Now,  isn't  it  a fact  that  immediately  after  consolidation 
you  closed  up  as  many  independent  concerns  as  there  were  com- 
petitors in  the  field  against  you?  A.  No,  sir. 

Q.  You  closed  up  eight  concerns,  didn’t  you?  A.  We  closed 
up  four  at  that  time. 

Q.  When  were  the  other  four  closed?  A.  At  subsequent 
times;  I can’t  remember. 

Q.  How  long  after?  A.  Oh,  I think  two  years. 

Q.  You  mean  within  two  years?  A.  I think  at  the  end  of 


698 


[Senate, 


the  two  years;  at  the  end  of  the  second  year  we  closed  up  these 
others — not  all  of  them  even  then,  Mr.  Chairman— some  were 
not  closed  up  until  the  third  year. 

Q.  What  productive  capacity  did  the  eight  concerns  that  were 
closed  up  by  you  represent?  A.  The  eight — you  speak  of  eight, 
now,  Mr.  Chairman? 

Q.  Yes;  four  in  the  first  year  and  four  in  the  second  two  years? 
A.  Well,  we  closed  up  six  additional  in  the  second  two  years, 
making  ten  in  all;  but  they  were  combined. 

Q.  Ten;  what  haven’t  I mentioned  in  the  names  that  I have 
given  3rou?  A.  Well,  if  you  can  call  off  those  names  again,  I 
will  supply  the  deficiency. 

Q.  Baird  Wall  Paper  Company?  A.  Yes,  sir. 

Q.  Bartholomew?  A.  Yes,  sir. 

Q.  Leisler,  Middleton  & Hughes?  A.  Yes,  sir. 

Q.  Lindsay?  A.  Yes. 

Q.  Manhattan?  A.  Yes,  sir. 

Q.  Wilson,  Fennemore  & Company?  A.  Yes,  sir. 

Q.  Nevius  & Haviland?  A.  Well,  you  want  to  add  to  that  the 
A.  Yerkes  Manufacturing  Company;  and  the  Frankfort  Wall 
Paper  Mills;  and  the  Boston  Wall  Paper  Company;  I would  say 
that  those  were  all  small  plants. 

Q.  I will  get  at  that  in  a moment;  what  was  the  productive 
capacity  of  all  these  ten  concerns?  A.  About  15  per  cent,  of  all 
our  total  output. 

Q.  Fifteen  per  cent,  of  your  total  output?  A.  Yes,  sir. 

Q.  Or  of  the  total  output  of  the  entire — A.  Our  total  output. 

Q.  Employing  15  per  cent  of  the  labor  that  was  employed  with 
the  consolidated  concerns?  A.  No,  sir. 

Q.  How  much?  A.  Well  I should  judge  not  to  exceed  10  per 
cent,  for  the  reason  that  they  made  a cheaper  line  of  goods  which 
does  not  require  as  much  help  as  the  better  class  of  goods. 

Q.  Ten  per  cent  of  the  labor  would  represent  how  many  men? 
A.  About  500  men— no,  it  would  not  represent  that  many — it 
would  not  represent  more  than  300  men. 

Q.  All  told?  A.  All  told. 


No.  40.] 


699 


Q.  Can  you  give  us  positive  figures  upon  this  question?  A. 
Not  w ithout  considerable  analysis. 

Q.  Without  what?  A.  A considerable  analysis  of  our  books. 

Q.  Have  you  no  figures  showing  the  amount  of  the  output  of 
these  closed  concerns,  and  the  amount  of  labor  employed?  A. 
We  have  never — we  have  not  drawn  up  any  memorandum  show- 
ing the  number. 

Q.  Have  you  agreements  with  your  employes;  do  you  compel 
them  in  advance  of  employment  to  sign  agreements  according  to 
which  they  bind  themselves  not  to  enter  the  employ  of  any  com- 
petitive concern?  A.  No,  sir;  never  heard  of  such  a thing. 

Q.  Is  there  nothing  of  that  kind  as  a part  of  the  system  of  your 
company  or  of  any  branch  of  it?  A.  I certainly  have  no  knowl- 
edge of  the  fact,  and  I am  inclined  to  think  I ought  to  have  if  such 
a thing  did  prevail. 

Q.  You  say  you  have  not  reduced  the  price  of  labor;  do  you 
mean  to  make  that  statement  on  your  positive  knowledge?  A. 
I will  make  that  statement  with  a qualification;  your  question 
undoubtedly  alludes  to  the  charge  made  that  we  have  reduced 
wages  of  block  cutters;  as  a matter  of  fact  we  simply  graded 
them. 

Q.  A reduction  by  way  of  grading?  A.  No,  sir;  on  the  average 
they  cost  us  just  as  much,  but  the  good  men  were  receiving  less 
than  some  of  the  poorer  men,  and  in  order  to  adjust  that  all 
around  we  graded  the  men  according  to  their  abilities,  paying  the 
best  men  what  was  considered  the  highest  wages. 

Q.  And  reducing  the  others  instead  of  paying  the  uniform 
price?  A.  No,  sir;  we  made  the  gradation  like  this;  all  men  of  a 
certain  amount  of  ability  we  paid  the  highest  wages  to,  and  those 
who  didn’t,  come  up — 

Q.  What  was  the  net  result  of  the  grading?  A.  The  net  result 
of  the  grading? 

Q.  Yes?  A.  That  so  far  as  the  company  was  concerned  it  prac- 
tically paid  the  same  amount  as  it  did  before. 

Q.  Practically?  A.  Yes,  sir. 


700 


[Senate, 

Q.  Did  it  absolutely?  A.  Did  it  absolutely?  In  my  estimation 
it  did  absolutely. 

Q.  Are  you  now  stating  a positive  fact?  A.  I am  stating  now 
what  my  conviction  is. 

Q.  Can  you  not  produce  the  figures  for  this?  A.  No,  sir;  I can- 
not. 

Q.  Why  not?  A.  I could  not  produce  them  to-day,  Mr.  Chair- 
man— 

6 

Q.  I understand  that;  but  you  have  got  the  statistics  that  will 
enable  us  to  determine  that  question  as  a fact,  have  you  not?  A. 
Possibly,  I may;  I don’t  know  whether  I could  or  not. 

Q.  Did  you  reduce  the  wages  of  a man  called  Young,  from  $30 
to  $22?  A.  Mr.  Young — • 

Q.  Did  you?  A.  I will  have  to  state  it  my  way,  Mr.  Chairman, 
in  order  to  make  it  clear;  the  labor  union  brought  that  about. 

Q.  Brought  that  about?  A.  Yes,  sir;  we  were  paying  different 
wages  to  different  men  in  his  class,  and  the  labor  union  insisted 
we  should  pay  a uniform  rate,  and  that  brought  about  a reduction 
of  Mr.  Young’s  pay.  J 

Q.  Do  you  mean  to  say  that  the  labor  union  singled  out  Mr. 
Young  and  substantially  constrained  you  to  pay  him  $22  a week 
instead  of  $30?  A.  I say  that  the  labor  union — 

Q.  Now,  is  that  a fact?  That  is  a fair  question  that  you  can 
answer?  A.  I didn’t  single  out  Mr.  Young;  no,  sir. 

Q.  Then  there  were  others?  A.  There  were  others. 

Q.  How  many?  A.  It  brought  up  the  wages  of  some  and  re- 
duced the  wages  of  others. 

Q.  The  wages  of  how  many  were  reduced?  A.  I can’t  remem- 
ber— very  few. 

Q.  The  wages  of  how  many  were  increased?  A.  Well,  I should 
say  that  as  many  were  increased  as  were  decreased. 

Q.  And  you  say  that  this  proceeded  from  the  initiative  of  the 
labor  union?  A.  From  the  demands  of  the  labor  union  that  we 
pay  a certain  rate  of  wages. 

Q.  Coming  to  you  in  what  way?  A.  In  the  way  of  committees. 


No.  40.] 


701 


Q.  In  writing  or  printed  notice?  A.  No,  sir;  that  has  not  been 
their  method. 

Q.  How  did  they  officially  notify  you  of  this  desire  on  their 
part?  A.  Well,  they  usually  brought  pressure  to  bear  on  the 
manager  of  the  branch. 

Q.  Does  this  apply  to  the  State  of  New  York  as  well  as  to  the 
other  States  mentioned  in  which  you  had  branches?  A.  Yes,  sir. 

Q.  Uniform  throughout  all  your  factories?  A.  Their  union 
takes  in  the  men  connected  with  all  of  our  factories. 

Q.  Now,  I would  like  to  get  the  fact  from  you  as  far  as  you 
know  it  how  you  received  official  information  of  this  desire  on  the 
part  of  the  union?  A.  Well,  I can’t  remember  the  exact  method 
by  which  they  made  them  known  to  us;  I simply  state  the  fact. 

Q.  Well,  you  must  have  received  it  in  some  official  way;  we 
want  to  get  at  the  facts.  A.  Well,  I presume  I received  it 
through  the  managers  of  the  branches. 

Q.  What  branch  manager  received  an  official  communication 
from  the  union  to  that  effect?  A.  I could  not  tell  you  at  this 
time. 

Q.  What?  A.  I didn’t  charge  my  mind  with  it. 

Q.  Do  you  remember  any  manager  of  any  branch  that  did?  A. 
No,  sir;  I could  not  distinguish  one  manager  from  another  as  hav- 
ing made  such  suggestion. 

Q.  Do  you  mean  that  they  all  did?  A.  I presume  that  those 
where  the  wages  differed  demand  might  be  made  upon  us  by  the 
labor  union,  but  where  they  w7ere  all  in  accordance  with  the  labor 
union  I presume  they  did  not. 

Q.  Can  you  determine  any  one  branch  in  which  this  situation 
existed?  A.  No,  sir;  I could  not  state. 

Q.  Could  not?  A.  No,  sir;  I would  not  presume  to  state — at 
this  late  date. 

By  Mr.  Warner: 

Q.  Simply  because  you  can’t  state,  isn’t  it?  A.  I can’t  state; 
my  memory  does  not  serve  me  well  enough  to  remember  every  de- 
tail of  a large  business. 


702 


[Senate, 


By  Mr.  Lexow : 

Q.  Have  you  in  your  establishment  what  is  know  as  a commit- 
tee on  economies?  A.  We  have  had  in  the  past. 

Q.  Was  this  reduction  in  wages  made  by  order  of  the  commit- 
tee on  economies?  A.  Well,  I would  say  I don’t  remember;  I 
have  no  recollection  that  that  reduction  was  made  by  order  of  the 
committee  on  economies. 

Q.  It  seems,  however,  not  to  be  entirely  repugnant  to  the  situ- 
ation in  your  mind?  A.  Well,  I simply  have  no  knowledge  of 
the  facts. 

Q.  Well,  don’t  you  remember  anything  about  it?  A.  No,  sir; 
I do  not. 

Q.  Were  you  a member  of  this  committee  on  economy?  A.  I 
probably  was,  ex-officio. 

Q.  Well,  you  must  remember,  then,  whether  the  order  for  this 
reduction  of  wages  came  from  that  committee?  A.  If  it  came 
from  that  committee  it  was  in  view  of  the  fact  that  this  demand 
had  been  made  upon  us  by  the  labor  union. 

Q.  Well,  then,  did  it  proceed  from  a committee  which  implies 
the  introduction  of  economies  in  your  establishment?  A.  It 
seems  to  me  that  was  a very  proper  place  for  it  to  come  from. 

Q.  Then  it  was,  was  it,  in  the  line  of  economy?  A.  (Con- 
tinuing) Enforced  by  the  demands  of  the  labor  union. 

(Question  repeated.) 

A.  If  it  was  in  the  line  of  economy  it  was  also  brought  about 
by  the  demand  of  the  labor  union. 

Q.  Do  you  wish  to  be  understood  to  say  that  the  labor  union  is 
very  solicitous  to  have  you  economize  in  the  price  of  labor?  A. 
No;  it  stands  to  reason,  Mr.  Chairman,  that  if  we  are  paying  vary- 
ing rates  of  wages  and  the  labor  union  makes  a demand  upon  us, 
and  wishes  us  to  observe  a certain  rate  of  wages  that  we  will  give 
all  of  the  men  belonging  to  that  union  that  rate  of  wages. 

Q.  The  committee  on  economics  have  had  charge,  dil  it  not, 
of  the  introduction  of  economies  for  the  purposes  of  making  a 
dividend?  A.  The  committee  on  economies  was  appointed  to  do 
away  with  wasteful  expenditures. 


No.  40.] 


703 


Q.  For  the  purpose  of  being  able  to  make  a proper  and  suita- 
ble return  to  the  stockholders  of  the  company?  A.  In  the  in- 
terest of  the  stockholders  and  creditors  of  the  company;  if  it 
didn’t,  it  couldn’t  pay  its  debts. 

Q.  Now,  please  tell  me  why  this  committee  on  economies 
should  order  a reduction  of  the  wages  of  workmen  unless  for  the 
purposes  mentioned  in  your  last  answer?  A.  I don’t  think — 

(Question  repeated). 

A.  I don’t  think  I quite  understand  your  present  question,  Mr. 
Chairman. 

Q.  Why  was  the  committee  on  economies  specially  chosen  to 
make  this  reduction  unless  it  was  for  the  purpose  of  introducing 
economies?  A.  Economies,  as  understood  by  that  committee, 
were  to  do  away  with  wasteful  expenditures. 

Q.  And  you  considered  that  the  payment  of  $30  to  a man  whose 
services  you  could  secure  for  $22  was  a wasteful  expenditure? 
A.  No,  sir;  that  doesn't  follow;  I do  not  see  that  that  has  any 
bearing  on  the  case. 

Q.  Why  did  this  particular  department  of  yours,  the  com- 
mittee on  economies,  make  this  cut  in  wages?  A.  It  made  no  cut 
in  wages,  Mr.  Chairman. 

Q.  It  reduced  the  wages  of  Mr.  Young  and  a lot  of  other  fel- 
lows, didn't  it?  A.  It  made  a more  uniform  rate  of  wages  than 
had  theretofore  prevailed. 

By  Mr.  Warner: 

Q.  Why  don’t  you  answer  the  question  of  the  chairman?  A.  I 
will  try  to  answer. 

(Question  repeated). 

A.  I could  not  answer  that  in  the  affirmative,  because  I have  no 
knowledge  that  it  did. 

By  Mr.  Lexow: 

Q.  Why,  you  have  testified  that  it  did  already?  A.  I have 
testified  that  it  reduced  a few  and  increased  a few;  the  entire 
number  will  probably  not  exceed  ten,  up  and  down. 


704 


[Senate, 


Q.  That  were  reduced?  A.  That  were  reduced;  res,  sir. 

Q.  And  how  many  increased?  A.  Probably  the  same  num- 
ber. 

Q.  Now,  are  you  swearing  to  this?  A.  I am  swearing  to  the 
best  of  my  knowledge  and  belief. 

Q.  Wasn’t  there  a general  reduction  all  along  the  line  made 
by  order  of  the  committee  on  economies  in  the  fall  of  1S94,  and 
have  the  reduced  wages  then  ordered  by  the  committee  on  econ- 
omies, have  they  not  been  maintained  until  this  time?  A.  When 
you  speak  of  a general  reduction — 

Q.  Now,  you  will  please  answer  that  question;  it  is  an  intelli- 
gent question,  susceptible  of  an  intelligent  answer. 

(Question  repeated.) 

A.  There  was  no  general  reduction  of  wages  or  compensa- 
tion. 

Q.  Do  you  swear  there  was  not.  A.  I do;  there  was  no  gen- 
eral reduction  of  wages  or  compensation. 

Q.  Do  you  mean  that  there  was  something  which  was  intended 
to  equalize,  by  putting  some  men’s  salaries  up  and  other  men’s 
salaries  down?  A.  In  the  course  of  business — 

Q.  Now,  please  answer  that  question.  A.  Well,  in  the  course 
of  business  you  have  to  advance  certain  men’s  compensation 
from  time  to  time,  as  their  services  become  more  valuable  to 
you. 

Q.  Now,  I am  not  asking  for  a general  system;  I am  asking  as 
to  what  you  did?  A.  Well,  I presume  that  those  who  were  enti- 
tled to  advance  in  compensation  outside  of  the  labor  unions  were 
increased. 

Q.  You  presume  that  those  who  were  outside  of  the  labor 
unions  were  increased?  A.  WThere  they  deserved  it,  yes,  sir. 

Q.  And  those  that  were  inside  the  labor  unions  were  reduced? 
A.  No,  sir;  I have  not  stated  that  at  all. 

Q.  Well,  what  do  you  mean?  A.  I have  stated  that  we  don’t 
regulate  the  wages  of  the  members  of  the  union;  we  have  abso- 
lutely acceded  to  every  demand  made  by  them. 

Q.  I am  asking  now  about  the  action  of  your  committee  on 


No.  40.] 


705 


economies:  Did  your  committee  on  economies,  in  September  or 
October,  1S94,  bring  about  or  order  a general  reduction  of  wages 
in  your  various  establishments;  and  I ask  you  to  give  me  a cate- 
gorical answer  to  that  question?  A.  No — when  you  say  a “gen- 
eral reduction”  I say  “No!”  there  may  have  been  individual  re- 
ductions and  there  may  have  been  individual  advances. 

Q.  Did  your  committee  on  economies  introduce  economies  in 
the  way  of  a reduction  in  wages  in  September,  1894?  A.  I think 
I have  tried  to  reply  to  that  as  intelligently  as  I can,  Mr.  Chair- 
man. 

Q.  Then  you  can’t  give  any  answer — A.  The  committee  on 
economies  was  appointed  not  to  cut  down  wages;  it  was  to  bring 
about  improved  conditions  of  manufacture;  introduce  methods, 
good  methods  that  prevailed  at  some  factories  and  that  had  not 
been  introduced  into  others;  in  the  course  of  that  they  brought 
about  economies;  there  was  no  general  reduction  of  wages. 

Q.  But  there  was  a sort  of  equalization,  the  final  result  of 
which  was  that  on  the  question  of  labor  the  committee  on  econo- 
mies reported  progress?  A.  As  far  as  labor  was  concerned  there 
was  positively  no  reduction  made. 

Q.  What  has  become — A.  In  other  words,  we  paid  union 
rates  of  wages. 

Q.  What  has  become  of  the  salesmen,  bookkeepers  and  other 
clerks  connected  with  the  various  competing  establishments  em- 
ployed prior  to  the  consolidation;  were  they  all  retained?  A. 
Most  of  them. 

Q.  How  many  were  discharged?  A.  I could  not  state  exactly, 
Mr.  Chairman. 

Q.  You  can’t  state?  A.  No,  sir. 

Q.  Were  half  of  all  that  number  employed  in  the  independent 
establishments  kept  after  consolidation?  A.  Well,  I consider 
there  were  a great  many  more  than  half,  a great  many  more. 

Q.  Have  you  had  half  as  many  bookkeepers,  clerks,  and  sales- 
men as  the  various  independent  concerns  had  before  consolida- 
tion? A.  We  have  a great  deal  more,  Mr.  Chairman. 

Q.  Can  you  furnish  the  figures?  A.  No,  sir;  I cannot. 


45 


706 


[Senate, 


Q.  Why  not?  A.  — but  every  branch  that  exists  to-day  em- 
ploys just  as  many  as  it  did  at  the  time  the  corporation  was 
formed. 

Q.  I am  restricting  the  inquiry  now  to  clerks,  bookkeepers  and 
salesmen?  A.  I am — I will — as  far  as  salesmen  are  concerned 
we  probably  employ  fully  25  per  cent,  more;  as  far  as  bookkeep- 
ers are  concerned  we  employ  probably  more;  in  addition  to  the 
men  that  are  employed  in  our  various  branches  we  have  a large 
head  office  with  a staff  of  nearly  one  hundred  employes. 

Q.  Here  in  the  city?  A.  Yes,  sir. 

Q.  You  can  furnish  reliable  statistics  on  those  subjects,  can 
you  not,  Mr.  Burn?  A.  I would  certainly  endeavor  to  do  so,  Mr. 
Chairman. 

Q.  You  have  stated  that  the  price  of  your  product  has  de- 
creased to'  the  consumer;  do  you  state  that  as  a fact  within  your 
knowledge?  A.  As  an  absolute  fact. 

Q.  Has  the  price  of  the  material  diminished  in  grade  or  qual- 
ity? A.  The  price — 

Q.  The  value  of  the  material  used  diminished  in  quality?  A. 
In  some  cases  it  has  slightly  diminished;  in  other  cases  it  has 
advanced. 

Q.  Have  you  tables  showing  the  prices  obtained  prior  to  the  or- 
ganization of  this  consolidation  and  nowr — do  you  keep  statistical 
records  in  your  company?  A.  No,  sir;  not  in  the  sense  that  you 
ask  the  question;  w?e  all  know  the  prices  of  certain  grades  of 
goods  prior  to  the  formation  of  the  company  and  wre  know  their 
present  price. 

Q.  And  the  expense  of  their  production;  have  you  that?  A. 
We  have  not  the  details  of  the  cost  of  production  prior  to  the 
formation  of  the  company;  no,  sir. 

Q.  You  have  now?  A.  We  have  some  details  as  to  our  own — 

Q.  I understood  you  to  say  that  in  the  issue  of  stock  you  had 
issued  it  for  earning  capacity,  in  the  proportion  of  16;  was  that 
true?  A.  Yes,  sir;  in  other  words,  we  capitalized  our  profits  on 
the  basis  of  6 per  cent. 

Q.  Now,  in  order  to  arrive  at  that  result  you  must  have  made 


No.  40.] 


707 


a careful  investigation  into  the  price  that  the  material  cost  in  the 
various  establishments?  A.  No,  sir;  made  no  investigation  of 
that  kind,  at  all ; that  had  no  bearing  on  the  case. 

Q.  How  could  you  show  earning  capacity  without  showing  the 
cost  of  the  material  ? A.  Well,  the  net  profits  of  the  concern  can 
be  ascertained  without  going  into  all  that  detail. 

Q.  You  didn't  go  into  that  detail?  A.  No,  sir. 

Q.  You  said,  did  you  not,  that  you  bought  out  Mr.  Smith’s 
establishment?  A.  Yes,  sir;  I was  about  to  give  you  the  history 
of  the  case  when  you  interrupted  me. 

Q.  Have  you  kept  it  open?  A.  We  didn’t  buy  it  for  any  such 
purpose. 

Q.  I am  not  asking  the  purpose;  have  you  kept  it  open?  A. 
I think  you  had  better  let  me  give  the  history  of  that  transac- 
tion. 

Q.  No,  no — 

Q.  (Interrupting)  Have  you  kept  it  open — A.  (Continuing)  I 
think  that  will  give  the  public  the  information  you  are  after. 

Q.  Have  you  kept  it  open?  A.  No,  sir. 

Q.  How  many  transactions  similar  to  that  of  Mr.  Smith’s  did 
you  make?  A.  I have  no  recollection  of — perhaps  one  other. 

Q.  Are  you  prepared  to  swear  that  there  was  only  one  other 
establishment  like  Mr.  Smith’s  bought  and  closed  up  by  you? 
A.  That  is  the  only  other  one  that  I can  remember. 

Q.  In  the  city  of  New  York?  A.  There  was  no  other  in  the 
city  of  New  York. 

Q.  Where  was  the  other?  A.  In  St.  Louis. 

Q.  Where  you  did  not  buy  out  concerns,  did  you  establish  com- 
peting concerns  next  door?  A.  No,  sir. 

Q.  And  drive  them  out?  A.  No,  sir. 

Q.  In  no  cases?  A.  No,  sir;  I should  like — 

Q.  In  no  cases?  A.  I should  like  to  make  a statement  in 
regard  to  this  Smith  transaction — 

Q.  In  no  cases?  A.  In  no  cases;  we  drove  nobody  out  of  busi- 
ness. 

Q.  About  the  time  that  Mr.  Smith  sold,  or  was  constrained  to 


708 


[Senate,, 


sell  his  property  to  you,  were  there  75  per  cent,  of  similar  busi- 
nesses destroyed  throughout  the  United  States?  A.  I have  no 
knowledge  of  such  a state  of  facts. 

Q.  Will  you  swear  that  such  a state  of  facts  did  not  exist?  A. 
1 have  no  knowledge  of  same. 

Q.  Will  you  swear  it  didn’t  exist,  Mr.  Burn?  A.  I can  only 
swear  to  my  knowledge  of  things. 

Q.  You  keep  track  of  that  department  of  the  business,  don’t 
you?  A.  Yes,  sir. 

Q.  Now  will  you  swear  from  your  knowledge  of  the  wall  paper 
business  in  the  country  that  75  per  cent  of  merchants  engaged 
in  a similar  business  as  Mr.  Smith  were  not  forced  to  the  wall  at 
about  the  time  you  acquired  his  business?  A.  I should — if  any- 
body should  make  that  statement  as  a statement;  I should  pro- 
nounce it  absolutely  false. 

Q.  Well,  what  do  you  say  under  oath?  A.  I know  of  nobody 
who  was  forced  out  of  business  through  the  operation  of  this 
company. 

Q.  Did  they  go  out  of  business  coincident  with  that  time,  ac- 
cidentally or  on  purpose?  A.  A few  went  out  of  business,  as  in 
the  case  of  Mr.  Smith,  whose  bad  judgment  caused  him  to  leave 
the  business;  his  large  competitor  in  the  city  continued  business 
on  the  same  basis  and  is  prosperous  and  flourishing  to-day. 

Q.  And  do  you  mean  to  say  that  coincident  with  the  exercise 
by  Mr.  Smith  of  such  bad  judgment,  75  per  cent,  of  all  the  gentle- 
men engaged  in  similar  business  were  accidentally  compelled  to 
give  up  business?  A.  I have  already  testified  that  I know  of  no 
such  condition  of  affairs. 

Q.  Will  you  swear  that  it  did  not  occur?  A.  I have  no  such 
knowledge. 

Q.  You  know  what  did  occur,  do  you  not?  A.  I am  not 
aware  of  everything  that  may  have  occurred. 

Q.  You  remember  that  there  was  a remarkable  destruction  of 
business  similar  to  Mr.  Smith’s  at  about  the  same  time  that  you 
got  Smith’s  business?  A.  I remember  nothing  of  the  kind. 

Q.  You  stated  you  remembered  a few — A.  I don’t  believe — 


No.  40.] 


709 


I should  like  to  be  furnished  with  the  names  of  the  concerns  who 
claim  to  have  been  forced  out  of  business;  then  I can  make  my 
answers  specific;  and  I might  add  that  Mr.  Smith  has  stated 
he  always  felt  sorry  he  went  out  of  business  at  that  time,  that  he 
was  more  scared  than  hurt. 

Mr.  Lexow:  That  will  do,  Mr.  Burn. 

We  will  now  take  up  the  rubber  branch  of  the  case  where  we 
left  it  off. 

The  other  witnesses  in  the  matter  of  the  Wall  Paper  Company 
may  now  leave,  and  attend  again  at  2 o'clock  this  afternoon. 

Charles  K.  Flint,  recalled. 

Examined  by  Mr.  Lexow: 

Q.  Mr.  Flint — A.  Mr.  Chairman,  I would  like  to  make  a 
statement;  it  has  occurred  to  me  that  there  may  have  been  some 
misunderstanding  in  regard  to  my  testimony. 

Q.  Yes?  A.  Although  I have  not  had  the  opportunity  of  read- 
ing it — but  I want  to  state  that  the  United  States  Rubber  Com- 
pany as  a corporation  had  no  knowledge  as  to  the  distribution 
of  the  stock  by  the  bankers.  On  the  other  hand  I want  to  state 
that  personally  I had — I knew  that  the  stock  was  distributed  by 
the  bankers  on  the  basis  of  preferred  stock  for  tangible  assets 
and  common  stock  for  trade  marks,  patents,  organization  busi- 
ness, franchises,  etc.,  in  my  testimony  it  has  occurred  to  me  that 
there  may  have  been  some  confusion  as  to  the  matter  and  I wanted 
to  make  that  clear;  after  making  that  statement  I will  present 
the  original  Simmons  report;  I would  like  to  have  it  back,  if  you 
can  get  it.  in  reasonable  time. 

By  Mr.  Mazet 

Q.  That  is  the  one  of  which  you  gave  us  a copy  yesterday? 
A.  That  is  the  one  of  which  I gave  the  copy;  I personally  didn’t 
have  an  opportunity  of  making  any  comparison,  but  I now  prefer 
that  a comparison  should  be  made  with  the  original. 


710 


[Senate, 


Chairman  Lexow:  The  Simmons  report.  Will  the  stenom’a- 
pher  make  a comparison  between  the  copy  which  was  presented 
yesterday  and  this  original,  and  after  such  a comparison,  return 
the  original  to  the  witness? 

Stenographer:  Yes,  sir. 

By  Mr.  Bedell: 

Q.  You  wish  it  mailed,  do  you?  A.  No,  I prefer  to  have  it 
delivered  personally;  it  is  a very  valuable  document. 

I will  arrange  to  have  a representative;  I will  have  a represen- 
tative go  with  the  stenographer  for  the  purpose  of  comparison, 
and  in  order  to  receive  the  original  paper. 

By  Mr.  Lexow: 

Q.  Where  was  this  kept,  Mr.  Flint?  A.  I don’t  know;  it  was 
handed  to  me  by  the  counsel  of  the  company  this  morning;  I 
don’t  know  where  he  obtained  it,  but  I infer  it  was  in  the  archives 
of  the  company. 

Q.  You  were  requested  yesterday  by  subpoena  to  produce  the 
schedules  that1  were  attached  to  this  report,  indicating  the  sub- 
division of  values — I am  referring  to  the  respective  properties 
acquired;  have  you  those  schedules?  A.  There  were  no  sched- 
ules attached. 

Q.  You  have  referred  upon  your  examination  to  schedules,  in- 
cluding about  3,000  pages,  that  formed  part  of  the  appraisement 
of  the  appraisal  committee  headed  by  Mr.  Simmons?  A.  I have 
testified,  Mr.  Chairman,  that  those  papers  were  never  in  the  pos- 
session of  the  United  States  Rubber  Company;  they  never  have 
been  in  my  possession ; that  data  was  used  by  the  Simmons  Com- 
mittee as  a basis  for  their  recommendation  I infer,  but  the  United 
States  Rubber  Company  have  never  had  possession  of  it. 

Q.  You  have  never  seen  it?  A.  I have  never  seen  it;  I have 
seen  parts  of  it,  but — * 

Q.  We  understood  you  to  say  the  other  day  on  your  examina- 
tion that  that  was  kept  in  the  safe  deposit  vault  of  the  company 


No.  40.] 


711 


in  New  Jersey?  A.  That  is  not  the  fact;  that  data,  that  detailed 
information  has  never  been  in  the  possession  of  the  United  States 
Rubber  Company. 

Q.  Do  you  know  in  whose  possession  it  was?  A.  I know  it 
was  in  the  possession  of  the  committee  and  the  experts. 

Q.  The  Simmons  Committee?  A.  The  Simmons  Committee 
and  the  experts  referred  to  in  the  Simmons  report. 

By  Mr.  Warner: 

Q.  How  much  did  the  committee  receive  for  their  services  in 
making  this  appraisement?  A.  I don't  remember. 

Q.  You  testified  the  other  day  that  they  acted  for  the  United 
States  Rubber  Company  in  making  that  appraisement?  A.  The 
Simmons  Committee  were  appointed  by  the  directors  of  the 
United  States  Rubber  Committee. 

Q.  Yes?  A.  And  were  requested  to  report  to  the  United 
States  Rubber  Company  on  the  value  of  these  properties. 

Q.  They  were  employed  by  the  directors  of  the  company  that 
was  subsequently  formed?  A.  They  wrere  employed  by  the  direc- 
tors of  the  United  States  Rubber  Company;  the  United  States 
Rubber  Company  had  already  been  incorporated  and  the  directors 
appointed,  and  a special  committee  to  examine  and  report  on  the 
offer  of  the  bankers. 

Q.  Do  you  know  how  much  they  were  paid  for  their  services? 
A.  I don’t  remember. 

Q.  They  were  simply  the  employes  of  those  directors?  A. 
Well,  the — Mr.  Simmons — 1 

Q.  Is  that  the  fact?  A.  They  were  a committee  appointed  by 
the  United  States  Rubber  Company;  they  represented  the  United 
States  Rubber  Company,  and  they  were  entirely  in  the  service  of 
the  United  States  Rubber  Company,  but  I could  hardly  call  them 
employes. 

Q.  Now,  you  mean  to  say  that  their  report  and  all  this  data  is 
now  in  the  hands  of  the  employes  of  this  company?  A.  No;  the 
report  was — of  the  Simmons  Committee  is  in  the  archives  of  the — 
or  has  been — of  the  United  States  Rubber  Company,  and  I have 


712 


[Senate, 


now  produced  the  original  report;  the  data,  the  detailed  informa- 
tion of  all  these  experts,  to  which  I have  referred,  that  has  never 
been  in  the  possession  of  the  United  States  Rubber  Company. 

Q.  Well,  what  else  was  there  beside  this  report  that  was  turned 
over  to  the  company,  which  consisted  of  two  or  three  thousand 
pages  of  matter?  A.  That  was  not  turned  over  to  the  company; 
that  data  remained  in  the  possession  of  the  experts  referred  to  in 
the  Simmons  report. 

Q.  You  testified  the  other  day  that  the  company  had  two  or 
three  thousand  pages  of  matter  made  up  by  this  appraisal  com- 
mittee? A.  I didn’t  so  testify;  the  fact  is  that  the  United  States 
Rubber  Company  have  never  had  that  data;  it  has  never  been  in 
their  archives ; they  never  have  had  possession  of  it. 

Q.  Do  you  mean  to  say  that  the  United  States  Rubber  Com- 
pany does  not  possess  to-day  data  showing  the  amounts  paid  by 
the  bankers,  if  you  please,  for  those  respective  plants  and  prop- 
erties? A.  I do;  I mean  to  say  that  the  company  acted  upon  the 
Simmons  report,  issuing  their  stock  in  accordance  with  their  rec- 
ommendation ; the  members  of  that  committee  had  access  to  all 
data. 

By  Mr.  Lexow: 

Q.  Were  you  a member  of  the  board  at  the  time  of  the  acquisi- 
tion of  this  property,  that  is  to  say,  the  turning  over  of  this  capi- 
tal stock?  A.  I was  not. 

Q.  How  do  you  know  that  the  United  States  Rubber  Company 
did  not  have  in  its  possession  the  inventory  or  schedule  upon 
which  this  report  is  based?  A.  I don’t  know  it  positively;  I 
stated  it  on  knowledge  and  belief;  general  knowledge  and  belief. 

Q.  You  mean  to  say  simply  that  you  haven’t  got  it — is  that  it? 
A.  No;  well,  I am — I am  satisfied,  or  I don’t  believe  that  the 
United  States  Rubber  Company  has  it. 

Q.  Have  you  searched  for  it?  A.  No— I don’t  know  where  to — 
I know  it  is  not — I am  satisfied  it  is  not  in  the  archives  of  the 
United  States  Rubber  Company,  that  no  one  connected  with  the 


No.  40.] 


713 


United  States  Rubber  Company  has  it,  and  there  would  be  no 
way  in  which  I could  search  for  it. 

Q.  Have  you  inquired  among  those  who  are  custodians  of  the 
company’s  property?  A.  I am — I am  satisfied  that  they  haven’t 
possession  of  it. 

Q.  We  don’t  wish,  Mr.  Flint,  to  intrude  improperly  into  the 
private  concerns  of  your  corporation,  or  any  other,  but  we  want 
to  know  for  the  purpose  of  this  legislative  investigation  what 
water,  if  any,  was  injected  into  this  stock,  what  the  value  was  of 
the  respective  properties  secured  and  the  proportion  of  stock  is- 
sued; now,  why  is  it  the  policy  of  the  United  States  Rubber  Com- 
pany to  withhold  from  us  that  very  natural  and  important  ques- 
tion? A.  There  was  no  water  introduced  in  the  stock. 

Q.  That  is  what  we  want  to  determine?  A.  The  stock  was  all 
issued  for  value;  I produced  the  original  of  a report,  signed  by 
men  of  well  known  conservatism  and  ability,  in  which  they  recom- 
mend to  directors  of  equally  high  standing  the  purchase  of  cer- 
tain property  at  certain  prices,  and  that  is — that  seems  to — that 
is  evidence  of  the  value,  that  the  stock  was  issued  for  full  value, 
and  that  there  was  no  water,  and  I know  that  there  was  no  water 
introduced  into  this  capitalization. 

Q.  How  could  you  know  that?  A.  From  my  general  knowl- 
edge of  the  business;  I know  that  the  value  of  trade  marks,  pat- 
ents, good  will,  business  organization,  is  equally  valuable  in  fact 
as  bricks  and  mortar;  it  is  absolutely  necessary  to  have  the — 

Q.  How  did  the  United  States  Rubber  Company  know  what  it 
was  acquiring  if  it  didn’t  have  the  inventory  and  the  schedules  of 
the  properties  that  were  turned  over  in  exchange  for  its  capital 
stock?  A.  Well,  they  had  the — there  was  a special  committee 
appointed,  as  I have  before  stated,  consisting  of  directors  of  the 
company,  that  went  into  the  matter,  fully  and  in  detail,  and  then 
made  a report  covering  all  these  points  and  covering  the  facts, 
and  they  acted  on  that  report  as  I have  before  stated,  accepting 
the  recommendation,  and  making  the  issue  in  accordance  there- 
with. 


714 


[Senate, 


Q.  They  didn’t  make  the  issue — the  directors  of  the  United 
States  Company  made  the  issue,  didn’t  they?  A.  Oh,  yes. 

Q.  On  the  recommendation  of  this  committee?  A.  That  is  cor- 
rect— I meant  to  state  that  when  I used  the  word  “ they  ” I re- 
ferred to  the  directors. 

Q.  Now,  how  does  the  United  States  Rubber  Company  know 
to-day  what  it  has  purchased  in  the  absence  of  the  inventory  and 
schedules  covering  those  three  thousand  pages  that  you  have 
mentioned?  A.  They  have  possession  of  all  the  plants;  they  have 
possession,  or  had  possession  of  all  the  quick  assets. 

Q.  How  do  they  know  that?  A.  That  is  shown,  and  1 — by  the 
inventories  of  the  company. 

Q.  Simply  the  capital  stock  purchased?  A.  No;  the  company 
has  detailed  inventories  of  all  the  assets;  those  inventories  are 
in  the  possession  of  the  United  States  Rubber  Company. 

Q.  Have  you  been  able,  since  the  last  meeting,  to  ascertain 
whether  or  not,  the  statement  made  by  me  as  to  the  increase  in 
prices  of  rubber  after  the  organization  of  your  combination  was 
justified?  A.  There  was  a substantially  large  increase  owing  to 
the  bicycle  demand;  I haven’t  the  exact  figures. 

Q.  An  increase  in  rubber  boots  owing  to  the  bicycle  demand; 
do  you  mean  to  be  so  understood?  A.  I understood  that  you  re- 
ferred to  the  price  of  crude  rubber. 

Q.  No,  no;  I am  referring  to  the  price  of  your  manufactured 
articles  to  the  consumer?  A.  I have  obtained  no  information 
on  that  point. 

Q.  Do  you  deny  the  statement  that  you  have  made  a uniform 
increase  of  from  20  to  44  per  cent.?  A.  As  I have — 

Q.  (Interrupting)  Now,  Mr.  Flint — A.  Well,  I have  not  the 
information  on  that  point;  in  general  I will  state  that  there  can’t 
be  uniformity  owing  to  the  differences  in  styles  and  qualities,  and 
it  is  impossible  in  any — to  have  uniformity  where  there  is  such 
a variety  of  product,  under  such  varying  conditions. 

Q.  You  have  substantially  refused  to  answer  every  question 
■with  regard  to  the  business  of  the  company,  on  the  ground  that 
you  are  not  connected  with  that  part  of  the  company’s  transac- 


]p.  40.] 


715 


tons.  What  were  your  duties,  Mr.  Flint,  in  your  capacity  as 
leasurer  and  director  of  the  company?  A.  I attended  the  di- 
i ctors’  meetings  in  the  main,  and  in  a general  way  attended  to 
lancial  matters,  but  there  has  always  been  an  assistant  treas- 
:’er  looking  after  the  details  of  the  business  and  I have  given 
lecial  attention  to  crude  rubber,  the  one  branch  of  the  business 
here  I have  had  a long  experience;  but  I am  not  a shoemaker — 
Q.  (Interrupting)  We  have  had  all  that  before.  Isn’t  part  of 
our  business  attending  to  the  stock  of  the  company?  A.  It 
Dines  under — that  comes  under  the  treasurer’s  department,  but 
ie  details  of  the  business  are  attended  to  by  the  assistant  treas- 
rer  and  employes  of  the  company. 

Q.  Isn’t  it  a fact  that  you  were  the  chief  promoter  of  the  com- 
any?  A.  I wouldn’t  like  to  claim  that  distinction;  I don’t  know 
ust  what  a “promoter”  is. 

Q.  Were  you  not  the  leading  spirit  in  the  organization  of  the 
ombination?  A.  I took  an  active  part  in  bringing  it  about. 

Q.  Did  you  take  an  active  part  in  the  acquisition  by  the 
lanlcing  firm  of  the  various  stocks  and  properties  that  were  put 
nto  the  combination?  A.  I assisted  in  that  work. 

Q.  Were  you  not  the  principal  organizer  of  the  work?  A.  I 
lould  not  claim  that;  it  might  be  disputed. 

Q.  Was  the  combination  not  made  for  the  purpose  of  the  dis- 
tribution of  the  resulting  stock  to  the  public?  A.  No;  that  may 
tiave  been  an  incidental  result. 

Q.  Was  not  that  the  main  purpose?  A.  No. 

Q.  (Continuing)  So  far  as  you  are  concerned?  A.  No. 

Q.  Was  that  purpose  not  equally  as  strong  a one  as  any  sup- 
posed economies  derivable  from  the  consolidation  itself?  A. 
No. 

Q.  Was  it  not  your  main,  underlying  purpose?  A.  No. 

Q.  Without  reference  to  your  own  interests  in  any  of  the  con- 
cerns that  were  consolidated,  was  it  not  your  purpose  to  produce 
this  consolidation  for  the  purpose  of  distributing  the  stock  to  the 
public?  A.  No. 


Q.  You  claim  that  it  was  an  incidental,  but  not  the  main  pu 
pose?  A.  No. 

Q.  What  do  you  claim?  A.  I make  no  claim. 

Q.  You  had  no  purpose?  A.  No  what? 

Q.  (Continuing)  In  making  this  consolidation  outside  of  th 
establishment  of  economies?  A.  I didn’t  make  the  consolide 
tion. 


«[' 

- 

f;!i 

i 

lu 


Q.  You  were  a factor  in  it?  A.  I took  part ; assisted. 

Q.  Was  not  the  whole  consolidation,  Mr.  Flint,  a speculation 
A.  Positively  not. 

Q.  Will  you  explain  to  this  committee  why  it  is  that  the  owner 
ships  in  these  industries  so'-called  are  distributed  to  the  publii 
so  liberally  after  the  stock  of  the  concerns  have  been  so  largely  Mi 
increased  ? A.  The  reason  of  the  distribution  is  owing  to  the  fact 
that  the  public  recognize  the  advantages  in  the  way  of  economies 
resulting  from  consolidation;  they  also  recognize  the  value — 

Q.  (Interrupting)  Before  leaving  that,  Mr.  Flint,  do  you  believe 
that  the  public  that  I am  speaking  of  now,  the  non-speculative 
public,  believe  that  any  advantage  is  to  be  derived  from  the  break- 
ing dowrn  of  individual  enterprise  and  the  concentration  of  every- 
thing into  one  great,  over-shadowing  monopoly?  A.  There  is— 

Q.  (Continuing)  Do  you  believe  that  the  public  recognize  that 
as  an  advantage?  A.  Read  the  question  (to  stenographer). 

Q.  Do  you  not  believe,  if  you  fail  to  answer  that  question,  that 
it  is  against  the  public  judgment  and  sentiment  that  you  and 
your  associates  are  operating  when  you  destroy  individuality  in 
business  and  concentrate  everything  into  the  hands  of  a few 
men — will  you  answer  that  question,  please?  A.  If  you  will 
read  all  the  question. 

(Question  read). 

A.  Mr.  Chairman,  if  you  will  permit  me  to  answTer  the  first 
question;  the  public  also  recognize  the  advantage  of  having  in- 
vestments in  ready  realizable  securities,  securities  which  in  case 
of  sickness  or  death  can  be  readily  realized;  they  also  recognize 
the  advantage  of  having  securities  which  are  listed  and  which  can 
be  readily  used  on  short  notice  at  any  financial  institutions  for 


1).  40.] 


717 


ie  purpose  of  obtaining  money  by  loan,  occupying  the  position  of 
{reserve  investment  available  at  times  for  the  raising  of  cash 

inds. 

(To  stenographer.  Now,  repeat  the  question.) 

(Question  re-read.) 

A.  (Continuing)  There  are  other  advantages,  Mr.  Chairman, 
it  I will  not  enumerate — 

By  Mr.  Lexo  w : 

Q.  Now,  turn  to  the  disadvantages;  just  answer  the  last  ques- 
on,  please. 

(The  whole  question  re-read.) 

A.  I think  that  in  all  human  organizations  that  disadvantages 
lay  result  dependent  on  management  and  administration,  and 
or  other  reasons — as  well  as  advantages;  but  in  the  main  I am 
atisfied  that  it  is  in  the  best  interests  of  all  concerned  that  the 
resent  evolution  which  is  going  on  in  economic  manufacturing — 
am  satisfied  that  there  is  noi  other  way  in  which  this  country 
:an  hold  its  position  in  the  production  of  goods  at  low  prices,  and 
hat  there  is  no  other  way  in  which  we  can  permanently  sustain 
he  present  high  wages  of  American  workmen;  otherwise  I be- 
ieve  that  we  would  be  ultimately  forced  to  come  down  to  the 
iasis  of  wages  of  the  more  densely  populated  countries. 

Q.  Then  you  believe  that  in  making  these  concentrations  and 
changing  industrial  enterprises  into  speculative  stock  that  you 
have  the  support  of  the  public  and  are  not  running  counter  to 
public  opinion  in  this  country?  A.  I don’t  believe  that  any  gen- 
eral rule  can  be  laid  down  as  applying  to  all  industries;  I will 
speak  for  the  United  States  Rubber  Company;  the  parties  origi- 
nally— the  parties  originally  in  interest,  having  large  holdings, 
with  one  exception,  still  continue  to  be  very  large  holders;  I have 
stated  that  the  men  composing  the  executive  committee — 

Q.  (Interrupting)  We  have  had  all  that;  they  hold  f 10, 000,- 
000 — A.  (Continuing)  And  they  hold  $10,000,000,  showing  that 
they  are  in  the  business  for  legitimate  development;  now,  Mr. 
Chairman,  I can  understand  how  these  organizations  can  be  mis- 


718 


[Senat 


used  the  same  as  abuses  can  occur  under  copartnerships,  or  undt 
smaller  corporations;  but  if  these  concerns  are  managed  on  soun 
economic  lines,  I believe  that  they  result  to  the  best  interests  ( 
this  country,  and  that,  Mr.  Chairman,  if  you  will  allow  me  t 
state,  has  been  proved  to  be  the  experience  abroad;  during  th 
past  year  the  new  capitalization,  principally  industrials,  in  Loi 
don,  has  amounted  to  $7S0,000,000. 

Q.  In  other  words,  the  owners  of  the  properties  that  have  bee: 
stocked  at  $780,000,000  have  successfully  promoted  their  scheme 
upon  the  investing  public  to  that  extent— is  that  the  effect  of  it 
A.  I understand  that  the  parties  originally  in  interest  in  the  mail 
continue  in  interest — 

Q.  Do  you  think,  Mr.  Flint,  from  your  knowledge  of  busines: 
situations  that  it  is  for  the  policy  of  the  State,  or  the  nation,  t<! 
permit  its  industrial  enterprises  to  be  made  the  subject  of  abso 
lute  monopoly  in  the  hands  of  the  few  in  every  instance,  and  to  b( 
made  the  football  of  speculation  upon  stock  exchanges?  Do  yoi 
think  that  is  good  State  or  national  policy — applying  the  rule  oi 
your  combination  to  every  other  industrial  pursuit  of  the  coun 
try?  A.  If  you  would — Mr.  Chairman — if  you  would  divide  that1 
question,  and  leave  out  the  last — I would  like  to  answer  that,  and 
then  take  up  the  specific  case. 

(Question  repeated.) 

A.  Applying  the  same  rule  in  every  other  industrial — if  you 
will  repeat  that  question  — 

(Question  re-read.) 

A.  I don’t  believe  in  monopolies,  and  I don’t  believe  in  specula- 
tion; I think  that  speculation  is  demoralizing— and  I don’t  be- 
lieve in  monopolies;  as  to  the  policy  of  legislation,  that  presents 
a difficult  question  from  the  fact  that  it  is  very  difficult  to  pass 
laws  that  cover  the  complex  conditions  of  trade;  in  the  main  I 
believe  that  it  is  best  that  trade  should  be  regulated  by  natural 
laws;  in  this  connection  I have  sent  to  England  to  obtain  infor- 
mation from  England,  to  ascertain  the  laws  that  have  been 
passed  in  their  experience — which  has  been  broader  and  more  ex- 
tensive than  ours — but  in  general,  as  I understand  that  in  Eng- 


No.  40.] 


719 


land — these — they  permit — the  English  laws  permit  the  organiza- 
tion or  aggregation  of  capital  and  intelligence  without  limit  to 
the  number  of  persons  entering  or  without  limit  to  the  amount  of 
capital;  as  to  how  far  the  disadvantages  or  abuses  of  these — of 
combinations,  can  be  covered  by  legislation,  that  is  a question 
that  I,  at  this  time,  am  not  prepared  to  answer  or  give  an  opinion 
on. 

Q.  Combination  such  as  you  represent  increase  in  power  and 
strength  as  time  rolls  on,  do  they  not?  They  become  more  of  a 
monopoly  with  the  years;  is  that  true  or  not?  A.  If  you  will  per- 
mit me — 

Q.  (Interrupting):  Is  that  true  or  not?  A.  If  you  will  please 
permit  me,  if — if  the  company  is  managed  intelligently,  looking 
to  the  interests  of  stockholders  and  recognizing  the  fundamental 
principle  that  the  best  interests  of  the  company  are  subserved  by 
giving  the  best  article  to  the  consumer,  then,  Mr.  Chairman,  I 
think  that  such  a company  will  increase  in  capital  and  in  power; 
but  if — • 

Q.  (Interrupting):  Well?  A.  (Continuing) — If  on  the  other 
hand  a narrower  policy  is  pursued  and  the  fundamental  princi- 
ples— on  which  successful  companies  have  been  organized — if 
they  are  not  followed,  then,  in  my  judgment,  and  I haven’t  any 
question,  but  what  natural  laws  will  not  only  prevent  the  growth 
of  such  a corporation,  but  that  it  will  diminish;  now,  as  far  as 
the  conditions  of  the  boot — of  the  rubber  trade  is  concerned,  I am 
satisfied  that  at  prseent  the  interests,  the  corporations  outside  of 
our  company,  will  grow  as  rapidly  as  ours,  although,  of  course, 
that  will  depend  upon  the  wisdom  of  their  administration — - 

Q.  As  compared  with  yours?  A.  As  compared  with  ours. 

Mr.  Lexow:  Now,  will  you  repeat  the  question  again  in  which 
I asked — or — I will  put  the  question  again:  Whether  you  con- 
sider it  for  the  policy  of  the  State  and  nation  to  permit  these  in- 
dustrial pursuits  to  be  made  the  subject  of  acquisition^  by  monop- 
oly, and  their  securities  to  be  made  the  football  of  speculation ; I 
ask  you  that  as  a general  principle,  as  a business  man?  A.  It  is 


720 


[Senate, 


certainly  desirable  to  prevent  the  securities  or  organizations  be- 
ing capitalized,  and  becoming  the  football  of  speculation. 

Q.  Now  the  fact  is,  is  it  not,  that  the  result  of  your  organiza- 
tion, and  of  that  of  the  American  Sugar  Refining  Company,  is  in 
the  direction  of  securing  a monopoly,  and  making  that  industrial 
pursuit  the  football  of  speculation?  A.  No. 

Q.  Was  there  any  speculation  in  the  securities  of  the  compo- 
nent companies  prior  to  the  combination?  A.  There  were  no  gen- 
eral dealings — in  some  instances  there  may  have  been,  but  to  a 
very  moderate  extent,  but  there  was  no  general  dealings  of  the 
securities,  none  of  them  were  listed — they  were  not  quoted  in  any 
of  the  important  newspapers. 

Q.  One  of  the  first  st,eps  taken  by  the  promoters  of  your  com- 
pany, after  the  issuance  of  its  increased  stock,  was  to  put  it  upon 
the  stock  exchange,  and  make  it  the  subject  of  general  specula- 
tion, wTas  it  not?  A.  No;  not  the  subject  of  general  speculation — 
I will  answer  no,  to  be  categorical. 

Q.  Has  it  not  become,  from  that  time  until  this,  one  of  the  sub- 
jects of  general  speculation  in  the  market?  A.  No. 

Q.  You  state  that  positively?  A.  Positively. 

Q.  Has  it  not  been  largely  speculated  in?  A.  No-. 

Q.  You  make  a similar  positive  statement  in  regard  to  that? 
A.  I do. 

Q.  Is  it  not  one  of  the  regularly  listed  stocks  on  the  stock  ex- 
change? A.  Yes. 

Q.  (Continuing)  and  dealt  in  on  the  floor  of  the  exchange  daily 
in  larger  or  -smaller  quantities?  A.  Almost  daily — not  every  day. 

Q.  Actively?  A.  No;  not  considered,  as  I believe. 

Q.  Do  you  not  call  it  “actively,”  when  you  have  managed,  or 
those  who  promoted  the  enterprise,  have  managed  to  make  six 
thousand  people  interested  where  only  three  hundred  were  in- 
terested before?  A.  The  fact  does  not  imply  activity  in  purchase 
and  sales;  the  records  of  the  stock  exchange  published  daily  in 
the  papers  will  show  exactly  the  number  of  shares  bought  and 
sold  from  week  to  week. 


No.  40.] 


721 


Q.  Don't  you  follow  the  matter  yourself?  A.  No;  sometimes 
for  weeks  I don't  notice  the  quotation. 

Q.  Do  you  mean  to  state  before  this  committee  that  it  is  not 
one  of  the  so-called  active  industrials  upon  the  stock  exchange? 
A.  Comparatively  inactive;  the  records  will  show  exactly  the 
comparison;  but  that  is  a matter  of  daily  and  public  record — but  I 
should  say,  comparatively  inactive. 

Q.  “Sugar”  so-called,  is  an  active  one,  as  compared  with  your 
securities?  A.  The  records  show  that. 

Q.  I mean,  do  you  know  that  as  a business  man?  A.  In  gen- 
eral ; yes. 

Q.  That  is  largely  speculated  in?  A.  I hear  so;  I have  never 
bought  or  sold  a share  of  it. 

Q.  Now,  I want  to  ask  you  the  general  question  as  to  whether 
or  not  this  expansion  of  stock,  this  system  of  incorporating  a 
large  number  of  industrial  enterprises  of  the  same  character  into 
one  combination,  has  not  had  the  effect  of  making  them  the  foot- 
bail  of  speculation? 

(Question  repeated.) 

A.  No;  it  has — the  formation  of  these  corporations  has  in- 
creased the  number  of  shares  dealt  in  on  the  exchange. 

Q.  Is  that  all  the  answer  you  care  to  make  to  that  general  ques- 
tion. 

(Question  read  again.) 

A.  I will  answer — it  has  increased  the  number  of  shares  dealt 
in — 

Q.  Now,  Mr.  Flint,  isn’t  the  main  purpose  of  the  promoters  of 
this  kind  of  enterprise,  to  make  it  a speculative  specialty,  and 
change  it  from  a legitimate  business  enterprise  into  Wall  street 
speculation?  A.  It  is  not  possible  to  cover  the  situation  by  any 
general  statement  pertaining  to  all  industrials;  I can  say  for  the 
industrial  with  which  I am  connected  that  the  parties  in  interest, 
the  large  stockholders — 

Q.  (Interrupting):  We  have  heard  that — they  have  got  $10,- 
000,000  of  the  f 40, 000, 000  of  stock;  that  is  on  record;  $30,000,000 
among  the  public,  and  they  kept  of  the  $40,000,000,  $10,000,000  to 
46 


722 


[Senate, 


themselves;  that  has  nothing  to  do  with  this  question,  which  is  a 
general  one;  whether,  in  addition  to  the  disadvantages  of  the 
creation  of  the  monopolies,  you  do  not  add  by  this  system  of 
work,  the  additional  injury  to  the  public  of  making  a public 
necessity  the  subject  of  speculation  in  Wall  street?  A.  Well,  I 
stated  that  no  general  statement  can  be  made,  applying  to  indus- 
trials in  general;  that  some  industrials  are  managed  wisely,  the 
parties  in  the  management  believing  in  the  ultimate  success, 
based  upon  the  economies  secured  in  manufacture  and  otherwise, 
are  holding  for  permanent,  legitimate  advantage;  in  other  cases 
— there  is — in  other  cases  the  industrials  are  mismanaged,  the 
same  as  corporations  and  firms  are  mismanaged,  and  may  be  im- 
properly used,  and  the  parties  in  the  management  may  engage  in 
speculation  to  the  prejudice  of  the  stockholders  and  to  the  pre- 
judice of  the  public. 

Q.  Is  not  the  system  introduced — A.  Will  you  enlarge  that 
question,  Mr.  Chairman? 

Q.  Is  not  that  latter  end  of  your  answer  the  precise  situation 
that  has  been  introduced  by  the  concentration  of  these  industrial 
enterprises  into  monopolies,  or  quasi-monopolies?  A.  Since  the 
creation  of  large  organizations,  since  the  establishment  of  rail- 
ways, the  creation  of  railway  securities,  and  of  all  kinds  of  securi- 
ties, with  this  great  development  which  has  gone  on  in  the  de- 
velopment of  the  resources  of  the  country,  there  has  been  a cer- 
tain amount  of  speculation  in  shares  and  the  formation  and  the 
creation  of  large  companies  undoubtedly  increases  the  number  of 
shares  dealt  in. 

Q.  That  is  the  object  of  the  formation,  isn’t  it?  A.  ‘No. 

Q.  Not?  A.  Not  the  object  of  the  men  who  are  building  wisely 
and  well;  I do  not  mean  to  say  but  what  men  can  misuse  these 
opportunities  the  same  as  individuals  misuse  other  opportunities. 

Q.  You  illustrate  by  referring  to  railroads;  do  you  believe  that 
where  the  State  permits  a monopoly  to  be  created  or  to  exist, 
either  in  a perfect  or  an  imperfect  form,  that  it  should  regulate 
the  charge  and  price  the  same  as  the  State  regulates  the  cost  of 
transportations  on  railroads?  A.  In  my  judgment  it  would  be 


No.  40.] 


723 


possible  to  do  that;  I mean  to  say,  to  illustrate  by  the  industrial 
with  which  I am  connected,  that  itwould  be — it  would  be  impos- 
sible to  regulate  price  from  the  fact  that  conditions  are  so  varied 
and  complex,  changing  almost  weekly,  that  it  would  not  be  pos- 
sible to  formulate  any  plan  by  which  prices  or  conditions  could 
be  regulated,  and  I think  that  those  conditions  must  be  subject  to 
the  operation  of  the  natural  law  of  supply  and  demand. 

Q.  Why  not,  any  more  than  in  the  railroad  business?  A.  From 
the  fact  that — 

Q.  (Continuing) — the  State  regulates  the  business  of  railroad 
companies  and  other  companies  holding  public  franchises  without 
reference  to  the  question  of  supply  and  demand?  A.  Well,  there 
at  once  is  a special  condition  where  a corporation  holds  a public 
franchise;  that  State  in  — 

Q.  Do  you  believe  that  when  the  State  permits  you  to  make  an 
industrial  enterprise  substantially  a monopoly  that  there  is  not 
the  power  or  the  right  on  the  part  of  the  State,  and  a considera- 
tion owing  to  the  State,  in  exchange  for  that  facility;  that  it 
should  insist  that  the  consumer  on  the  one  side  and  labor  on  the 
other  side,  should  receive  equal  advantages  with  your  company  in 
the  reduction  of  price  or  the  introduction  of  economies?  A.  I 
will  continue  my  answer  to  your  first  question — 

Q.  Now,  can’t  you  answer  the  second?  A.  Well  I — and  then 
I will  answer  the  second. 

Q.  Now,  we  have  had  your  answer  to  the  first;  just  answer  the 
second?  A.  Well,  Mr.  Chairman,  my  principal  point  in  answer  to 
the  first  was  this:  That  while  it  is  a simple  matter  for  the  State 
to  fix  the  rate  per  mile  for  a passenger  or  other  service,  the  con- 
dition in  that  case  being  simple,  that  it  would  be  impossible  for 
the  State  to  formulate  a law  that  would  regulate  the  prices  of 
varied  manufactured  products  from  the  fact  that  the  quality  is — 
differs  so  much,  that  it  would  be  impossible  to  create  a system 
whereby  you  could  fix  quality;  you  can  easily  fix  the  price,  but  in 
my  experience  as  a buyer,  the  great  difficulty  is  in  fixing  the  qual- 
ity of  an  article;  and  -where  there  is  a varied  product  the  State 
would  find  the  conditions  so  complex  that  they  could  not  regulate 


724  [Senate, 

% 

quality  as  can  be  done  in  a simple  way  in  the  case  of  fixing  the 
rates  of  mileage  on  a raidroad. 

By  Mr.  McCarren: 

Q.  Mr.  Flint,  would  you  advocate  the  policy  of  the  State  buy- 
ing up  all  the  plants  of  the  various  industrial  enterprises  therein 
and  conducting  the  firm  under  the  form  of  government?  A. 
From  what  I know  of  the  State  I think  they  have  sufficient  busi- 
ness on  hand  at  present;  I do  not  think  that  it  is  wise  for  the 
State  to  undertake  to  enter  into  the  manufacturing  business;  I 
have  before  me  now  an  example  where  the  United  States  of  Bra- 
zil are  to-day — recently  advertised  in  one  of  our  New  York  papers 
the  fact  that  they  wanted  to  dispose  of  all  the  lines  of  railways 
of  that  country;  experience  has  shown  that  it  has  cost  the  State 
or  cost  Brazil,  a very  considerable  amount  of  money  per  annum  to 
run  the  railways,  while  a syndicate  are  now  preparing  to  take 
over  all  those  railways  and  pay  the  United  States  of  Brazil  a sub- 
stantial profit  for  the  service;  I believe  that  the  more  simple  gov- 
ernment can  be  made  the  better. 

Q.  Well,  is  there  any  other  way  that  occurs  to  you  mind  by 
which  the  State  could  regulate  the  price  of  manufactured  articles 
other  than  buying  the  plants?  A.  I am  satisfied  that  there  is  no 
other  way;  the  only  way  in  which  the  quality  can  be  fixed  of  the 
great  variety  of  manufactured  articles  is  by  owning  the  plants. 

By  Mr.  Lexow: 

Q.  Do  you  believe  it  to  be  good  policy  on  the  part  of  the  State  of 
New  York  to  permit  these  industrial  enterprises  to  go  into  a few 
hands  and  be  controlled  by  a few  men,  do  you?  A.  I am  satisfied 
that  it  is  in  the  interest  of  the  State  of  New  York  to  encourage 
the  development  of  manufacture,  the  formation  of  corporations 
— of  corporations  under  the  laws  of  this  State — facilitating  and 
encouraging  these  conditions  on  which  we  must  depend  for  our 
progress  in  the  future  as  economical  producers  of  manufactured 
products. 

Q.  You  claim,  do  you,  that  the  concentration  of  industrials  is  a 


No.  40.] 


725 


natural  evolution,  or  do  you  not?  A.  I am  satisfied  that  it  is;  I 
haven’t  any  question  but  that  it  is. 

Q.  Isn’t  it  the  product  of  a few  who  come  together  for  specu- 
lative purposes?  A.  Speculation — 

Q.  Now,  Mr.  Flint,  is  it  not,  from  your  observation  of  the  man- 
ner in  which  industrials  have  been  organized  and  conducted — do 
you  mean  to  say  that  it  is  a normal  movement,  or  is  it  produced 
by  what  is  known  as  “promoting”  on  the  part  of  speculators  in 
order  to  amass  large  amounts  of  money  in  a short  time?  A.  As 
compared  with  the  general — 

Q.  Can’t  you  answer  that  question?  A.  That  is — as  compared 
with  the  general  purposes  for  which  these  organizations  are 
formed,  in  the  main,  the  matter  of  speculation  in  shares,  is  a very 
insignificent  incident;  the  history,  or  the  present  status  of  the  in- 
dustrial organizations  of  this  country  will  show  that  in  the  main 
they  have  advanced  our  industries  and  advanced  our  systems  of 
production — 

Q.  We  understand  that,  Mr.  Flint;  have  had  all  that;  just  con- 
fine yourself,  if  you  can,  or  as  nearly  as  you  can,  to  this  question 
and  we  will  get  through ; now,  I ask  whether  instead  of  being  the 
normal  outcome  of  conditions  the  concentrations  of  industrial  en- 
terprises in  combinations  is  not  the  result  of  the  work  of  pro- 
moters acting  together  for  the  purpose  of  making  fabulous  for- 
tunes in  little  or  no  time?  Now  that  is  a fair  question  and  asks 
for  a fair  answer.  A.  In  exceptional  cases,  yes;  in  the  main  the 
formation  of  these  companies  is  in  the  interest — in  the  interest 
of  our  industrial  development,  and  speculation  and  abuses  under 
these  conditions  are  comparatively  very  insignificant  as  com- 
pared with  the  grand  results  accomplished. 

By  Mr.  Warner  i 

Q.  For  whom?  A.  For  the  people  at  large;  for  the  6,000  stock- 
holders in  our  instance;  for  the  people  who  are  interested  in  the 
production  and  the  purchase  of  manufactured  goods  under  the 
most  favored  conditions. 


726 


[Senate, 


By  Mr.  Lexow: 

Q.  How  about  the  independent  concerns,  the  individuality  of 
which  is  blotted  out  and  the  competition  destroyed;  is  it  benefi- 
cial to  those?  A.  In  my  judgment  there  is  no  way  in  which  you 
can  prevent  the  law  of  the  survival  of  the  fittest. 

Q.  Now,  I am  coming  right  down  to  that  question;  in  it,  owing 
to  any  such  law  as  that,  or  is  it  owing  to  the  speculative  schemes 
of  promoters  that  this  tendency  in  favor  of  concentration  of  in- 
dustrials has  been  created  and  now  exists?  A.  The  best  evi- 
dence— • 

Q.  Now,  is  it ; that  is  a fair  question ; now  make  a fair  answer. 

(Question  repeated.) 

Q.  Which  is  it,  Mr.  Flint? 

(Question  re-read.) 

A.  I don’t  think  that  that  question  admits  of  a categorical  an- 
swer, Mr.  Chairman ; the  comparison  between — 

Q.  Do  you  know  of  a single  instance  of  the  combination  of  in- 
dustrials that  has  not  been  brought  about  by  promoters  acting 
together  for  the  purpose  of  making  the  stock  in  those  industrials 
a football  for  speculation?  A.  Yes. 

Q.  In  what  case?  A.  I have  in  mind  a case  where — there  have 
been  recently  consolidated  four  or  five  corporations  where  the — 
all  of  the — in  order  to  secure  economies,  there  has  been,  there 
have  been  four  or  five  factories  put  into  one  where  heretofore 
three  or  four  or  five — where  there  were  four  or  five  presidents, 
four  or  "five  treasurers,  four  or  five  lawyers  and  more  lawsuits, 
with  four  or  five  establishments  with  general  expenses — a cor- 
poration has  been  organized  where  all  these  conditions  have  been 
concentrated  in  one  concern,  resulting  in  higher  efficiency,  better 
manufacture  and  where  there  has  been  no  promoting  stock  and 
no  speculation  in  the  securities. 

Q.  Is  that  an  individual  case  which  forms  an  exception  to  the 
rule?  A.  The — it  would  be — I have  not  in  mind — the  number  of 
industrials  which  have  been  formed  is  so  very  large  that  I could 
not  answer  that  question  accurately. 

Q.  Now,  isn’t?  A.  In  general  I know  the  main  purpose  of  the 


No.  40.] 


727 


consolidations  which  have  been  formed  has  been  to  secure  the 
economic  advantages  of  centralization. 

Q.  Take  the  United  States  Rubber  Company  as  a type;  was  that 
consolidation  brought  about  by  the  natural  laws  of  trade,  or  was 
it  brought  about  by  the  action  of  promoters,  who  by  the  concen- 
tration of  various  factories  into  one  combination  necessarily  ac- 
quired a large  amount  of  money  in  a short  time  and  made  the 
securities  of  the  combination  a speculative  commodity? 

(Question  repeated.) 

A.  That  combination  was  brought  about  by  the  natural  laws 
of  trade,  and  it  never  could  have  been  effected  except  through  the 
operation  of  such  laws. 

Q.  Isn’t  it  a fact  that  in  that  case,  as  in  all,  or  if  not  quite  all 
almost  all  others,  the  process  is  that  promoters  by  offering  the 
owners  of  property  large  inducements  in  the  way  of  watered 
stock  manage  to  get  them  to  come  in  combination  with  each  other 
without  regard  to  the  laws  of  trade;  will  you  say  that  that  was 
not  true  in  the  case  of  the  United  States  Rubber  Company?  A.  I 
positively  do.  t 

Q.  Do  you  dispute  the  fact  that  that  combination  -was  secured 
by  the  action  of  the  promoters  instead  of  the  natural  demand  of 
trade?  A.  I state  that  that  combination  is  the  result  of  natural 
laws — 

Q.  And  only  that?  A.  (Continuing)  Assisted  by  wise  counsel. 

Q.  Was  the  “wise  counsel”  the  counsel  of  the  promoters?  A.  I 
used  the  word  “counsel”  in  a general  sense,  not  as  referring — 

Q.  I understand,  not  a lawyer?  A.  Not  a lawyer. 

Q.  Now,  Mr.  Flint,  was  any  one  of  the  promoters  of  the  United 
States  Rubber  Company  interested  in  or  engaged  in  the  business 
of  manufacturing  rubber  goods  in  this  country?  A.  In — 

Q.  Now,  that  asks  for  an  answer,  yes  or  no;  any  one  of  them? 
A.  Well,  I find  difficulty  in  answering  the  question  as  to  the  sig- 
nificance of  the  word  “promoter.” 

Q.  I mean  those  who  brought  together  the  combination  of  these 
interests  which  you  say  was  the  result  of  the  normal  demands  of 
trade;  I ask  you  was  any  one  of  the  gentlemen  interested  in  pro- 


728 


[Senate, 


during  that  combination  interested  directly  or  indirectly  in  the 
manufacture  of  rubber  goods  in  this  country?  A.  Those  who 
took  the  initial  step,  and  took  part  in,  to  a large  extent,  in  bring- 
ing about  this  combination,  bad  no  interest  in  the  rubber  manu- 
facturing business  or  in  the  manufacturing  in  this  line  in  which 
the  United  States  Rubber  Company  was  engaged. 

Q.  Then  the  initial  step  in  the  way  of  concentration  in  your 
particular  branch  wns  taken  by  men  who  were  not  interested  in 
the  business  at  all?  A.  They  assisted — 

Q.  One  moment;  was  it  not  taken  by  them? — A.  No;  not — 

Q.  Were  they  not  the  promoters?  A.  They  acted  simultane* 
ously,  or  assisted  in  carrying  out  the  ideas  of  the  manufacturers; 
the  manufacturers  had  met  frequently  with  the  idea  of  bringing 
about  such  a consolidation;  they  realized  that  it  was — that  to  se- 
cure the  advantages  in  the  economies  of  production,  that  it  was 
necessary,  and  the  bankers  and  others  in  interest  assisted  in 
bringing  about  that  desirable  result. 

By  Mr.  McCarren: 

Q.  Mr.  Flint,  a few  moments  ago  you  said  that  in  your  opinion 
there  was  no  way  in  which  the  inevitable  law  of  a survival  of  the 
fittest  could  be  defeated;  did  I understand  you  to  say  that?  A.  I 

did. 

Q.  Have  you  ever  read  Benjamin  Kidd’s  work  on  Social  Evolu- 
tion? A.  I have  not;  but  I want  to  make  this  point,  and  that  is, 
that  in  my  observations  of  the  working  of  that  law7  that  it  is  most 
cruel  through  the — in  the  development  of  large  concerns  owned 
by  individuals  or  in  the  hands  of  a few;  that  in  that  event  the 
party  at  a disadvantage  gets  no  advantage  whatsoever  from  his 
position;  he  is  ultimately  forced  to  the  wall  by  a concern  that 
may  be  owned  by  an  individual  or  by  a few  individuals,  and  that 
law  is  far  more  cruel  under  those  conditions  than  where  in  many 
cases  for  self  protection  the  strong  and  the  weak  unite  in  a cen- 
tralization such  as  that  of  the  United  States  Rubber  Company. 

Q.  Well,  I asked  you  that  question  simply  because  your  ideas 
seem  to  conform  to  the  ideas  of  Mr.  Kidd?  A.  I regret  that  I 
have  not  read  that  book. 


No.  40.] 


72!) 


By  Mr.  Lexow : 

Q.  Is  this  the  promoting  contract  under  which  the  United 
States  Rubber  Company  was  formed,  or  a copy  of  it.  (Exhibiting 
paper  to  witness.)  A.  No. 

Q.  Isn't  it  a true  copy  of  an  agreement  that  was  signed?  A.  I 
don’t  remember  as  to  the  exact  wording,  but  in  substance;  sub- 
stantially. 

Q.  That  is  right?  A.  An  agreement  was  entered  into  of  that 
kind. 

Q.  You  don’t  dispute  the  fact  that  that  is  a copy  of  the  agree- 
ment that  was  entered  into?  A.  Substantially  an  agreement 
that  was  entered  into. 

Q.  After  refreshing  your  recollection  by  referring  to  this,  do 
you  now  dispute  the  proposition  that  you  were  the  chief  promoter 
of  the  United  States  Rubber  Company?  A.  I do;  as  that  paper 
will  show,  I was  one  of  a number,  and  that — and  the  parties  to 
that  agreement  only  comprise  a few  who  were  instrumental  in 
bringing  about  this  important  result. 

Q.  Was  any  commission  other  than  that  mentioned  in  this 
agreement  paid  for  the  promoting  of  that  enterprise?  A.  Let  me 
see  that  agreement.  (Paper  handed  to  witness.)  None  that  I can 
think  of. 

Q.  Now,  you  or  your  representative,  under  the  terms  of  that 
agreement,  received  the  largest  share  of  the  commission  that  was 
paid  for  the  promotion  of  the  enterprise,  didn’t  you ; that  is  true, 
isn’t  it?  A.  That  is  true. 

Q.  You  received  twice  as  much  as  anybody  else?  A.  No. 

Q.  Twice  as  much  as  any  one  individual  appearing  upon  the 
list  of  promoters?  A.  No. 

Q.  Well,  who  is  “A.  M.  Flint”?  A.  That  I don’t  know. 

Q.  Any  relation  of  yours?  A.  No;  I haven’t  any  relation  with 
the  initials  of  “A.  M.” 

Q.  Is  this  “A.  M.”  in  the  agreement  a mistake,  and  it  ought  to 
be  “ C.  R.”?  A.  I think  it  is;  I think  it  should  read  “ Charles  R.” 

Q.  Now,  the  fact  is  that  according  to  this  agreement,  which 
yon  admit  having  executed,  “C.  R.  Flint  shall  receive  of  such 


730 


[Senate, 


“stock  the  par  of  two  hundred  thousand,  the  banking  company 
“one  hundred  thousand  and  Mr.  Earle  one  hundred  thousand; 
“such  balance  as  shall  remain  shall  be  divided  into  four  equal 
“parts,  one  part  belong  to  and  be  paid  over  to  Mr.  Flint,  one  part 
“to  the  banking  concern,  one  part  to  Mr.  Earle  and  one  part  to 
“Mr.  Sibley”;  after  having  your  attention  called  to  that  provision 
do  you  still  dispute  that  you  received  twice  as  much  as  any  other 
promoter  under  the  terms  of  this  agreement?  A.  I do. 

Q.  How?  A.  It  won't  figure  out  that  way. 

Q.  Oh,  then,  you  mean  that  there  was  a large  balance  over  that 
was  divided  into  four  equal  parts  between  the  four  gentlemen 
named;  is  that  right?  A.  Any  balance  would  change  the  per- 
centage. 

Q.  If  the  original  division  included  only  four  hundred  thousand 
dollars  as  the  price  paid  to  the  promoters  then  you  would  have 
one-half  of  the  four  hundred  thousand;  if  there  was  a difference 
beyond  that  then  you  would  only  get  one-quarter  of  that  differ- 
ence, and  that  would  reduce  your  whole  below  one-half  of  the 
whole;  that  is  what  you  mean?  A.  That  is  correct. 

Q.  How  much  difference  was  there,  Mr.  Flint,  that  was  divided 
in  quarters?  A.  Mr.  Chairman,  the— for  the  purpose  of  this  com- 
mittee is  it  necessary  to  go  into  the  details  of  that;  that  is  a pri- 
vate matter. 

Q.  Do  you  desire  to  be  excused  from  answering  on  the  ground 
it  is  a matter  of  private  business  which  should  not  be  divulged; 
do  you  desire  to  be  excused  on  that  account?  A.  I do. 

Q.  After  having  your  attention  called  to  this  agreement,  Mr. 
Flint,  do  you  still  insist  that  the  United  States  Rubber  Company 
originated  as  the  result  of  natural  laws  and  was  not  the  work  of 
independent  promoters,  endeavoring  to  make  a fortune  in  a short 
time,  as  the  result  of  combination? 

(Question  read.) 

A.  I do  so  insist. 

Q.  You  mean  to  say  that  a little  matter  of  four  hundred  thou- 
sand dollars  for  making  a combination  is  not  a fortune;  is  that 
time?  A.  It  is  good  compensation. 


No.  40.] 


731 


Q.  Fair;  liaw  about  the  consumer  that  is  to  pay  by  buying  the 
product — the  dividends  on  stock  issued  for  any  such  purpose  as 
this,  Mr.  Flint;  had  that  occurred  to  you  in  making  the  trans- 
action? A.  I do  not  think  that  the  consumer  was  in  any  way 
prejudiced  thereby. 

Q.  Do  you  not  consider  that  in  making  issues  of  stocks  by  cor- 
porations the  principle  underlying  that  issue  is  to  make  that  stock 
a dividend  payer,  and  its  stock  is  issued  for  “water,”  or  “intelli- 
gence,” as  represented  by  this  document,  that  it  require  addition- 
al profits  on  the  part  of  the  company  to  pay  dividends  on  stocks 
so  issued?  A.  I do  not  think  that  water  should  be  stated  as 
synonymous  with  intelligence. 

Q.  I said  “water  or,”  not  “water  and.”  A.  Oh,  oh;  I think 
that  the  service  rendered  was  one  properly  compensated  for  and 
that  the  general  interests  were  benefited  by  the  work  performed. 

Q.  How  can  you  explain  to  the  committee  the  fact  that  com- 
binations of  legitimate  business  enterprises  have  to  be  made  the 
subject  of  promoters’  agreements,  have  to  be  placed  through 
banking  establishments  in  Wall  street— if  they  are  the  normal 
outcome  of  a demand  of  the  businesses  themselves  to  enter  into 
combination  with  each  other?  A.  For  the  same  reason  that  men 
of  high  intelligence  are  needed  to  make  treaties  between  the  na- 
tions, particularly  during  periods  of  war;  these  manufacturers 
have  been  in  many  cases — 

Q.  You  mean  it  is  a delicate  diplomatic  situation  that  has  to  be 
met?  A.  It  is  one  requiring  the  very  highest  intelligence,  and  as 
a rule  neutral  parties,  parties  not  interested,  men  of  the  intelli- 
gence and  reputations  to  inspire  unlimited  confidence  on  the  part 
of  manufacturers  are  needed  to  bring  manufacturers  together  in 
order  that  they  may  move  with  the  current  of  natural  laws. 

Q.  Then  it  requires  peculiar  intelligence  for  a man  to  move 
with  natural  laws  and  no  intelligence  to  have  him  obstruct  natu- 
ral laws?  A.  There  are  many — • 

Q.  Is  that  the  situation  you  wish  to  put  upon  the  record  here? 
A.  No;  not  just  in  that  form;  but  I mean  to  say  that  although 
primarily  and  fundamentally  these  consolidations  are  the  result 


732 


[Senate, 


of  the  natural  evolution  of  economical  manufacture,  that  it  re- 
quires men  of  responsibility  and  high  intelligence  to  bring  about 
these  consolidations. 

Q.  When  you  make  an  analogy  between  war  on  the  one  hand 
and  trade  on  the  other  you  mean  that  you  face  a condition  of  war 
in  trade  when  you  meet  competition,  and  that  it  is  your  object  to 
remove  that  competition  by  diplomatic  finesse  represented  by  a 
promoter’s  agreement;  is  that  true?  A.  This  case  illustrates  the 
general  fact  that  it  is  always  dangerous  for  a man  to  use  a simile. 

Q.  You  don’t  mean  to  be  understood  in  that  way?  A.  An  ex- 
perienced lawyer  like  yourself  in  999  cases  out  of  1,000  can  turn 
it,  which  you  have  successfully  done. 

Q.  You  don’t  mean  to  be  understood  that  way,  then?  A.  Not 
that  way. 

Q.  Mr.  Flint,  how  can  you  explain,  if  this  is  a natural  economic 
evolution  and  not  forced  or  strained,  that  it  required  the  payment 
of  $400,000  and  additional  compensation  which  we  for  reasons 
of  delicacy  do  not  inquire  into,  in  order  to  secure  that  natural  re- 
sult? 

(Question  read.) 

A.  The  assistance  of  neutral  parties  able  to  inspire  the  confi- 
dence of  the  manufacturers. 

Q.  Intermediaries  between  the  various  manufacturers  to  secure 
their  consent  to  a general  plan  whereby  this  combination  is  final- 
ly consummated;  that  is  the  situation,  isn’t  it?  A.  That  is  it. 

Q.  Is  this  characteristic  of  every  other  combination  that  you 
know  of,  having  been  recently  made  in  industrials;  or  to  change 
the  question,  when  you  made  this  agreement  were  you  not  acting 
upon  well  established  lines  of  the  promoting  business?  A.  In 
general  I believe  that  the  assistance  of  intermediaries — 

Q.  Now,  that  is  not  going  to  add  anything  to  the  situation  at 
all.  A.  Well,  then,  erase  that. 

Q.  That  is  a fair  question  and  can  admit  of  only  one  answer. 

(Question  read.) 

A.  I am  not  in  that  business. 

Q.  No;  but  is  that  not  the  general  situation?  . 


No.  40.] 


733 


(Question  read  again.) 

A.  No. 

Q.  You  were  not?  A.  No. 

Q.  You  were  doing  something  extraordinary  were  you?  A. 
Extraordinary  in  the  rubber  business. 

Q.  Extraordinary  in  your  business,  but  was  it  extraordinary  in 
the  promoting  business,  as  established  in  the  city  of  New  York? 
A.  My  experience  has  not  been  sufficiently  extensive  to  answer 
that  question  specifically ; in  general  I think  that  the  intervention 
of  neutral  parties  has  been  found  necessary,  and  that — 

Q.  With  the  payment  of  a large  commission  for  their  services? 
A.  And  with  the  payment  of  a substantial  amount  for  their  ser- 
vices. ( 

Q.  In  producing  it?  A.  In  producing  those  results. 

Q.  A sort  of  assistant  to  the  normal  evolution  of  business ; that 
is  it,  isn’t  it — or  “pushing  a good  thing  along?”  A.  Midwife;  I 
think  that  would  cover  it. 

Q.  Do  you  think  it  public  policy,  Mr.  Flint,  that  industrial  pur- 
suits lying  close  to  the  people  should  be  treated  in  this  way,  and 
made  the  subject  of  this  kind  of  speculation?  A.  I think  that 
the  payment  to  the  neutral  party  bringing  about  these  important 
results  is  an  insignificant  incident,  as  compared  with  the  sub- 
stantial benefits  resulting  from  their  work. 

By  Mr.  Warner: 

Q.  To  the  promoters?  A.  To  those  assisting  in  bringing  about 
these  most  favored  economic  conditions. 

By  Mr.  Lexow: 

Q.  You  think  then,  that  the  establishment  of  conditions  where- 
by the  promoting  of  an  industrial  enterprise  of  this  kind  in  the 
direction  of  monopoly  is — good  State  policy,  do  you  ? A.  It  is  in 
the  direction  of  a monopoly. 

Q.  I read  from  your  agreement:  “To  bring  about  a consolida- 
tion into  one  parent  or  consolidated  corporation,  of  interests  in 


734 


[Senate, 


several  companies  now  engaged  in  the  manufacture  of  rubber 
boots  and  shoes  throughout  the  United  States.”  Do  you  dispute 
that  the  intent  of  this  agreement  is  in  the  nature  of  establishing 
or  tending  toward  a monopoly?  A.  I do. 

Q.  You  believe  it  good  policy?  A.  I do. 

Q.  You  believe  it  good  policy  to  traffic  in  the  industrial  pur- 
suits of  the  people  in  such  a manner  as  to  give  issue  to  increased 
stock  to  the  extent  of  the  large  sum  mentioned  in  this  agreement 
for  the  simple  purpose  of  bringing  about  a combination  in  the 
direction  of  a monopoly?  A.  Like  all  questions,  or  like  most 
questions  that  arise,  there  are  advantages  and  disadvantages;  in 
the  main  the  advantages  resulting  in  more  economic  manufacture 
justify  the  conditions. 

Q.  You  did  not  care  anything  about  economic  manufacture,  did 
you,  Mr.  Flint,  when  you  signed  this  promoting  agreement,  and 
you  had  no  interest,  and  your  associates  in  this  agreement  had  no 
interests,  to1  serve  the  public;  you  were  working  for  your  com- 
mission of  $400,000,  together  with  such  accessories  as  might 
be  added  to  it,  were  yon  not?  A.  I was  working  for  my  commis- 
sion, but  on  the  other  hand  I was  interested  in  building  on  sound 
economic  principles,  or  assisting  to  build;  although  I had  no  in- 
terest in  the  manufacturing  corporations,  or  little  interest,  if  any, 
I was  interested  in  the  sale  of  crude  rubber  to  those  concerns, 
and  was  interested  in  building  wisely  and  well. 

Q.  Was  there  anybody  else  on  this  agreement  interested  in  the 
sale  of  crude  rubber,  or  in  any  of  the  companies?  A.  One  person. 

Q.  Who  was  that?  A.  Mr.  Earle. 

Q.  Was  Richard  Sibley,  or  the  banking  concern?  A.  No;  no 
interest. 

Q.  Then  you  and  Earle  were  solitary  upon  the  question  of 
building  wisely  and  well,  in  addition  to  the  commission;  the 
other  gentlemen  were  in  it  simply  for  the  commission;  is  that 
true?  A.  At  that — at  the  time  that  agreement  was  signed — 

Q.  Is  that  true?  A.  Mr.  Earle  and  I were  the  only  ones  inter- 
ested in  the  rubber  business,  in  crude  rubber  business,  or  any 
other. 


No.  40.] 


735 


(Question  read.) 

A.  I can’t  answer  for  the  other  gentlemen. 

Q.  You  know  however  that  the  fact  is  as  stated  in  the  ques- 
tion? A.  No. 

Q.  You  do  not?  A.  I do  not  know  it. 

Q.  Do  you  deny  it?  A.  I have  no  knowledge  on  the  subject. 

Q.  Now,  I am  going  to  put  to  you  these  specific  questions  and 
ask  you  after  recess  either  to  dispute  or  to  verify  these  figures. 
Is  it  true  that  immediately  after  consolidation  you  advanced  the 
price  of  men’s  hip  rubber  boots  34  per  cent.;  the  price  of  short 
rubber  boots,  men’s,  34  per  cent.;  the  price  of  men’s  pure  gum 
rubber  boots,  44  per  cent. ; the  price  of  men’s  Arctics,  20  per  cent. ; 
the  price  of  men’s  Alaskas,  23  per  cent;  the  price  of  men’s  imita- 
tion sandals,  40  per  cent.;  the  price  of  men's  and  women’s  foot- 
holds, 28  per  cent,  the  price  of  women’s  imitation  sandals,  30  per 
cent.  We  would  like  to  have  those  figures  upon  the  record ; and 
that  since  that  advance  in  prices  there  has  been  no  substantial 
reduction  in  the  figures  then  fixed.  You  certainly  can  secure 
those  figures,  Mr.  Flint?  A.  I can  secure  any  information  that 
may  be  asked  for — or  will  endeavor  to  do  so;  I will  endeavor  to 
get  the  information  as  promptly  as  possible,  and  in  obtaining  the 
information  the  question  that  always  comes  in  regard  to  prices 
of  any  articles  is  the  one  of  quality. 

Q.  We  understand  that  you  have  explained  that  the  result  of 
consolidation  has  been  increasing  the  quality  of  the  goods  sold; 
that  is  right?  A.  Therefore  prices  may  have  advanced,  but  the 
quality  may  have  improved  more  than  the  advance  in  price. 

Q.  Or  anything  else  may  have  occurred;  that  is  true;  has  it  oc- 
curred? A.  That  is  the  question  you  want  me  to  ascertain? 

Q.  Has  it  occurred?  A.  I will  endeavor  to  obtain  the  informa- 
tion as  requested. 

Q.  You  don’t  know  whether  there  has  been  any  bettering  of  the 
product?  A.  I know  there  has  been;  I have  stated  that  so  many 
times  that — 

Q.  Interrupting)  With  reference  to  these  eight  articles — A. 
(Continuing)  I didn’t  feel  justified  in  stating  it  again. 


736 


[Senate, 


Q.  With  reference  to  these  eight  articles?  A.  Yes;  well,  I can- 
not say  with  reference — yes,  I am  satisfied  that  the  quality  has 
improved  on  all  our  high  grade  output. 

Q.  Are  you  speaking  now  what  you  know  as  a fact  or  simply  a 
matter  of  guess  work  on  your  part?  A.  From  general  informa- 
tion; I have  not  the  detailed  knowledge. 

Q.  You  will  furnish  us  with  the  specific  fact,  will  you  not?  A. 
I will  obtain  all  the  information  I can. 

Q.  By  half-past  two  o’clock  this  afternoon?  A.  I will  do  the 
best  I can. 

Q.  We  would  like  to  conclude  with  your  examination  very 
shortly,  Mr.  Flint.  A.  I shan’t  regret  that  event  and  will  en- 
deavor to  hasten  it. 

Original  Simmons  report  marked  “Exhibit  A,  February  19.” 

A recess  was  here  taken  until  two  o’clock  in  room  19. 


AFTERNOON  SESSION.  FRIDAY,  FEBRUARY  19,  1897, 
ROOM  19,  CITY  HALL. 

Charles  R.  Flint  recalled. 

Examined  by  Mr.  Lexow: 

Q.  Mr.  Flint,  have  you  had  an  opportunity  to  secure  the  figures 
requested?  A.  I have. 

Q.  And  have  you  them  with  you?  A.  I have;  all  I have  been 
able  to|  secure. 

Q.  Covering  the  eight  grades  of  shoes  that  were  mentioned  in 
the  various  questions  propounded?  A.  Covering  the  most  of 
them. 

Q.  What  grades  have  you?  A.  Shall  I state  the  respective 
prices  of  the  different  years? 

Q.  Yes.  A.  Men’s  hip  rubber  boots,  price,  net,  at  present  is 
$3.00,  in  1892  it  was  $2.45 ; men’s  short  rubber  boots,  the  price  in 
1892  was  $1.86,  at  present  $2.00 ; men’s  Arctics,  the  price  in  1892 
was  87-|,  now  $1.00 ; high  cut  Arctics,  the  price  in  1892  was  $1.52, 
now  $1.50;  imitation  sandals  are  not  made  now;  the  United  States 


Yo.  40.] 


737 


Company  are  not  making  imitation  sandals  or  men’s  and  women’s 
imitation,  and  what  they  had  on  hand  have  been  sold  at  25  per 
cent,  below  regular  prices;  footholds  in  1892  were  selling  at  33 
cents  and  the  present  price  is  40  cents;  in  this  connection  I have 
the  price  lists  of  1892  and  the  price  lists  of  189G  and  1897,  and  in 
case  that  they  are  received  I will  call  attention  to  the  fact  that 
the  price  lists  have  been — are  lower  at  present  than  during  1892, 
but  in  the  discount  to  jobbers  was  higher  in  1892  than  at  present. 

Q.  Do  you  mean  that  you  are  selling  directly  now  to  the  retail- 
ers? A.  Yo;  I think  not;  not  to  any  extent,  not  to  any  extent; 
there  may  be  some  exceptions,  but  it  would  be  an  exception  that 
we  would  sell  to  retailers;  but  the  price  lists  which  go  to-day  to 
the  retailer  are  lower  at  present  than  before  the  organization  of 
the  United  States  Rubber  Company;  I have  also  for  the  same 
period  the  time  that  was  taken  for  sugar — namely,  nine  years;  I 
have  1o  state  that  prices  are  lower  to-day  than  the  average  prices 
prior  to  the  organization  of  the  United  States  Rubber  Company 
for  nine  years  prior  to  the  organization. 

Q.  According  to  your  statement,  then,  every  article  inquired 
of  has  been  increased  in  price  as  compared  with  1892,  with  the 
exception  of  the  one  mentioned  by  you  as  “high  cut”?  A.  Yes. 

Q.  Do  the  percentages  that  were  contained  in  my  question 
agree  with  the  figures  you  now  make?  A.  I haven’t  had  time  to 
figure  them  out,  Mr.  Chairman ; I have  given  the  figures  as  I have 
received  them.  1 

Q.  You  have  in  reaching  these  figures  added  to  your  statement 
the  fact  that  you  have  decreased  the  discount  to  jobbers;  but  how 
much  have  you  decreased  the  discount  to  jobbers?  A.  And 
have  decreased  the  price  list  to  consumers. 

Q.  By  how  much  have  you  decreased  the  discount  to  jobbers? 
A.  Well,  I have  not  those  figures  with  me — I have  given  you  all 
the  data  except  that  owing  to  the  change  of  styles,  and  as  a mat- 
ter of  policy  in  the  interest  of  the  consumer — I desire  to  state 
that  during  the  past  year  we  have  sold  a very  large  percentage 
of  our  total  product,  say  15  to  20  per  cent.;  I think  that  it  even 
may  be  more — we  have  sold  at  25  per  cent,  below  the  prices  which 


47 


738 


[Senate, 


I have  stated;  those  being  goods  that  have  been  sold  on  account 
of  change  of  styles;  and  that  is  about  four  times  as  many  goods 
sold  at  a reduction — four  or  five  times  as  many  as  we  sold  in 
years  previous  to  the  organization  of  the  company. 

Q.  Do  I understand  that  the  figures  that  you  have  made  here 
are  the  figures  at  which  you  put  your  goods  to  the  jobber?  A. 
Those  are  the  figures  to  the  jobber. 

Q.  So  that  if  you  have  decreased  the  discount  to  the  jobber  the 
increase  so  far  as  profit  to  your  concern  is  concerned  has  been  so 
much  increased?  A.  In  accordance  with  the  figures  which  I have 
given. 

Q.  Have  you  any  knowledge  of  the  approximate  decrease  of  the 
discount  to  jobbers?  A.  I have  not. 

Q.  Do  you  know  whether  it  was  10  per  cent.?  A.  I could  not 
say;  but  the  figures  that  I have  given  give  the  net  result;  it  was 
figured  out  for  me,  and  I have  not  given  the  net  comparisons,  but 
there  was  a reduction  in  price  lists;  these  price  lists  are  lower 
now  than  they  ever  have  been  heretofore  or  for  several  years  prior 
to  the  organization  of  the  United  States  Rubber  Company. 

Q.  How  can  the  price  list  be  lower  when  the  figures  you  give 
us  show  that  the  prices  charged  for  your  goods  are  higher?  A. 
From  the  fact  that  the  discount  to  jobbers  was  higher  before  the 
organization  of  the  company  than  it  is  at  present. 

Q.  That  means  that  your  margin  of  profit  has  been  increased 
to  just  that  extent?  A.  Not  to  the  extent  of  the  decrease  in  dis- 
count because  the  price  lists  have  been  lower,  but  the  net  figures 
which  I have  given  to  you  give  the  net  comparisons  to  jobbers. 

Q.  Do  you  mean  that  the  price  of  $3  charged  in  189G  for  hip 
rubber  boots  as  compared  with  $2.45  charged  in  1892  presents  the 
net  price  charged  by  you  after  the  discount?  A.  That  is  what  I 
understood  you  desired  me  to  furnish. 

Q.  That  is  the  fact,  is  it?  A.  That  is  the  fact. 

Q.  Now,  Mr.  Flint,  how  can  you  justify  increase  to  the  consum- 
ing public  in  view  to  the  depression  which  has  existed  during  all 
those  years?  A.  In  the  first  place  the  goods  are  not  the  same; 
the  quality  of  the  goods  being  manufactured  at  the  present  time 


No.  40.] 


739 


has  improved;  furthermore,  there  must  be  taken  into  considera- 
tion the  very  large  sale  of  goods  at  prices  25  per  cent,  less  than 
the  figures  I have  given,  so  that  in  looking  at  the  matter  of  sales 
— in  looking  at  it  from  a public  standpoint,  should  be  in  their  en- 
tirety; furthermore,  Mr.  Chairman,  I desire  to  state  that  the  con- 
ditions prevailing  in  1890,  1891  and  1892,  were  those  of — that  the 
trade  was  in  that  condition  that  many  concerns  were  losing  very 
large  amounts  of  money;  the  Para  Rubber  Shoe  Company  was 
obliged  to  shut  down,  and  in  round  figures,  in  a few  years  prior  to 
the  organization  of  the  United  States  Rubber  Company  the  Para 
Rubber  Shoe  Company  lost  about  three-quarters  of  a million  dol- 
lars; say  about  three-fourths  of  its  capital;  you  have  yourself  re- 
ferred to  the  unfavorable  condition  of  other  companies,  and  a 
very  considerable  amount  of  money  was  lost  during  an  excep- 
tional period,  not  of  general  depression,  but  during  a period  when 
as  I have  stated,  many  of  the  companies  were  doing  business  at  a 
great  loss,  and  one  I think,  as  stated,  was  forced  to  shut  down. 

Q.  How  much  of  the  capital  stock  of  the  United  States  Rubber 
Company  was  issued  for  the  Para  Rubber  Company?  A.  I don’t 
remember  the  exact  amount,  but  I think  about  $300,000. 

Q.  Are  you  sure  about  that?  A.  I am  not. 

Q.  Preferred  or  common?  A.  I think — well  I may  be  able  to 
get  at  the  facts  from  this  Simmons  report  (indicating);  I think 
about  $300,000  for  preferred  and  for  common. 

Q.  Are  you  sure  about  it?  A.  Not  sure. 

Q.  Can  you  furnish  the  information  ? A.  I can. 

Q.  Will  you?  A.  I will. 

Q.  We  understood  you  to  say  that  the  general  purpose,  or  the 
main  purpose  of  the  organization  of  these  combinations  was  for 
the  purpose  of  securing  economy;  how  can  you  bring  into  con- 
sistency with  that  purpose  the  fact  that  you  have  increased  the 
price  of  your  goods  to  the  consumer?  A.  In  the  first  place  owing 
to  improvements  in  quality;  in  the  second  place  owing  to  the  in- 
creased variety  in  styles,  making  manufacture  expensive  and  the 
necessity  of  large  realization  of  goods  at  a sacrifice;  and  again 
in  the  rubber  industry,  owing  to  the  great  variety  of  its  product 


740 


[Senate,. 


and  the  complex  character,  it  takes  very  much  longer  to  realize 
the  economies  through  combination  than  in  the  case  of  industrials 
where  the  output  is  of  one  kind  of  goods  or  a few  kinds. 

Q.  Do  you  wish  to  be  placed  on  record  and  as  making  the  same 
statement  that  Mr.  Searles  made,  that  an  experience  within  nine 
years  was  not  fair  to  be  considered  upon  the  question  of  economy 
to  the  consumer  in  combinations  of  this  kind?  A.  No;  I should 
not — I would  not— I do  not  desire  to  make  that  statement;  I think 
that  now  we  are  making  rapid  progress  in  the  improvement  of 
our  manufacturing  methods,  and  that  while  it  will  be  many  years 
before  we  realize  the  larger  percentage  of  economies  we  are  mak- 
ing to-day  substantial  progress  in  realizing  substantial  economies. 

Q.  Have  you  been  able  to  ascertain  the  number  of  men  dis- 
charged by  your  company  since  its  organization  as  compared  with 
the  number  employed  prior  thereto?  A.  I haven’t  the  exact  fig- 
ures; I — but  I — I can  state  positively  that  we  have  run  our  fac- 
tories and  manufactured  all  the  goods  that  we  could  sell,  but 
owing  to  the  depression  in  business  during  the  particular — during 
the  period  before  the  election,  the  amount  of  goods  wanted  have 
been  abnormally  low. 

By  Mr.  McOarren: 

Q.  The  last  election?  A.  Last  election. 

By  Mr.  Lexow: 

Q.  Can  you  give  any  more  specific  answer  to  that  question  as 
to  the  number  of  men  now  employed  by  the  company  as  com- 
pared to  the  number  of  men  employed  by  the  independent  com- 
panies before  consolidation?  A.  I have  not  the  exact  informa- 
tion; that  is  I haven’t  any  more  information  on  the  subject  than 
that  given. 

Q.  Have  you  attempted  to  reach  specific  figures?  A.  I have 
not;  my  time  has  been  so  absorbed  I have  not  been  able  to  secure 
it,  but  I will  be  glad  to  furnish — 

Q.  Is  Mr.  Johnson  in  court?  A.  I think  not;  no. 


No.  40.] 


741 


Q.  Did  you  ask  him  to  attend?  A.  I did;  I telegraphed  him. 

Q.  Will  he  be  here  to-day?  A.  I think  not  to-day. 

Q.  Why  not  to-day?  A.  Well,  he  was  in  Boston  on  important 
business,  and  it  is  not  possible  for  him  to  reach  here  to-day. 

Q.  Have  you  ascertained  since  the  last  examination  whether 
the  Goodyear  Glove  Company  of  Naugatuck  has  been  closed  down 
by  your  concern?  A.  I know  that  it  has  not  been  closed  down 
by  the  United  States  Rubber  Company;  Mr.  Vermeule  is  the  pres- 
ident of  the  corporation,  a man  who  has  been  president  for  many 
years;  it  is  under  independent  management;  the  United  States 
Rubber  Company  takes  no  part  in  the  sale  of  its  goods  or  in  the 
management  of  the  company,  and  if  the  Goodyear  Glove  Com- 
pany is  closed  it  is  simply  temporary  and  for  repairs,  or  for  some 
temporary  reason. 

Q.  How  do  you  know  that  fact?  A.  I know  in  general  that 
the  glove — there  is  a very  large  demand  for  the  glove  company’s 
goods;  it  is  a — it  is  generally  considered  the  best  brand  or  the 
most  favored  brand  manufactured. 

Q.  You  are  arguing,  then,  from  general  principles  without  a 
knowledge  of  the  special  facts?  A.  Without  specific  knowledge. 

{ Q.  In  reference  to  the  shutting  down  of  the  Colchester  works 
have  you  any  reason — or  have  you  ascertained  since  the  period 
the  date  when  it  was  closed  down?  A.  It  ran  for  over  a year 
after  we  purchased  it. 

Q.  And  then  was  closed  down?  A.  And  finally  closed  down 
permanently. 

Q.  Do  you  know  whether  a large  proportion  of  the  workmen 
that  were  employed  in  the  Colchester  factory  and  had  been  em- 
ployed there  practically  since  its  organization,  and  had  estab- 
lished their  homes  in  the  vicinity  of  that  factory,  took  employ- 
ment in  the  Goodyear  Glove  concern,  and  were  then  discharged 
upon  the  closing  down  of  that  factory?  A.  I understand  that  a 
large  number  of  the  employes  of  the  Colchester  went  to  the  works 
of  George  Watkinson  & Co.  of  Philadelphia,  but  in  general  they 
went  to  different  factories;  there  is  the  L.  Oandee  factory  at  New 


742  [Senate, 

Haven,  the  American  at  Cambridgeport,  and  I do  not  think  that 
any  large  percentage  of  them  went  to  the  glove  factory. 

Q.  Do  you  know  anything  about  it?  A.  Only  in  a general  way; 
from  actual  knowledge  I am  not  informed;  only  in  general. 

Q.  Who  is  there  in  the  employ  of  the  company  who  has  special 
charge  of  the  matter  of  labor?  A.  The  president,  Robert  B. 
Evans;  and  on  that  point  Mr.  Vermeule  or  Van  Vleet  of  the  Good- 
year Glove  Company  would  be  able  to  answer  specifically;  or  I 
can  obtain  information. 

Q.  What  was  there  surrounding  the  Colchester  Company  that 
made  it  imperative  for  the  United  States  Rubber  Company  to 
close  it  down?  A.  It  was  found  after  operating  the  plant  for  a 
year  or  more — it  was  determined  by  those  practically  in  the  man- 
agement of  rubber  boots  and  shoes,  when  making  comparisons,  as 
I understand,  of  costs,  that  it  was  more  to  the  interests  of  the 
company  to  increase  one  of  the  larger  plants;  the  plant  of  the 
National  Company  had  cost  $1,300,000;  it  was  determined  advis- 
able to  build  new  buildings,  put  in  new  machinery  and  also  to 
use  the  machinery  of  the  Colchester  Rubber  Company,  thereby 
increasing  capacity,  the  manufacturing  capacity  in  general,  and 
securing  economies  by  centralization;  and  furthermore  it  was 
found  that  the  Colchester  Company  was  at  a disadvantage  owing 
to  its  location;  that  the  cost  of  the  transportation  for  coal  aDd 
other  material  was  larger  than  at  the  National  plant;  Mr.  Bedell 
suggests  the  question  how  is  it  that  these  factories  were  not  in- 
cluded in  the  Simmons  report  before  the  acquisition  of  the  prop- 
erty; not  being  a member  of  the  committee  I cannot — not  having 
been  a member  of  the  committee  I cannot  answer  that,  but — 

Q.  Now,  is  it  one  of  the  characteristics  of  combination  that  you 
operate  in  just  that  way,  and  without  considering  any  just  claims 
that  may  be  made  upon  a specific  factory  by  the  fact  that  labor 
has  been  employed  there  for  a quarter  of  a century  or  more,  and 
established  its  homes  in  the  vicinity  for  the  purposes  of  economy 
for  the  whole  combination,  you  deem  it  necessary  to  close  it  down 
and  do  so?  A.  In  every  such  instance,  under  the  law  of  the  sur- 
vival of  the  fittest,  would  be  more  cruel  on  such  a concern  than  if 


No.  40.] 


743 


that  concern  is  bought  at  a proper  value  in  connection  with  a con- 
solidation of  interests;  if — that  concern — as  events  proved  after 
operation,  was  not  in  a position  to  compete  with  more  favored 
concerns,  it  would  ultimately  under  those  conditions  have  failed, 
in  which  event  all  interests  would  have  been  sacrificed;  under  a 
plan  of  consolidation  there  was  some  value  at  the  time  that  was 
saved  and  realized  to  the  parties  in  interest. 

Q.  That  value  was,  was  it  not,  purely  and  solely  a getting  rid  of 
competition?  A.  No;  it  was — it  consisted  in  a certain  special 
knowledge  of  the  business;  there  was  a value,  and  in  getting  Mr. 
George  Watkinson  in  the  service  of  the  United  States  Rubber 
Company,  he  occupying  the  position  of  assistant  general  manager 
of  the  corporation;  it  also  had  a very  large  business  and  facilities 
that  were  found  of  advantage,  and  as  before  stated,  the  machin- 
ery, lasts,  styles,  in  certain  respects,  vrere  utilized  in  other  fac- 
tories. 

Q.  Mr.  Flint,  you  testified  on  your  former  examination  that  the 
banking  house  which  promoted  this  combination  had  come  to  the 
United  States  Rubber  Company  and  offered  these  properties;  now 
if  you  have  refreshed  your  recollection  by  consulting  the  agree- 
ment which  is  in  evidence,  do  you  desire  to  change  your  testimony 
on  that  subject? 

(Question  repeated.) 

A.  The  Simmons  report  shows  that  these  properties  were  of- 
fered by  H.  B.  Hollins  & Co.,  but  I stated  at  the  opening  this 
morning  an  arrangement  existed  of  which  I had  personal  knowl- 
edge between  the  bankers  and  stockholders  in  the  companies  pur- 
chased, by  which  the  bankers  had  an  arrangement  under  which 
they  distributed  the  stock  which  they  received  to  said  stockhold- 
ers, on  the  basis  of  preferred  stock  for  tangible  assets. 

Q.  We  have  heard  about  that? 

By  Mr.  Bedell: 

Q.  Mr.  Flint,  the  other  day  I asked  you  the  question  whether 
or  not  there  was  not  some  distinct  understanding  existing  be- 


744  [Senate, 

tween  the  bankers  and  the  United  States  Rubber  Company  in  re- 
spect to  the  property  that  was  to  be  turned  over  by  the  bankers 
to  the  United  States  Rubber  Company,  and  you  answered  me 
“no,”  and  that  they  had  only  purchased  this  property  of  the  in- 
dividual campanies  in  anticipation  of  a probability  upon  the  part 
of  the  United  States  Rubber  Company  taking  it  from  them  after 
they  had  purchased;  now,  do  you  wish  to  change  your  testimony 
in  that  respect,  or  do  you  adhere  to  the  statements  made  by  you 
in  that  connection  the  other  day?  A.  Well,  I haven’t  had  a 
chance  to  read  my  testimony. 

Q.  But  don’t  you  recollect?  A.  Oh,  as  you  state,  it  is  not  ex- 
actly in  accordance  with  the  facts. 

Q.  Now,  I will  state  the  facts. 

(Question  read  down  to  the  words  “and  you  answered.”) 

A.  In  answer  to  the  first  point,  there  was  no  understanding  be- 
tween the  United  States  Rubber  Company  and  the  bankers;  the 
bankers  had  an  understanding  with  the  stockholders  in  the  sev- 
eral purchased  companies. 

Q.  That  you  have  told  us;  now,  I want  to  get  the  connection 
between  the  bankers  and  the  United  States  Rubber  Company? 
A.  Now,  there  is  no  connection  between  the  United  States  Rub- 
ber Company  and  the  bankers,  except  that  the  bankers  offered  to 
the  United  States  Rubber  Company  in  a letter  which  forms  a part 
of  the  Simmons  report,  certain  properties. 

Q.  Where  is  that  report?  A.  Here  is  a copy  of  it.  (Producing 
report.)  The  bankers  offered  certain  properties;  that  offer  was 
submitted  to  the  Simmons  committee;  ihe  Simmons  committee 
recommended  the  purchase  and  the  directors  of  the  corporation, 
the  United  States  Rubber  Company  ordered  the  purchase  to  be 
made  in  accordance  with  the  recommendations  of  the  Simmons 
committee. 


Yo.  40. J < 4o 

Q.  Well,  now,  Mr.  Flint,  when  you  received  this  offer  from  the 
bankers,  which  you  say  was  in  the  nature  of  a letter  from  Hollins 
& Company — A.  (Interrupting) : Will  you  kindly  let  me  correct 
you  at  this  point? 

Q.  Yes;  certainly?  A.  I did  not  receive  the  offer;  I was  not  a 
director. 

Q.  I mean  the  United  States  Rubber  Company;  I am  not  speak- 
ing of  you  individually?  A.  But  at  that  time  I was  not  an  officer. 

Q.  I know;  but  the  United  States  Rubber  Company — A.  (In- 
terrupting): Well,  that  is  true — 

Q.  (Continuing)  Received  it?  A.  Yes. 

Q.  Well,  they  accepted  it,  did  they  not?  A.  They  accepted  the 
offer  under  the  report  of  the  Simmons  Committee. 

Q.  And  that  included  a provision  like  this: 

“Whereas,  the  bankers  have  performed  valuable  services  for 
the  company  as  set  forth  in  their  proposition,  dated  1892,  made 
to  and  accepted  by  the  company;  and 

Whereas,  the  company  is  desirous  to  avail  itself  of  the  services 
of  the  bankers  hereafter,  and  also  to  make  compensation  to  them 
for  their  services,  past  and  future;  and 

Whereas,  the  bankers  are  willing  to  perform  services  for  the 
company  hereafter,  as  and  when  requested  by  it,  as  hereinafter 
mentioned. 

Kow,  Therefore,  in  consideration  of  the  premises,  and  of  the 
agreement  herein  contained,  etc. 

First.  The  bankers  shall  and  will  hereafter  as  and  when  there- 
unto requested  by  the  company,  devote  their  best  efforts  to  the 
purchase  or  other  acquisition  by  or  for  the  benefit  of  the  company 
of  rubber  manufacturing  plants  and  properties,  or  interests  there- 
in, situated  in  the  United  States  or  Canada,  the  company  to  be  the 


746  [Senate, 

sole  beneficiary  of  each  purchase  or  acquisition,  and  to  become 
and  remain  the  sole  owner  of  any  plant  or  interest  so  acquired, 
and  no  profit  or  compensation  arising  out  of  any  such  purchase 
or  acquisition  by  or  through  the  bankers,  shall  be  derived  or  re- 
tained by  them  except  as  hereinafter  mentioned.” 

Q.  Now,  after  I have  refreshed  your  recollection  by  reading 
from  the  Simmons  agreement  those  statements  do  you  still  adhere 
to  your  testimony,  as  given  the  other  day,  that  there  was  no  agree- 
ment existing  between  the  United  States  Rubber  Company  and 
the  bankers  by  which  they  were  assured  that  the  United  States 
Rubber  Company  would  take  these  properties  off  from  their 
hands  after  they  had  purchased  them?  A.  There  was — 

Q.  Now,  that  is  a fair  question?  A.  There  was  no  such  agree- 
ment that  I know  of  or  I can  remember. 

Q.  Now,  you  cannot  remember  any  such  agreement,  you  say; 
you  were  not  a director  of  this  company  at  the  time — but  now 
from  the  statements  made  in  that  report  (handing  back  report) 
and  these  clauses  that  I have  just  read  to  you,  doesn’t  it  appear 
to  you  from  the  facts  that  there  was  just  such  an  agreement?  A. 
No;  not — 

Q.  No;  what  does  it  appear  to  be?  A.  It  appears  that  the 
bankers  have  performed  valuable  services — 

Q.  That  is  true — A.  — but  it  does  not  indicate  an  agreement 
such  as  you  speak  of;  now  the  facts — the  main  facts — of  course 
this — 

Q.  (Interrupting):  Please  don’t  wander  into  an  explanation 
that  I am  not  seeking.  A.  No — 

Q.  I am  asking  for  a simple  answer  to  a simple  question ; what 
do  these  clauses  in  the  paper  there  indicate;  doesn’t  it  recognize 
that  there  was  a proposition  made  by  the  bankers,  and  that  the 


No.  40.]  747 

proposition  was  accepted,  and  is  not  that  an  agreement  existing 
between  the  United  States  Rubber  Company  and  the  bankers  as 
to  the  property  that  bad  been  acquired,  and  that  might  thereafter 
be  acquired?  A.  Well,  the  agreement  referred  to  was  not  ex- 
ecuted at  the  time  this  offer  was  made;  the  letter  is  addressed  by 
the  bankers  to  the  directors  of  the  United  States  Rubber  Com- 
pany, in  which  the  bankers  offer  certain  securities  to  the  United 
States  Rubber  Company,  and  in  that  connection  they  propose  an 
agreement  which  will  have  to  do  with  subsequent  transactions, 
and  after  this  date. 

Q.  Now,  did  the  company  accept  that  agreement?  A.  It  did. 

Q.  Then  there  was  an  agreement  existing  between  the  bankers 
and  the  United  States  Rubber  Company,  was  there  not?  A. 
There  was — subsequent  to  the  offer  of  the  original  securities,  but 
not  before. 

Q.  No  agreement  whatever  before?  A.  No;  not  to  my  knowl- 
edge, and  I think  I am  informed. 

Q.  You  sav  that  this  is  in  effect  an  agreement  existing  after 
the  formation  of  the  original  Trust?  A.  This  agreement  (indicat- 
ing paper)  went  into  operation  after  September  6. 

Q.  September  6 of  what  year?  A.  September  6 of  1892. 

Q.  When  was  the  organization  completed  of  the  United  States 
Rubber  Company?  A.  Well,  the  present  capital  was  completed 
about — say  in  1894. 

By  Mr.  Mazet: 

Q.  When  did  the  company  organize?  A.  I have  put  in  the  cer- 
tificate of  incorporation,  but  it  was  organized  in  the  early  part  of 

1892. 

Q.  April,  wasn’t  it?  A.  I think,  perhaps,  in  April,  1892;  then 
on  September  6th  H.  B.  Hollins  & Co.  offered  these  properties,  for 


748  [Senate, 

which,  in  round  figures,  twenty  odd  millions  of  stock  was  issued ; 
then  after  that  there  was  a provision  that  H.  B.  Hollins  & Co. 
should  thereafter  turn  over  to  the  United  States  Rubber  Company 
any  properties  that  they  might  acquire  at  actual  cost,  subject  to 
the  compensation  provided  in  this  agreement. 

Q.  And  that  compensation  was  in  the  nature  of  a commission? 
A.  That  compensation  was  in  the  nature  of  a commission;  after 
the  6th  of  September  the  H.  B.  Hollins  Co.  were  in  that  respect 
the  commission  agents  of  the  United  States  Rubber  Company. 

Q.  Well,  now,  were  you  interested  with  H.  B.  Hollins  & Co.  in 
the  commissions  that  might  be  derived  by  the  turning  over  by 
them  to  the  United  States  Rubber  Company  of  any  properties 
acquired  subsequent  to  this  date?  A.  Under  a contract  ante- 
dating my  connection  with  the  company  I had  an  interest  as 
shown  by  the  document  which  has  been  produced  and  which  is  in 
evidence. 

By  Mr.  Warner: 

Q.  Have  you  any  idea  how  much  the  bankers  paid  in  the  aggre- 
gate for  these  different  plants?  A.  I have  not. 

Q.  In  round  numbers — A.  But  in  general  the  basis  was  that 
the  stockholders  of  these  purchased  companies  received  preferred 
stock  for  the  amount  of  pro  rata  amount  of  quick  assets  guaran- 
teed and  secured  and  for  the  amount  of  plant,  and  then  they  re- 
ceived the  amount  of  common  stock  in  different  percentages  for 
the  good  will,  patents,  trade  marks,  etc. 

Q.  Can  you  give  us  a general  idea  of  how  much  was  turned 
over  to  them?  A.  That  is  a matter  that  would  have  to  be  ob- 
tained from  the  bankers. 

Q.  Don’t  you  have  any  knowledge  in  a general  way  of  how 
many  millions  of  dollars  of  stock  was  turned  over  to  different 


No.  40.]  749 

stockholders  for  these  different  plants?  A.  I haven’t  a general 
knowledge. 

Q.  Several  millions  of  dollars,  wasn’t  it?  A.  You  see  it  is — 

Q.  (Interrupting)  Now,  Mr.  Flint,  do  you  mean  to  have  this 
committee  believe  that  bankers  doing  purely  banking  business 
and  having  no  right  under  the  laws  of  the  State  would  purchase 
plants  of  the  value  of  several  millions  of  dollars,  not  with  a view 
of  turning  them  over  to  any  person  or  corporation  and  without 
a.ny  understanding  whatever?  A.  No;  I would  not  desire  to  have 
the  committee  understand  that,  because  it  is  not  in  accordance 
with  the  facts;  the  bankers  naturally  in  securing  these  stock  in- 
terest and  other  properties  undoubtedly  looked  forward  to  the 
idea  of  disposing  of  those  properties  to  a corporation  that  was  in 
a position  to  buy  them,  and  they  had  an  understanding,  as  I have 
indicated,  a personal  understanding  with  the  stockholders  of 
these  different  corporations. 

By  Mr.  Bedell: 

Q.-  Wasn't  there  a personal  understanding  with  the  directors 
-or  some  one  who  was  entitled  to  speak  for  them  on  the  part  of 
the  United  States  Bubber  Company?  A.  Not  that  I know'  of. 

Q.  Well,  you  wrere  a party  to  this  agreement;  you  were  one  of 
the  purchasers  of  these  individual  companies,  and  if  there  was 
such  an  agreement  you  ought  to  have  known  about  it,  ought  you 

not?  A.  The  agreement  was  made  by  the  stockholders  with  the 

♦ 

bankers. 

Q.  I am  not  speaking  of  the  stockholders  in  the  individual  com- 
panies now,  I am  speaking  with  reference  to  the  bankers  and  the 
United  States  Rubber  Company;  now  do  you  wish  us  to  under- 
stand that  the  bankers  acquired  all  of  this  property  merely  in  an- 


750  [Senate, 

ticipation,  as  you  stated  I think  the  other  day — merely  in  antici- 
pation that  the  United  States  Rubber  Company  might  take  them 
off  of  their  hands  for  a certain  consideration ; is  that  what  you 
wish  us  to  understand?  A.  Practically,  they  had  such — 

Q.  Now,  that  is  a simple  question;  is  that  what  you  wish  us  to 
understand?  A.  I wish  you  to  understand  that  they — that  their 
knowledge  of  the  situation  was  such  as  to— 

Q.  How  did  they  acquire  that  knowledge  of  the  situation  with- 
out a distinct  understanding?  A.  It  is  not  an  unnatural  thing 
for  men  to  get  together  properties — bankers — with  a general 
knowledge  of  situations,  with  the  view  of  disposing  of  proper- 
ties — 

Q.  Do  you  mean  to  say,  Mr.  Flint,  that  it  was  not?  A.  I — 

Q.  Do  you  mean  to  say  that  it  is  not  unnatural  with  bankers  to 
get  together  properties  aggregating  in  value  several  millions  of 
dollars,  they  not  being  competent  to  carry  on  the  business  them- 
selves, unless  they  have  made  some  good,  valid  and  definite  ar- 
rangement with  some  one  to  take  that  property  off  from  their 
hands  at  a fixed  price;  do  you  mean  to  say  that  that  is  custom- 
ary — A.  (Interrupting).  It  depends  upon  the  conditions. 

Q.  Is  that  customary;  do  you  know  of  any  such  instance  be- 
sides this?  A.  We'll,  I will  explain  this  case  in  a way  that  will 
appeal  to  your  judgment  as  being  a reasonable — 

Q.  I would  like  to  have  you  do  it  because  I cannot  see — • A. 
Well,  if  you  will  permit  me  I will  do  go. 

Q.  I will  permit  you,  certainly.  A.  Now,  it  idepends  upon  the 
conditions  under  which  the  bankers  secure  such  properties;  if  you 
asked  me  whether  it  would  bel  natural  that  a banking  firm  should 
pay  out,  say  twenty  millions  in  cash,  or  ten  millions  in  cash,  for 
properties  of  this  kind,  with  a 'view  of  offering  them,  and  the  ques- 


Iso.  40.]  , 751 

tion  was  in  doubt  as  to  whether  an  offer;  would  be  accepted,  I 
should  say  that  would  be  unnatural  and , unreasonable;  it  would 
be  an  unnatural  operation;  but  a banker  may  get  properties  in 
hand,  under  conditions  where  he  does  not  run  any  very  great  risk; 
he  may  run  some  risk,  but  not  a great  risk,  whereby  his  opera- 
tion may  be  subject  to  the  contingency  of  failure,  but  the  loss  to 
him  would  not  involve  these  large  amounts  of  which  we  have  beeni 
speaking.  , 

Q.  Then,  let  me  ask  you  right  here;  then  the  bankers  purchased 
from  the  individual  companies,  or  made  a contingent  arrangement 
with  them,  depending  upon  theiir  being  able  tO‘  turn  this  matter 
over  to  the  United  States  Rubber  Company  at  a certain  price;  is 
that  it?  'A.  As  far  as  I remember. 

Q.  You  were  a party  to  it?  A.  I was;  I knew  of  the  facts. 

Q.  Well,  was  that  the  fact?  A.  And  in  general  that  is  about 
the  possession  of  specific — 

Q.  Well,  how  were  you  able  to  fix  in  your  arrangement  with  the 
individual  companies  the  basis  upon  which  you  would  purchase 
their  property,  if  you  did  not  have  a distinct  arrangement  with  the 
United  iStates  Rubber  Company  as  to  what  they  would  pay?  A. 
The — 

Q.  That  is  what  I would  like  to  have,  an  answer  to  that  ques- 
tion. (Question  read).  A.  When  you  address  me,  do  you  want 
me  to  talk  for  the  bankers? 

Q.  Well,  you  may  talk  for  either  side  that  you  please;  I don’t 
know  which  side  to  put  you  on?  A.  Well,  I have  stated  to  you 
that  I was  not  a director  or  an  officer  of  the  United  States  Rubber 
Company;  on  the  other  hand,  I am -not  a member  of  the  banking 

firm. 

Q.  But  you  were  a party  to  the  agreement?  A.  Oh,  I was  fa- 


752  [Senate, 

miliar  with  the  general  conduct  of  the  business;  and  if  I can  elu- 
cidate the  matter,  I am  very  glad  to. 

By  Mr.  Lexow : 

Q.  Let  me  ask  you  whether  this  was  not  the  position  that  you 
in  connection  with  the  others  mentioned  in  that  agreement  were 
simply  what  is  understood  to  be  a syndicate  for  the  purpose  of 
securing  these  properties,  and  that  by  presenting  to  the  various 
then  competing  concernsi  this  alluring  prospect  of  ,a  largely  in- 
creased nominal  stock  islsue,  you  secured  their  acquiescence  in  the 
consolidation,  and  as.  a result  of  that  the  turning  over  of  their 
property  to  the  United  States  Rubber  Company,  through  the  op- 
erations of  this  syndicate;  that  was  the  situation,  wasn’t  it?  A. 
Well,  Mr.  Chairman,  I think  I have  explained  the  method  in 
which  this  business  was  done. 

Q.  Is  that  the  way?  A.  It  is  putting  it  in  another  form;  I have 
stated  it  accurately  as  I could,  as  to  the  method. 

By  Mr.  Bedell: 

Q.  The  difficulty  is  that  we  were  dull  of  comprehension,  I am 
afraid,  because  we  can  not  seem  to  get  at  the  exact  method. 

By  Mr.  Lexow: 

'Q.  Is  that  the  method;  the  method  stated  in  the  question  I put 
to  you  a moment  ago  A.  I cannot  say  that  it  is;  but  I can  state 
the  method  and  state  it  accurately;  if  you  like,  if  you  desire  me  to 
do  it,  I will  state  the  method. 

Q.  Will  you  read , the  question,  Mr.  Stenographer,  and  see 
whetheh  we  cannot  get1  a categorical  answer  to  it?  (Question 
read).  A.  I cannot  accept  that  statement;  I can  state  accurately 
the  method.  : i 1 


No.  40.] 


753 


Q.  Well,  leaving  from  the  question  the  word  “alluring”;  can  you 
answer  it  with  that  omission?  A.  No;  here  is  a situation  with 
which  I am  fairly  familiar;  it  occurred  over  four  years  ago,  but 
1 have  got  a general  idea  of  it;  1 can  state  it  and  state  how  it  was 
done  to  the  best  of  my  knowledge. 

Q.  I think  you  have  stated  a number  of  times,  and  it  is  such  a 
lengthy  explanation  that  it  states  little  or  nothing  for  the  compre- 
hension of  this  committee? 

By  Mr.  McOarren:  1 

Q.  Did  ithe  individual  owners  show  any  anxiety  to  sell  through 
the  bankers?  A.  The  individual  owners  made — that  is,  the  stock- 
holders in;  these  different  companies,  by  which  I infer  you  charac- 
terize them  as  individual  owners — they  desired  to  dispose,  or  were 
willing  tot  dispose  of  their  securities,  and  they  put  their  securities 
into  the  possession  of  the  bankers,  under  what  might  properly  be 
termed,  to  u^qyour  expression,  a contingent  agreement;  and  when 
the  bankers  got  possession  of  these  securities  on  the  6th  day  of 
September,  1896,  they  offered  them  to  the  United  States  Rubber 
Company,  and. as  already  explained — 

Q.  Well,  do  you  know  whether  the  individual  concerns  took  any 
steps  to  have  the  bankers  represent  them  in  the  negotiation  ? A. 
The  general  idea  of  a consolidation  or  a unification  of  certain  in- 
terests was  naturally  contemplated,  ’ but  the  method,  the  part 
taken  by  the  corporation  in, this  transaction  is  clearly  and  fully 
set  forth  in  the  Simmons  report  and  the  offer  of  the  bankers. 

By  Mr.  Warner: 

Q.  The  report  contains  several  whereases  to  the  effect  that  the 
bankers  have  performed  certain  services;  now,  those  services,  as 


48 


754  [Senate, 

cited  in  that  proposition  was  before  the  proposition  was  made  to 
the  United  States  Rubber  Company;  now,  to  what  services  does 

' : LtL-iux^.  xts j.-.-  - i wMtei'  ■ • - 

that  refer?  A.  I think  that  I can  correct  you  on  that  point;  and 
that  is,  that  these  whereases  are  not  a part  of  the  report — that  is 
to  say,  you  are  not  reading — 

Q.  But  it  is  a part  of  the  agreement  that  was  entered  into,  was 
it  not,  between  the  bankers  and  the!  United  ’States  Rubber  Com- 
pany? A.  It  is  a part  of  the  proposed  agreement  at  that  time; 
the  agreement  was  not  entered  into. 

Q.  It  was  subsequently,  wasn’t  it?  A.  Oh,  Subsequently,  it 
was  entered  into  ; therefore,  the  whereases — j 

Q.  And  was  it  dated  back  before  the  time?  A.  No;  it  was  not 
dated  back;  it  had  a date  after  the  purchase  of  these!  properties. 
The  misunderstanding  arises  from  the  fact  that  these  “Where- 
ases” refer  to — why,  the  offer,  the  proposed  agreement — 

Q.  Yes;  but  what  do  these  services  ■ refer  to,  if  it  was  not  ser- 
vices in  buying  up  these  plants  ; what  other  services  did  the  bank- 
ers perform  for  the  United  States  Rubber  Company?  A.  I have 
not  in  mind — that  was  a form  of  agreement  that  was  proposed; 
that  is,  not  an  executed  agreement. 

Q.  It  became  executed?  A.  It  became  executed  subsequently. 

Q.  Yes?  A.  But  it  was  not  executed;  it  did  not  apply  to  any 
former  date;  it  did  not  apply  to  transactions  before  that  agree- 
ment. 

Q.  This  agreement  which  recites  in  the  Whereas  that  the  bank- 
ers have  performed  valuable  services  for  the  company — now,  was 
that,  I ask  you,  true,  or  wasn’t  it?  A.  At  the  time  that  that 
agreement  was  executed,  at  a subsequent  date,  I have  no  question 
but  what  that  was  true;  but  if  you  will  read  that  agreement  in 
its  entirety  you  will  see  that  the  United  States  Rubber  Company 


NTo.  40.] 


755 


nakes  no  payment  of  any  kind  or  nature  (whatsoever;  there  is  no 
consideration  except  services  to  be  performed  subsequent  to  Sep- 
;ember  6,  1892. 

Q.  Well,  I know,  but  it  recites  that  they  performed  valuable 
services;  now,  do  you  know  what  those  services  were?  I will  read 
it  for  you.  A.  I am — I have  already  listened  to  it;  and  I can  only 
state  that  if  you  will  read  the  agreement  in  its  entirety,  that  there 
is  no  provision  made  for  any  paymetnt  by  the  United  States  Rub- 
ber Company  to  the  bankers,  except  for  the  services  performed 
subsequent  to  September  6,  1892,  and  that  at  the  date  of  that  re- 
port that  agreement  was  not  executed. 

Q.  Now,  I also  see  in  the  first  paragraph  of  the  contract,  which 
you  say  was  subsequently  executed,  that  the  bankers  agree  that 
whenever  requested  by  the  company  that  they  will  devote  their 
best  energies  and  efforts  to  buy  up  plants  in  the  United  States! 
and  Canada.  A.  That  is  correct. 

Q.  So  that  one  of  the  objects  of  the  formation  of  your  company 
is  to  get  control  of  other  companies;  is  it  not?  A.  That  does  not 
follow.  ' \ 

Q.  Not  necessarily;  but  you  have  an  agreement,  tan  arrangement 
hereiwith  a banking  corporation,  so  that  they  will  hold  themselves 
in  readiness  to  do  this  whenever  requested  to  by  your  company? 
A.  This  is  correct ; we  retained  their  services ; they  had  had  some 
experience,  and  w7e  wanted  to  avail  of  them  in  the  future. 

By  Mr.  Lexow: 

Q.  In  other  words,  Mr.  Flint,  at  the  (time  of  the  execution  of 
this  agreement  and  the  organization  of  this:  company  and  the  com- 
bination of  these  various  interests,  your  mind  was  not  limited  in 
its  operations  to  the,  inclusion  of  these  specific  companies  that 


756  [Senate. 

■were  consolidated,  but  that  you  bad  a continuing  contract  to  in- 
clude within  your  organization  other  rubber  plants;  throughout 
the  United  States  and  Canada?  A.  That  is  correct. 

Q.  For  the  purpose  of  purchasing  all  of  them?  A.  No. 

Q.  For  what  purpose?  A.  For  securing  advantageous  conidi- 
tions  in  the  them  stockholders  in  the  United  States  Rubber  Com- 
pany. 

Q.  For  the  purpose  of  purchasing  other  competing  concerns? 
A.  The  contract  does  not  say  that,  or  the  proposed'  contract,  any 
such  provision. 

Q.  Was  that  not  the  purpose  and  the  intent  of  the  organization? 
A.  In  some  respects  it  may  have  been  an  incidental  result. 

Q.  Was  it  not  the  purpose;  I am  not  speaking  of  the  result,  be- 
cause you  have  got  that  all  in?  A.  Well,  as  far  as  I am  con- 
cerned, I cannot  answer  for  others — so'  far  as  I am  concerned,  it 
was  not  my  purpose. 

Q.  Then  why  have  this  continuing  contract,  extending  substan- 
tially to  the  control  of  all  the  other  competing  concerns  in  your 
line  of  business,  in  the  United  States  and  Canada?  Aj.  The  bank- 
ers, in  offering  these  properties,  madei  that  a 'condition,  and  the 
United  States  Rubber  Company  desired  to  utilize  the  services  of 
men  who  had  had -a  certain  experience  in  securing  properties,  rub- 
ber properties. 

Q.  And  for  tha  purpose  of  securing 'additional  properties?  A. 
For  the  purpose  of  securing  additional  properties;  yes. 

Q.  What  particular  facilities  would  a banking  concern  have 
in  an  'organization  of  this  kind  for  the  purpose  of  securing  addi- 
tional properties?  A.  The  great  difficulty  in  forming  consolida- 
tions of  this  character  is  that  the  owners  of  properties  have  an 
exaggerated  idea  as  to  their  value;  the  service  performed  by  bank- 


no.  40.]  757 

•rs  is  in  a way  to  prevent  over-capitalization;  each  manufacturer- 
aas  an  idea  that  his  property  is  infinitely  (better  than  any  other 
property;  that  he  has  superior  processes;  he  attempts  to  put  on 
an  unnatural  value;  now,  the  advantage  of  a neutral  party,  of  a 
banker,  is  that  he  is  in  a position,  unlike  another  in  the  same 
trade,  to  get  at  the  facts;  he  gets  at  the  facts,  and  as  an  impartial 
party,  is  enabled  to  reduce — 

Q.  To  bring  the  minds  together?  A.  To  reduce  the  pretensions 

the  exaggerated  pretensions  of  the  manufacturer,  and  bring  their 
minds  together  upon  a reasonable  and  proper  basis;  for  that  rea- 
son the  appraisers  were  appointed;  instead  of  having  manufactur- 
ers put  valuations  on  their  own  plants,  they  have  left  the  matter 
to  the  judgment  of  men  like  J.  Edward  Simmons  and  others,, 
noted  for  conservatism,  and  putting  on  a reasonable  capitalization 
or  a capitalization  based  on  actual  values!  of  quick  assets,  plants, 
good  will,  etc. 

By  Mr.  Bedell: 

Q.  You  don’t  attempt  to  say  that  the  bankers  are  neutral  par- 
ties, do  you,  when  they  have  a decided  interest  in  having  the  deal 
consummated?  A.  They  are  neutral  as  between  the  manufac- 
turers. 

By  Mr.  Lexow: 

Q.  Now,  I want  to  call  your  attention  back  to  the  main  proposi- 
tion. Mr.  Flint,  and  that  iis  that  the  underlying  purpose  of  the  first 
sub-division  of  this  appraiser’s  report  is  the  continuance  in  office 
of  these  bankers  for  the  express  purpose  of  acquiring  the  plants 
of  other  manufacturing  concerns  than  those  mentioned  in  the  ap- 
praisers’ report  and  acquired  on  the  first  organization'  of  the  com- 
pany; isn’t  that  true?  (Question  read).  A.  No. 


758 


[Senate 


Q.  It  is  not?  A.  No. 

Q.  I am  speaking  now  of  the  appraisers’  report;  I am  getting 
at,  now,  Mr.  Flint,  tlie  main  purpose  of  the  incorporation  of  this 
association  of  independent  incorporations,,  and  asking  whether  this 
first  clause  of  the  agreement  does  not  imply  a continuance  of  pur- 
chases of  competing  concerns  under  the  direction  of  the  bank- 
ers? A.  If  you  will  permit  me,  Mr.  Chairman,  to  see  the  report. 
(Report  handed  to  witness).  Mr.  Chairman,  will  you  point  out 
what  part  yon  refer  to. 

Q.  The  first  sub-division  there?  (Indicating).  A.  That  is  not  a 
part  of  the  committee’s  report;  that  is  a part  of  a proposed  con- 
tract, which  contract  was  canceled  more  than  a year  ago;  that 

* 

was  a part  of  a proposed  contract  to  be  entered  into-  at  the  date 
subsequent  to  the  date  of  this  report,  providing  for  the  services  of 
bankers  to  be  used  by  the  United  States  Rubber  Company. 

Q.  That  begs  the  question  entirely;  the  question  is  whether  that 
was  one  of  the  purposes  of  your  organization,  as  shown  by  the  re- 
port of  the  appraisement  committee,  adopted  by  the  United  States 
Rubber  Company?  A.  You  say  “That  was  one  of  the  purposes”; 
what? 

Q.  The  continuance  of  the  operation  of  the  banker's  in  securing 
additional  manufacturing  plants  throughout  the  United  States  and 
Canada?  (Former  question  read). 

Q.  That  first  sub-division,  Mr.  Flint?  A.  That  is  a proposed 
contract. 

Q.  I understand;  I am  asking  the  purpose?  A.  The  purpose  is 
to  secure  the  services  of  the  bankers  for  obtaining,  plants. 

Q.  Other  plants?  A.  Other  plants. 

Q.  Of  the  same  character  in  the  United  States  and  Canada?  A. 
It  is  not  so  stated  in  the  contract. 


No.  40.] 


759 


Q.  Is  that  the  fact?  A.  Except — the  fact  is — it  is  the  fact  so 
far  as  the  word  "rubber”  is  used;  that  is,  rubber  manufacturing 
plants. 

Q.  Yes;  that  is  what  I mean,  exactly;  now,  how  can  you,  or  do 
you  deny,  that  that  provision  in  the  agreement  is  in  the  line  of 
establishing  a monopoly?  A.  From  the  fact  that  the  facts  dis- 
prove that,  inasmuch  as  the  United  States  Rubber  Company  only 
manufactures,  say,  65  per  cent,  of  the  total  manufacture  and  that 
there  are  concerns  outside  of  this  company,  that  there  is  in  this 
country  and  in  Canada. 

Q.  I am  asking  for  the  spirit  of  that  agreement;  do  you  dis- 
claim, upon  the  phraseology  of  that  agreement,  that  it  is  in  the 
line,  and  intended  to  be  in  the  line  of  establishing  a monopoly? 
A.  I don't  think  so;  the  only  wav,  as  I have  stated,  in  which  this 
corporation  can  grow  is  by  considering  the  interests  of  consumers 
and  laborers. 

Q.  I understand  that;  I assume  you  will?  A.  And  as  to  where 
the  end  may  be  is  a matter  of  conjecture  on  which  I cannot  ex- 
press an  opinion. 

Q.  But  the  line  towards  that  end  is  the  establishment  of  a 
monopoly,  is  it  not?  A.  I have  never  anticipated  any  such  con- 
dition. 

By  Mr.  Mazet: 

Q.  Mr.  Flint,  I want  to  read  you  one  clause  of  this  report  of  the 
Simmons  committee,  which  is  as  follows:  “ Our  examination  fur- 
ther shows  that  there  is  in  this  field  of  manufacture  less  oppor- 
tunity than  in  almost  any  other  for  the  operation  of  new  concerns 
whether  organized  and  equipped  to  manufacture  in  good  faith  or 
for  warfare  upon  vested  interests  with  the  design  of  coercing  the 
established  industry  and  of  purchasing  them,  not  on  the  basis 


TOO  [Senate, 

of  what  they  are  worth,  but  upon  an  estimate  of  the  injury  they 
may  be  able  to  do”;  and  I ask  you  whether  that  is  not  in  substance 
a declaration  that  owing  to  the  limited  facilities  in  this  business, 
and  the  intricate  methods  of  it,  it  is  not  a first-rate  kind  of  busi- 
ness to  establish  a monopol}'  in?  A.  That  is  an  expression  of  the 
Simmons  committee  that  I am  in  no  way  responsible  for. 

Q.  Well,  it  was  on  the  report  of  this  committee  that  this  organi- 
zation was  formed,  as  I understand  it?  A.  It  was  on  the  report 
of  that  committee  that  the  United  States  Rubber  Company  pur- 
chased properties'  at  a time  when  I was  neither  an  officer,  direc- 
tor or  stockholder  of  the  United  States  Rubber  Company,  and  was 
not  a member  of  the  committee. 

Q.  But  you  and  the  others  who  were  the  organizers  of  this  com- 
pany were  influenced  in  the  furtherance  of  the  company  by  reason 
of  this  favorable  report  and  the  reasons  therein  given  for  the  or- 
ganization? A.  I do  not  admit  that;  no;  I do  not  admit  that.  , 

Q.  I understand  that  this  committee  was  appointed  by  the  di- 
rectors of  the  company  to  investigate  this  matter,  and  it  was  upon 
their  report  after,  as  you  have  already  testified,  a careful  estimatei 
and  investigation  that  the  company  was  organized  and  continued? 
A.  It  was  upon  the  basis  of  that!  report  that  the  directors  pur- 
chased the  properties,  as  stated. 

Q.  And  for  the  reason,  as  stated  in  this  report,  that  “in  this  field 
of  manufacture  there  is  less  opportunity  than  in  almost  any  other 
for  the  operations  of  new  concerns” — which  iwould  indicate  that 
your  concern,  or  this  United  States  Rubber  Company,  had  better 
opportunities  for  controlling  the  market  than  in  some  other  in- 
dustry where  there  was  more  opportunity  for  competition?  A.  I 
will  be  glad  to  assist  in  interpreting  that  'expression,  from  my 
knowledge  of  the  business. 


I\o.  40.] 


761 


Q.  Is  that  mot  a reasonable  iterp  relation'  of  this  clause?  A. 
The  natural  interpretation  of  that  clause  would  be  that  the  busi- 
ness is  of  such  a character  that  it,  as  I have  before  explained,  it 
takes  many  years  to  establish  the  confidence,  by  the  manufactur- 
ing of  high-class  goods  under  trade-marks. 

Q.  And  for  that  reason 'you  would  be  less  likely  to  have  com- 
petition? A.  And  furthermore — 

Q.  Is  that  correct?  A.  (Continuing)  It  is  a business  where  the 
United  States  Government  gives  the  concern  certain'  points  of  ad- 
vantage under  the — in  connection , with  the  issue  of  patents;  and, 
without  knowing  what  the  members  of  the  committee  had  in  mind 
I make  those  suggestions  as  throwing  some' light  on  their  expres- 
sions. 'ill' 

Q.  Do  you  remember, what  this  stock  sold  for  in  the  market' when 
it  was  first  put  upon  the  market — preferred  stock?  A.  It  sold  for 
about  par. 

Q.  100  to  102,  wasn’t  it?  A.  AJbomt  par. 

Q.  Then  the  public  who  purchased  at  100  to  102,  can  now  realize 
only  about  70  cents  on  the  dollar;  is  that  true?  A.  I have  mot 
seen  the  quotations  lately,  but  the  last  quotation  was  about  70. 

Q.  Therefore,  the  public  that  bought  this  stock  from  the  origi- 
nal holders  is  not  particularly  benefited?  A.  They  are  not,  but — 
Q.  Then  they  have  not  received  a great  deal  of  consideration  at 
the  hands  of  the  original  stockholders,  so  far  as  their  interests  are 
concerned?  A.  If  you  will  look  through  the  general!  price  lists 
of  1892  and  compare  them  with ■ existing  prices,  you  will  find  that 
in  general  there  has  been  a decline ; and  one  reason  why  this  stock 
has  declined,  perhaps, 'is  owing  to*  the  fact  that  the  company  has 
been  improving  the  quality  of  its  goods  (Laughter)  ajnd.taking  into 
consideration  the  interests — all  interests — we  have  not  reduced 


762  [Senate 

wages;  perhaps,  ithei  stock  would  'be  worth  more;  if  we  had,  al- 
though I don’t  think  it  would  have  resulted  to  the  permanent  ad- 
vantage of  the  corporation. 

By  Mr.  Lexow : 

Q.  Now,  Mr.  Flint,  do  you  state  as  an  absolute  proposition, 
known  to  you  as  a fact,  that  you  have  not  reduced  wages?  A. 
Personally,  I cannot  remember  it;  I am  not  familiar  with  the 
business. 

Q.  Then,  why  do  you  interject  that  always  in  your  answers?  A. 
From  the  fact  that  it  is  ian  important  point  ini  considering  this 
business,  as  you  do  from  a legislative  standpoint. 

Q.  Well,  you  have  reduced  wages,  have  you  not,  to  the  extent 
of  the  number  of  men  that  you  have  dismissed  from  your  employ? 
A.  That  is  not  a reduction  of  wages. 

Q.  It  is  a reduction  of  the  total  wages?  A.  In  a*  country  like 
this,  where  we  are  in  need  of  mien  for  the  purpose  of  developing 
our  great  resources,  there  is  not  any  reason  why /the  American 
wage-earner  should  be  continued  in  work  that  is  not  productive 
of  general  benefit  or  of  special  benefit. 

By  Mr.  Warner: 

Q.  To  whom?  A.  For  all — as  an  economic  problem. 

By  Mr.  Lexow: 

Q.  You  think  you  ought  to  be  made  by  consolidation  not  only 
a judge  of  that  as  a fact,  but  a judge  to  the  extent  of  being  able 
to  put  what  you  consider  proper  into  execution  with  reference  to 
labor?  A.  We  are  not  in  that  position;  but  it  is  certainly  preju- 
dicial to  the  general  interest,  it  would  be  prejudicial  if  manufac- 
turers were  forced  to  make  more  goods  or  produce  goods  under 


o.  40.] 


763 


onditions  that  they  could  not  be  sold;  it  would  result  in — it 
/ould  certainly  result  in  a great  loss  to  about  6,000  stockholders, 
nd  would  be,  as  an  economic  proposition,  it  would  be  unwise 
nd  unsound. 

Q.  Now,  I want  to  put  one  more  question  to  you,  and  then  I have 
nished;  take  this)  clause  of  the  agreement:  “Our  examination 
urther  shows  that  there  is  in  this  field  of  manufacture  less  oppor- 
unity  than  in  almost  any  other  for  the  operation  of  new  concerns, 
phether  organized  and  equipped  to  manufacture  ini  good  faith,  or 
otherwise, ” and  compare  it  with  the  continuance  of  the  bankers 
or  the  purpose  of  purchasing  competing  concerns,  and  do  you  still 
nain tain  that  this  appraisement  report  approved  by  your  company 
s not  in  the  line  of  creating  a monopoly;  compare  that  with  the 
irst  clause  in  the  report.  (Showing  witness  Simmons’  report.) 
\i.  That  is  a recognition  of  the  general  fact  that  ini  this  business, 
those  who  have  been  engaged  in  it  for  many  years — and  in  this 
case  the  concerns  referred  to  had  been  in  business,  many  of  them 
tor  about  half  a century — that  there  were  certain  advantages  that 
came  from  continued  high  class  and  efficient  work,  represented  by 
primarily — 

Q.  One  moment;  isn’t  the  proposition  [upon  that  report  this: 
That  by  the  consolidation  of  those  interests,  you  were  practically 
constituting  a corporation  which  had  no  fear  of  competition?  A. 
The  best  evidence  that  that — 

Q.  Isn’t  that  a fact,  I mean,  as  appears  upon  that  document? 
(Question  read).  A.  No. 

By  Mr.  Mazet: 

Q.  Mr.  Flint,  the  stock  having  been  sold  originally,  as  you  have 
stated,  to  the  public,  at  pair,  and  now  being  about  70,  and  isn’t 


764  [Senati 

that  fact  the  result  of  a capitalization  of  this  company,  based  on ; 
figure  that  was  in  excess  of  its  earning  capacity;  and  is  that  no 
the  reason  that  the  company  has  not  been  able  to  earn  a divident 
that  will  be  a reasonable  return  on  this  capitalization,  which  ha; 
caused  the  depression  in  the  value  of  the  (stock  in  the  market?  A 
At  the  time  of  this  report  we  were  having  good  times;  since  then 
we  have  had  panics  and  depressions,  owing  to  the  general  want  ol 
confidence  and  the  uncertain  conditions  connected  with  the  un- 
certainties of  legislation. 

Q.  And  notwithstanding  the  increase  of  the  (selling  price  of  the 
goods  now  manufactured1  by  this  company  as  compared  up  to  that 
time?  A.  Give  us  normal  times,  so  that  wre  can  run  our  factories 
full,  and  that  capitalization  is  a reasonable  capitalization  and  a 
wise  one. 

Q.  For  the  original  stockholders?  A.  For  the  original  stock- 
holders. 

Q.  But  not  for  the  public  after  they  have  sold  it?  A.  And 
when  I referred  to  original  stockholders,  I referred  to  the  public 
who  purchased  the  stock  at  the  figures  you  have  named;  but  every 
industry,  almost  every  industrial  dependent  upon  the  United 
States  for  a market  has  suffered1  by  the  period  of  depression 
through  which  wTe  have  been  passing,  and  I am  familiar  with  a 
great  many,  and  there  has  been  general  depression,  and  the  United 
States  Rubber  Company  has  felt  that  as  well  as  all  others. 

By  Mr.  Warner: 

Q.  Was  this  report  and  contract  made  a part  of  the  minutes 
of  the  proceedings  of  the  Board  of  Directors  of  the  United  States! 
Rubber  Company?  A.  I infer  so;  they  were  presented  at  the 
time,  officially  acted  on,  and  if  not  made  a part  of  the  minutes, 


o.  40.]  • 765 

ere  certainly  documents  regularly  filed  in  the  archives  of  the 
jrporatkxn. 

By  Mr.  MeGarren : 

Q.  Now,  you  are  familiar  with  this  phrase  here:  “Our  examina- 
on  further  shows,  etc.  that  there  is  in  this  field  of  manufacture 
■ss  opportunity  than  in  almost  any  other  for  the  operations  of 
ew  concerns,  whether  organized  and  equipped  to  manufacture  in 
ood  faith  or  for  guerilla  warfare  upon  vested  interests” — you 
ave  that  in  your  mind,  have  you?  A.  I have. 

Q.  Well,  has  anything  occurred  since  these  properties  were  sold 
y the  bankers  to  justify  the  suspicion  that  the  hankers  were 
ooming  their  goods  for  the  purpose  of  selling  them?  (Question 
ead.)  A.  No;  on  the  contrary,  the  bankers  exerted  an  influence 
) reduce  the  ideas  of  manufacturers,  with  the  view  of  keeping  the 
apitalization  down;  and  some  of  the  manufacturers  are  to-day 
issatisfied,  feeling  that  they  ought  to  have  received  more  capital 
or  their  interests. 

By  Mr.  Mazet : 

Q.  The  interest  of  the  banker  is  precisely  the  other  way — as  the 
irger  the  capitalization  the  more;  their  percentage  would  be,  ae- 
ording  to  the  terms  of  this  agreement?  A.  Your  remark  would 
e on  the  theory  that  a printing  press  makes  value;  but  that  is  uot 
ogical  in  fact,  because  it  does  not  increase  the  percentages  of  in- 
erest. 

Mr.  Lexow:  That  is  all,  Mr.  Flint. 

James  D.  Ford,  having  been  duly  sworn,  testified  as  follows: 

By  Mr.  Lexow: 

Q.  What  is  your  business?  A.  I ami  Vice-President  of  the 
'nited  States  Rubber  Company. 


766  [Senate 

Q.  What  is  your  residence?  A.  New  York  city. 

Q-  What  was  your  business  (prior  to  the  organization  of  the 
United  States  Rubber  Company?  A.  Director  of  the  Meyer  Rub 
ber  Company. 

Q.  In  New  Brunswick,  N.  J.?  A.  In  New  Brunswick.  N.  J. 

Q.  And  had  been  in  that  employment,  how  long?  A.  Five  or 
six  years;  and  there  was — 

Q.  Had  you  been  familiar  with  those  works  for  a great  manj 
years  previously?  A.  I had  been  a (stockholder. 

Mr.  Lexow  (To  Mir  Flint) : 

Q.  Mr.  Flint,  can  we  have  Mr.  Johnson  here  to-morrow  morning? 
A.  I will  telegraph. 

Q.  I wish  you  would  have  him  here  so  as  to  complete  so  far  as 
we  can  this  side  of  the  question;  you  know,  that  you  have  referred 
uis  in  reference  to  certain  propositions,  to  Mr.  Johnson. 

Mr.  Flint:  In  reference  to  prices? 

Mr.  Lexow:  And  question  o<f  labor,  and  matters  of  that  kind; 
and  we  would  like  to  have  his  testimony  just  as  soon  as  possible. 

Mr.  Flint:  He  is  not  informed  in  regard  to  labor,  Mr.  Chairman. 

Mr.  Lexow:  Who  is,  then? 

Mr.  Flint:  I can — I will  telegraph  him  and  ask  him  to  get  the 
data  so  as  to  economize  time. 

By  Mr.  Lexow  (To  Mr  Ford): 

Q.  Did  you  enter  upon  the  office  of  Vice-President  of  the  United 
States  Rubber  Company  immediately  after  the  organization  of 
this  company?  A.  Some  time  in  the  fall  of  1892  when  I became 
Vice-President;  I can’t  remember  the  month  or  day. 

Q.  About  simultaneously  with  the  organization  of  the  company? 
A.  Oh.  no;  the  company  organized  in  March,  1892. 

Q.  Within  six  months,  then?  A.  Yes. 


'To.  40.] 


767 


Q.  And  you  have  loccupied  that  position  ever  since?  A.  Yes; 
.‘ither  Vice-i ’resident  or  second  Vice-President. 

Q.  Have  you  any  knowledge  with  reference  to  the  labor  statis- 
ts of  your  company?  A.  Well,  in  what  respect  do  you  mean? 

Q.  As  to  the  wages  paid  labor?  A,  Oh,  we  are  doing  just  as 
well  as  ever  in  that  sense. 

Q.  Do  you  know  that  to  be  a fact?  A.  Yes. 

Q.  With  reference  to  the  Meyers  Company,  or  with  reference  to 
— A.  Oh,  well,  I don’t  know  of  any  company  where  the  wages 
have  been  reduced. 

Q.  Who  has  the  power  to  reduce  wages,  the  separate  compan- 
ies or  the  parent  organization?  A.  The  superintendents  in  this 
rubber  company,  as  a rule,  hire  and  discharge  laborers. 

Q.  They  are  empowered  to  control  to  that  extent?  A.  Yes,  that 
has  been  the  custom.  (Question  read.)  A.  Oh,  I didn’t  under- 
stand; well,  it  is  the  superintendents  of  the  companies,  the  indi- 
vidual companies  who  hire  and  discharge  labor. 

Q.  Do  you  wish  to  be  understood  as  stating  that  the  organiza- 
tions of  the  isepaiate  companies,  the  stock  of  which  is  held  by  the 
United  States  Rubber  Company,  is  kept  intact,  and  that  the  super- 
intendents exercise  their  powers  under  direction  of  those  sub- 
companies?  A.  Your  question  is  so  long  it  confuses  me;  if  what 
you  want  to  know  about  is,  how  wages  are  fixed — so  far  as  I 
know — I know  the  superintendent  of  the  Meyer  Company  employs 
and  discharges  help  and  fixes  the  wages,  without  anything  from 
me. 

Q.  Haven’t  you  any  scale  in  wages  in  the  United  States  Rubber 
Company  for  employes?  A.  The  United  States  Rubber  Company 
has  its  own  separate  factory  at  New  Brunswick,  N.  J.;  their  super- 
intendent does  the  work  there,  fixes  the  wages  there. 


768  [Senate, 

Q.  Is  that  the  factory  that  was  started  after  the  closing  down 
of  the  New  Brunswick  Shoe  Manufacturing  Company  ? A.  Yes;  it 
succeeded  the  New  Jersey — it  is  the  factory  which  the  United 
States  Rubber  Company  bought  from  the  New  Jersey  Rubber 
Shoe  Company. 

Q.  And  which  commenced  operations  after  the  closing  down  of 
the  New  Brunswick  Rubber  Shoe  Manufacturing  Company?  A. 
No;  it  has  been  operating  right  along  since  it  was  formed,  in  1877, 

I think;  but  there  are  frequent  shut  downs  in  our  business. 

/ 

Q.  Can>  you  state  to  the  committee  what  proportion  of  the  year 
labor  is  employed  in  the  factories  in  New  Brunswick?  A.  It  de- 
pends entirely  upon  the  demand  for  goods,  which  is  fixed  by  the 
weather;  our  business  is  a business  dependent  largely  upon  the 
weather;  wTe  have  had  a great  many  open  winters  in  the  past  eight 
or  ten  years;  as  I recollect  it,  the  last  good  winter  we  had  was  in 
1892;  1892-3;  we  had  a good  demand  then  for  goods;  and  since 
then  we  have  had  many  open  winters;  and  our  production  has 
been  lessened  by  the  open  winters. 

Q.  Are  the  wages  the  same  for  the  same  class  or  kind  of  work 
in  the  different  factories  controlled  by  the  United  States  Rubber 
Company?  A.  No;  there  is  a difference;  according  to  the  lo- 
cality. 

Q.  How  is  that;  wages  is  different,  according  to  locality?  A. 
I say  locality  fixes  wages  according  to  the  amount  of  labor  there 
is  in  one  place;  for  instance,  a man  in  New  York  city  would  get 
more  wages  for  doing  a certain  line  of  work  than  he  would  possi- 
bly if  he  was  in  Naugatuck,  Connecticut. 

Q.  Then  there  is  no  uniform  scale  of  wages  paid  by  you  to  em- 
ployees for  doing  the  same  work?  A.  Oh,  no;  you  have  to  pay 
wages  according  to  help — what  you  can  get  it  for;  what  they  will 


work  for. 


5s  o.  40.]  769 

Q.  When  did  you  commence  running  the  United  States  Rubber 
Company’s  plant  in  New  Brunswick  on  third  quality  goods?  A. 
I don’t  know  as  to  that;  I had  nothing  particular  to  do  as  to  the 
manufacturing  part  of  it. 

Q.  How  many  factories  have  been  closed  down  in  New  Bruns- 
wick prior  to  your  commencing  to  run  that  factory  on  third  qual- 
ity goods?  A.  I do  not  know  that  any  had. 

Q.  Do  you  know  that  the  New  Brunswick  Rubber  Shoe  Manu- 
facturing Company  had  been  closed  down?  A.  I know  their  busi- 
ness was  transferred  two  blocks  over  to  this  New  Jersey,  the 
United  States  Rubber  Company  factory;  I think  that  was  last, 
a year  ago  last  November. 

Q.  Do  you  not  know  that  the  entire  winter  that  plant  was  shut 
down  and  has  not  been  in  operation  since?  A.  It  has  heen  in 
operation  making  rubber  tires,  and  is  now  making  them. 

Q.  When  did  it  commence  operation  as  a rubber  tire  manufac- 
turing plant?  A.  Well,  I think  almost  a year  ago. 

Q.  How  long  then  was  it  closed  down?  A.  I should  think  a 
few  months. 

Q.  A few  months?  A.  Yes. 

Q.  Only  a few  months?  A.  Well,  I can’t  say  just  how  many 
months  as  I don’t  go  down  there  very  often  to  the  factories. 

Q.  Do  you  know  how  many  months  during  the  year  1896  your 
factories  were  running  in  New  Brunswick?  A.  No — oh,  in  the 
year  1896;  I think  at  Milltown  we  ran  about  eight  months,  last 
season;  Milltown,  the  Meyer  Company. 

Q.  And  the  other  concern?  A.  I don’t  think  they  ran  more 
than  seven. 

Q.  How  many  months  have  those  concerns  been  running  prior 


49 


770 


[Senate, 


to  consolidation,  per  year?  A.  Well,  prior  to  'Consolidation,  we 
have  had  better  winters;  there  was  more  demand. 

Q.  I am  not  asking  you  that;  I am  asking  you  for  the  fact,  as 
to  the  length  of  time  operated?  A.  Well,  I don’t  know — no  knowl- 
edge whatever  of  the  New  Brunswick  factory;  not  being  inter- 
ested in  them,  I couldn’t  speak  as  to  those;  I should  say  at  Mill- 
town  we  had  run  some;  but  we  accumulated  a good  many  goods 
which  we  could  not  sell. 

I 

Q.  In  1895,  how  many  months  did  your  factories  run  during  the 
year?  A.  I should  say  about  the  same  as  in  1896. 

Q.  About  seven  months?  A.  Yes,  sir. 

Q.  In  1894,  how  many?  A.  I think  we  run  more;  longer. 

Q.  Aibout  eight  months?  A.  Well,  I think  (longer  than  that; 
that  is  going  back. 

Q.  Nine?  A.  That  is  going  back,  and  I don’t  recall. 

Q.  In  1893,  how  many  months?  A.  Well,  about  the  same. 

Q.  Nine  months?  A.  Yes,  possibly. 

Q.  Now,  explain  to  the  committee  how  it  was  that  with  factor- 
ies that  you  did  not  maintain  in  operation  during  1895  and  1896, 
for  more  than  seven  months  during  the  year,  you  continued  the 
practice  of  purchasing  competing  factories?  Al  I don’t  know  as 
we  did. 

Q.  Didn’t  you  buy  the  Goodyear  Eubber  Glove  Factory  at  Nau- 
gautuck?  A.  Well,  we  bought  the  stock  of  that  company  at  dif- 
ferent times;  just  when,  I don’t  recall. 

Q.  Did  you  buy  no  other  concern  during  the  year  1894?  A. 
Not  that  I recall. 

Q.  Or  in  1895?  A.  I don’t  recall. 

Q.  Were  you  operative  in  the  purchase  of  concerns?  A.  No. 

Q.  Who  was  ? A.  Only  so  far  as  being  a director  and  voting 


No.  40.]  , 771 

upon  any  agreements  to  purchase,  and  that  way;  nJot  in  the  nego- 
tiation of  them. 

Q.  Don't  you  remember  the  acquisition  of  the  Woonsocket  Rub- 
ber Company?  A.  Yes. 

Q.  One  of  the  largest  of  your  competitors  in  the  market?  A. 

Yes. 

Q.  When  was  that?  A.  That  was  in  the  spring  of  1893;  April 
or  May,  I think. 

Q.  Was  that  not  1894?  A.  No,  sir;  1893,  I should  say. 

Q.  What  led  you  to  the  acquisition  of  the  Woonsocket  plant? 
A.  Well,  it  is  a plant,  the  goods  had  a great  reputation  in  the 
market;  they  are  goods  that  we  thought  it  was  a desirable  thing 
to  get. 

Q.  Was  that  part  of  the  policy  of  the  company  to  acquire  plants 
that  were  competing  against  them  in  the  open  market?  A.  Well, 
there  were  no  other  plants  to  acquire  but  those;  there  were  no 
other  plants  to  buy  except  those  that  were  in  existence;  conse- 
quently— 

Q.  Consequently,  you  bought  those  that  were  in  existence?  A. 
We  couldn't  buy  any  others. 

Q.  Have  you  at  any  time  since  the  organization  of  the  United 
States  Rubber  iCompany  operated  to  the  full  capacity  of  the  plants 
that  you  purchased  under  the  first  deal  made  by  the  company,  in 
the  way  of  combination?  A.  I do  not  think  that  (we  have  had 
any  weather  that  would  enable  us  to  do  it. 

Q.  To  what  extent  have  you  utilized  the  productive  capacity  of 
the  factories  originally  purchased?  A.  We  have  made  all  the 
goods  in  them  that  we  could  sell,  and  more,  too. 

Q.  To  what  extent  of  the  percentage  of  the  total  producing  ca- 


772  [Senate, 

parity  of  the  plant?  A.  Well,  that  would  be  a very  hard  thing 
to  answer. 

Q.  Have  you  any  data  from  which  you  can  give  us  that  informa- 
tion ? A.  I have  none. 

Q.  Did  you  utilize  more  than  50  per  cent,  of  the  productive  ca- 
pacity of  those  plants?  A.  Not  having  any  data  I cannot  give 
you  the  figures. 

Q.  Well,  can’t  you  approximate,  Mr.  Ford?  A.  Well,  I can 
guess. 

Q.  Your  knowledge  of  the  company  is  such,  is  it  not,  that  you 
can  form  a fair  estimate?  A.  I have  no  great  technical  knowl- 
edge of  it;  I have  been  interested;  all  my  time  has  generally  been 
in  other  matters. 

Q.  What  is  your  special  line?  A.  I have  only  in  late  years 
been  brought  into  that  through  the  death  of  other  people. 

Q.  What  is  your — A.  I have  always  looked  after  the  finan- 
cial part  of  the  business,  and,  to  a certain  extent,  the  selling. 

Q.  The  treasury  of  the  company?  A.  Yes,  sir. 

Q.  Do  you  assist  Mr.  Flint  in  the  treasury  of  the  company?  A. 
Yes,  sir. 

Q.  But  you  do  know,  do  you  not,  that  at  no  time  since  the  or- 
ganization of  your  company  has  the  full  capacity  of  the  plants 
originally  purchased  been  put  in  operation?  A.  Which  do  you 
mean  by  original?  the  New  Jersey  Rubber  Shoe  was  the  first  one, 
and  then  there  were  some  plants  in — 

Q.  I mean  those  included — A.  (Interrupting)  In  the  Simmons 
report? 

Q.  Within  the  Simmons  report,  and  upon  which  about  26 
millions  of  capital  were  issued?  A.  I think  the  Goodyear  Me- 
tallic Rubber  Shoe  Company  has  been  run  full  for  some  years. 


No.  40.] 


773 


Q.  I am  now  speaking  of  tlie  total  productive  capacity  of  the 
properties  acquired  under  the  Simmons  report.  A.  Well,  as  I 
said,  we  have  not  had  weather  which  has  made  demand  enough 
for  goods  to  run  those  factories  full. 

Q.  I am  asking  for  the  fact  as  to  whether  or  not  you  did  run 
those  properties  full  at  any  time  since  their  acquisition?  A.  Not 
to  my  knowledge,  unless  we  have  the  Goodyear  Metallic  Rubber 
Shoe  Company,  which  I think  has  been. 

Q.  Now,  explain,  if  you  had,  as  you  say,  a productive  capacity 
exceeding  that  which  you  utilized,  why  you  purchased  the  Woon- 
socket plant?  A.  Because  they  had  a large  boot  trade  and  a 
capacity  to  make  boots  which  had  a great  standing  in  the  market, 
and  it  was  to  our  interest  to  buy  such  plants  of  goods  in  order  to 
supply  the  trade. 

Q.  They  were  manufacturing  the  class  and  the  same  grade  and 
description  of  boots  that  you  were  manufacturing  in  various  of 
your  factories,  were  they  not?  A.  They  were  making  rubber 
boots,  and  their  boots  had  a call;  their  boots  had  a call  which 
there  did  not  exist  of  other  makers  as  largely. 

Q.  But  that  brand  of  theirs  and  that  make  of  theirs  was  com- 
peting against  your  makes  of  a similar  kind  in  the  market?  A. 
To  a certain  extent. 

Q.  Well,  was  it  not  actively  competing?  A.  Yes. 

Q.  And  it  was  your  desire  to  acquire  that  brand  and  thus  save 
your  goods  from  competition  in  the  open  market  by  the  Woon- 
socket Company,  that  induced  you  to  acquire  that  property,  was 
it  not?  A.  It  was  not  the  competition;  it  wTas  because  we  consid- 
ered it  a desirable  and  business-like  thing  to  acquire  for  business 
purposes,  because  we  thought  we  could  sell  it. 

Q.  Well,  that  business-like  thing  you  speak  of  was  the  removal 


774  [Senate, 

V 

of  a very  energetic  competitor  in  the  market,  was  it  not?  A.  Not 
necessarily  so. 

Q.  Well,  was  it  so?  A.  I do  not  consider  it  so. 

Q.  What  distinction  is  there  in  the  brand  they  made  of  rubber 
shoes;  what  brands  are  made?  A.  They  had  a market  for  a very 
large  number  of  pairs;  our  market  for  the  Meyer  Company  was 
very  small.  ; 

Q.  I am  speaking  now  of  the  market  of  theUnited  States  Rub- 
ber Company  for  all  its  goods?  A.  Well,  the  Woonsocket  Rub- 
ber Company  boots  w’ere  boots  that  were  sold  all  over  the  United 
States;  the  other  company  would  have  a trade  in  one  State,  and 
another  company  in  another  State;  but  these  had  a universal 
trade;  it  was  a desirable  thing  to  own  them. 

Q.  They  had  a trade  extending  all  over  the  country?  A.  Yes, 
sir. 

Q.  And  entering  into  competition  in  every  part  of  the  country 
with  your  trade?  A.  To  a certain  extent;  yes. 

Q.  Well,  wasn’t  it  the  fact  that  it  was  to  a very  large  extent  an 
active  competitor  against  your  goods  thaf  induced  you  to  buy  the 
company?  A.  No;  it  is  because  they  had  a market  which  we  did 
not  have,  and  we  could  get  part  of  that  business. 

Q.  Were  they  not  operating  through  the  same  factors  that  you 
were?  A.  The  same  factors?  ( 

Q.  Factors  ? A.  That  is  a word  I have  heard  here  of  late;  I 
don’t  exactly  know  what  it  means;  do  you  mean  a shoe  merchant? 

Q.  Y"es;  through  the  same  merchants?  A.  Oh,  no;  there  are 
jobbing  houses  would  sell  theirs  that  wouldn’t  sell — there  were 
jobbing  houses  which  sold  theirs  which  did  not  sell  others;  we 
had  jobbing  houses  sold  ours  and  did  not  sell  theirs;  and  they — 

Q.  But  without  reference  to  individual  cases  or  exceptional 


No.  40.]  , 773 

cases,  wasn't  the  system  that  they  distributed  their  goods 
through  the  medium  of  jobbing  houses  that  distributed  your 
goods?  A.  Only  to  a certain  extent. 

Q.  Wasn’t  that  the  general  situation,  Mr.  Ford?  A.  No,  sir. 

Q.  You  mean  to  be  understood  as  saying  positively  that  it  was 
not  the — A.  I say  there  were  jobbing  houses  that  sold  our  goods 
very  largely  and  which  sold  no  other  goods;  and  then  again,  there 
were  jobbing  houses  which  sold  their  goods  very  largely  and  sold 
perhaps  a small  pro  rata  of  others;  -well,  we  used  to  have  a cus- 
tomer in  the  Meyer  goods  up  at  Albany  who  never  sold  Woon- 
socket; they  wouldn't  sell  them  to  him;  a man  up  in  Troy  would 
handle  them;  they  sold  them  through  him;  our  man  would  need 
sometimes  Woonsockets  for  his  customers,  and  he  would  have  to 
go  out  and  buy  them  for  him,  in  many  cases;  he  would  have  cus- 
tomers who  wouldn’t  take  any  other  kind;  the  retailers  will  only 
handle  a certain  kind  of  boot.  ( 

Q.  Did  you  see  the  document  that  was  put  in  evidence  yester- 
day, in  connection  with  Mr.  Flint’s  testimony?  Did  you  see  the 
agreement  that  was  put  in  evidence,  Mr.  Ford?  A.  You  mean  the 
agreement  for  the  purchase  and  sale  of  goods? 

Q.  Yes?  A.  Well,  I think  I saw  you  hand  them  up  here;  I 
think  I know  what  you  mean. 

Q.  Has  that  been  the  system  of  your  company  since  the  date 
of  its  organization?  A.  Oh,  that  is  the  system  that  existed  before 
the  United  States  Rubber  Company  was  thought  of. 

Q.  And  has  continued?  A.  Yes. 

Q.  It  was  a system  adopted  by  the  independent  companies 
when  there  was  free  competition  between  them?  A.  Yes,  sir; 
only  all  of  them  didn’t  have  it;  most  of  them — the  standard— 
what  we  called  standard  companies  used  it. 


776 


[Senate, 


Q.  Are  you  still  operating  under  that  system?  A.  Yes,  sir. 

Q.  When  you  purchased  the  Woonsocket  Company,  the  fac- 
tors’ agreements  that  the  Woonsocket  Company  held  were  turned 
over  to  the  United  States  Rubber  Company,  were  they  not?  A. 
I couldn’t  say  as  to  that;  I think  not. 

Q.  Don’t  you  know?  A.  I do  not  say  but  they  had — why  that 
should  be;  not  to  my  knowledge. 

Q.  The  business  was  turned  over?  A.  Well,  if  you  had  a stock 
of  a company,  you  would  naturally  get  the  business  that  goes 
with  it;  that  goes  without  saying;  there  was  no  formal  turning 
over. 

Q.  The  agencies  that  had  been  established  by  the  Woonsocket 
Company  as  the  result  of  the  purchase  of  the  stock  by  your  com- 
pany became  part  of  the  agencies  of  your  company,  did  they 
not?  A.  Oh,  I see  what  you  mean  now.  Well,  no;  some  years 
after  those  things  were  done,  and  those  agents  who  were  then 
agents  of  the  Woonsocket,  became  agents  of  the  United  States, 
I think. 

Q.  What  I mean  is,  that  the  United  States,  as  the  central  body, 
controlled  the  system  of  agencies  established  by  the  Woonsocket, 
immediately  after  the  acquisition  of  the  Woonsocket  Company’s 
stock?  A.  Not  to  my  knowledge;  no,  sir. 

Q.  Do  you  mean  they  still  operated  independently?  A.  Why, 
I say,  I know  they  did;  I am  sure  they  did. 

Q.  Notwithstanding  you  had  secured  the  whole  capital  stock 
of  the  WToonsocket  Company?  A.  Yes. 

Q.  That  competed  in  the  market  against  your  product?  A. 
Yes,  those  agents  were  controlled  by  the  Woonsocket  Rubber 
Company’s  officers  and  directors. 


No.  40.]  ( 777 

Q.  And  you  controlled  the  Woonsocket  Rubber  Company?  A. 
We  owned  the  stock  in  it. 

Q.  Didn’t  you  change  the  board  of  directors?  A.  No,  sir;  I 
think  not;  I don’t  think  the  board  was  changed  until  last  July,  if 
my  memory  serves  me  right. 

Q.  Didn’t  the  policy  of  the  parent  company  control  the  policy 
of  the  Woonsocket  Company,  after  you  had  acquired  the  whole 
of  its  capital  stock?  A.  I should  say  not. 

Q.  Are  you  stating  that  as  a fact  within  your  own  knowledge, 
that  it  did  not?  A.  Well,  the  directors  remained  the  same  until, 
as  I say,  about  last  July. 

Q.  Did  the  central  body  not  fix  the  price  at  which  the  goods  of 
the  Woonsocket  Company  were  delivered  to  the  factors  operat- 
ing under  these  factor's  agreements?  A.  I couldn’t  say  as  to 
that;  I didn’t  have  any  thing  to  do  with  fixing  the  price. 

Q.  Who  does  that?  A.  I don’t  know  anything  about  selling 
the  goods. 

Q.  Who  does  that?  A.  Well,  I presume  the  director  of  sales. 

Q.  Mr.  Johnson?  A.  Yes;  he  is  now  director  of  sales. 

Q.  Mr.  Johnson;  and  Mr.  Johnson  became,  by  reason  of  his  be- 
ing director  of  sales  of  the  United  States  Rubber  Company,  di- 
rector of  sales  of  the  product  of  the  Woonsocket  Company,  even 
after  it  had  acquired  the  capital  stock?  A.  Well,  to  a certain  ex- 
tent; no,  they  still  had  their  agents  to  sell  their  goods — 

Q.  Didn’t  the  parent  organization,  operating  either  through 
the  general  agent,  Mr.  Johnson,  or  through  some  other  agent, 
control  the  fixing  of  price  upon  the  product  of  the  Woonsocket 
Company?  A.  I cannot  say  as  to  that. 

Q.  You  won’t  deny  that  he  did,  will  you?  A.  Well,  I don’t 
know  enough  about  it  to  so  answer. 


778  [Senate, 

Q.  What  amount  of  business  did  the  Woonsocket  Company  do 
at  the  time  of  its  control  by  the  United  States  Rubber  Company 
— at  that  time?  A.  Well,  I have  no  special  figures  upon  which 
to  base  a statement  or  knowledge. 

Q.  Have  you  knowledge  of  the  output  and  the  sales  of  the 
company  the  stock  of  which  you,  as  a director,  authorized  to  be 
purchased?  A.  I have  no  remembrance  of  it. 

Q.  Was  a minute  made  upon  the  minute  book  of  the  directors 
with  reference  to  the  acquisition  of  the  Woonsocket  property? 
A.  Most  likely. 

Q.  Do  you  know  whether  there  was  or  not?  A.  I cannot  say. 

Q.  Was  it  made  the  subject  of  the  action  of  the  board  of  di- 
rectors of  the  company?  A.  I remember  attending  a meeting  at 
which  the  proposal  wTas  made  to  buy  it;  the  presumption  is  there 
was  a minute  made. 

Q.  Do  you  remember  whether  there  was  or  not?  A.  Well,  I 
have  not  looked  at  the  book  to  see;  I have  no  knowledge  except 
the  presumption. 

Q.  Did  not  the  board  take  official  action  upon  the  proposition 
made  for  the  purchase  of  the  Woonsocket  Company?  A.  Yes. 

Q.  And  was  that  official  action  entered  upon  the  minutes  of 
the  company?  A.  The  presumption  is  that  it  was. 

Q.  Don’t  you  remember  that  it  was?  A.  No,  I do  not. 

Q.  Was  an  agreement  entered  into  between  the  Woonsocket 
Company  and  the  United  States  Rubber  Company,  indicating 
the  terms  upon  which  that  purchase  was  made?  A.  I don’t  think 
they  ever  had  any  agreement  with  the  Woonsocket  Rubber  Com- 
pany; it  was  with  certain  stockholders. 

Q.  Who  controlled  all  the  capital  stock,  or  only  a proportion 
of  it?  A.  No,  I think  it  was  made  with  persons  who  controlled 
a large  part  of  it;  more  than  a majority. 


No.  40.] 


Q.  What  has  become  of  that  agreement?  A.  I think  that 
agreement  is  in  Providence  now,  in  a suit  that  is  there. 

Q.  In  a suit  in  Providence?  A.  Yes. 

Q.  Arising  out  of  that  sale?  A.  Well,  you  see  that  sale  was 
made  under  a certain  agreement  as  regards  values  and  so  on, 
that  came  in,  and  certain  uncollected  open  book  accounts,  and 
so  on. 

Q.  Yes?  A.  And  that  they  were  to  be  paid  at  a certain  time, 
and  not  having  been  completed,  there  is  a deficiency  there,  that 
the  stockholders  and  these  people  who  agreed  to  sell  their  stock, 
are  liable  for;  and  a suit  has  been  brought  to  collect  it. 

Q.  And  you  say  that  that  agreement  is  there  in  Providence? 
A.  Yes,  sir. 

Q.  Where  is  the  minute  of  the  board  of  directors,  showing  the 
acquisition  of  this  Woonsocket  property?  A.  I don’t  know,  sir. 

Q.  When  did  you  last  see  it?  A.  I don’t  know  as  there  is  any 
such  minute — if  you  mean  the  minute  book,  I presume;  I never 
read  the  minute  book  through. 

Q.  You  were  served  with  a subpoenae  duces  tecum,  were  you 
not,  Mr.  Ford,  to  produce  before  this  committee  the  schedules 
forming  part  of  the  report  of  the  appraisers  referred  to  in  the 
testimony  of  Mr.  Flint?  A.  Yes,  sir. 

Q.  Have  you  those  schedules?  A.  No. 

Q.  Or  under  your  control?  A.  No. 

Q.  Or  in  the  archives  of  the  company?  A.  I have  never  seen 

them. 

Q.  You  have  access  to  the  safe  deposit  vault,  have  you  not? 
A.  Yes. 

Q.  Have  you  examined  this  vault  to  ascertain  whether  those 
schedules  are  there?  A.  I have  not,  because  it  is  not  necessary. 


780 


[Senate, 


Q.  Why  not?  A.  Because  I have  a memoranda  of  what  is  in 
them;  if  such  a thing  was  there,  I could  keep  it  in  my  memory, 
being  such  a bulky  thing  as  three  thousand  pages — safe  deposit 
vaults  are  small. 

Q.  “You  have  seen  it,  have  you  not?  A.  I have  never  seen  it, 
sir. 

Q.  Were  you  an  original  director  of  the  United  States  Rubber 
Company?  A.  No. 

Q.  Were  you  a director  at  the  time  of  the  presentation  of  the 
so-called  Simmons  report?  A.  I don’t  think  so;  I should  say 

not. 

Q.  Don’t  you  remember?  A.  I should  say  not;  I don’t  recollect 
when  I came  in. 

Q.  Don’t  you  know  as  a fact  whether  you  were  or  not?  A. 
No,  I !do  not;  I came  in  in  the  fall  of  1892,  as  a director;  as  I 
remember  it,  it  was  in  April  when  I came  in. 

By  Mr.  Mazet : 

Q.  This  report  bears  date  September  6th?  A.  Yes,  so  I see, 
September  6th. 

By  Mr.  Lexow : 

Q.  Eighteen  hundred  and  ninety-two?  A.  Yes;  September 
6th,  1892. 

Q.  Can’t  you  remember  whether  or  not  you  were  a director  and 
party  to  the  arrangement  whereby  26,000,000  of  the  capial  stock 
of  the  company  wTere  authorized  to  be  issued  in  pursuance  of  this 
so-called  Simmons  report?  A.  Well,  I am  sure  if  I had  been  a 
director  I would  have  remembered  it;  my  remembrance  is  I was 
not  in  the  board  at  that  time. 


No.  40.] 


781 


Q.  Then  you  recollect  now  as  a fact  that  you  were  not  in  the 
board,  do  you?  A.  Well,  I say  the  fact  of  a report  like  that 
would  naturally  remain  on  my  mind;  when  I became  a director, 
I don't  recollect  exactly — I am  very  busy. 

Q.  Do  you  wish  to  be  understood  then  as  saying  that  at  no  time 
while  you  occupied  the  office  of  director  of  your  company,  was  a 
report  of  that  kind  or  schedule  of  that  kind  submitted  to  the 
board?  A.  I do  not  recall  any  such  report  being  submitted;  and 
I never  have  seen  the  schedule  spoken  of. 

Q.  Have  you  never  taken  action  as  a director  upon  that  original 
report  or  upon  any  branch  of  that  report?  A.  You  mean  the 
Simmons  report? 

Q.  Yes.  A.  1 do  not  recall  any. 

Q.  Would  you  recall  it  if  you  had?  A.  Yes;  I am  sure  I would. 

Q.  Has  it  never  occurred  to  you  to  investigate  into  the  methods 
of  distribution  of  so  large  a proportion  of  the  stock  of  the  com- 
pany? A.  I never  have  had  very  much  chance;  I am  a very  busy 
man;  I haven't  had  a vacation  in  eight  years;  always  working — so 
much  to  do  nowadays. 

Q.  What  was  the  capitalization  of  the  Myers  Company,  of 
which  you  were  president?  A.  You  mean  the  capitalization  or 
capital  stock? 

Q.  The  capital  stock?  A.  The  capital  stock  was  $200,000. 

Q.  Organized  when?  A.  I think  the  Meyer  Rubber  Company 
was  organized  in  1S61;  it  succeeded  the  Ford  Rubber  Company; 
succeeded  a corporation,  a firm,  a copartnership. 

Q.  With  a capital  stock  of  $200,000?  A.  Yes;  the  Ford  Com- 
pany was  $200,000,  and  it  had  a surplus. 

Q.  What  amount  of  capital  stock  of  the  United  States  Rubber 
Company  was  issued  in  payment  of  the  company  of  which  you 
were  president?  A.  I was  not  president;  I was  the  treasurer. 


782  [Senate, 

Q.  Or  treasurer?  A.  Well,  there  wasn't  any  issued  to  the  com- 
pany; to  the  stockholders. 

Q.  I mean  to  the  stockholders?  A.  I think  each  stockholder 
got  about  $600  of  stock  for  $100  of  Me3'er  stock. 

Q.  That  is  to  say,  in  the  proportion  of  one  to  sis?  A.  Oh,  no, 
not  at  all,  because  that  is  our  capital  stock,  I mean,  there  is  a 
difference  between  that  and  capital. 

Q.  I understand  that;  I am  speaking  of  the  nominal  stock?  A. 
Oh,  the  nominal;  yes. 

Q.  That  is  in  the  proportion  of  six  to  one  of  the  nominal  of 
both  companies?  A.  Yes. 

Q.  Was  the  Meyer  concern  then  in  full  blast?  A.  Well,  it  was 
running,  yes;  not  running  full. 

Q.  It  was  not  running  full?  A.  Oh,  well;  you  mean  the  time 
of  the  stock — 

Q.  Yes?  A.  Yes,  I think  we  were  then  in  the  fall,  we  were 
very  busy,  and  that  proved  to  be  a good  winter,  1892. 

Q.  During  1892?  A.  Yes. 

Q.  What  was  the  dividend  that  was  paid  in  the  year  1892  on 
the  Myers  company's  stock?  A.  We  didn’t  pay  any. 

Q.  Did  not  pay  any?  A.  No. 

Q.  Eighteen  hundred  and  ninety-one?  A.  Did  not  pay  any. 

Q.  Had  you  ever  paid  any  dividend  on  the  stock?  A.  Oh,  yes. 

Q.  In  what  year  was  the  last  dividend  paid  on  the  Myer  stock? 
A.  Well,  I don't  recollect  that;  that  is  veay  back  in  ancient 
history. 

Q.  Ancient  history;  -well,  go  way  back?  A.  Yes;  that  is  eight 
years;  seven  or  eight. 

Q.  So  long  ago  that  you  don’t  remember  the  particular  year  in 
which  it  was  paid?  A.  I know  until  about  four  years  before; 


No.  40.] 


783 


I don't  tliink  we  paid  dividends  those  lour  years;  previously  they 
had  always  paid  dividends. 

Q.  And  previous  to  that  time  what  dividends  had  you  paid; 
I mean  the  average?  A.  Oh,  well,  25  40,  50.  60  per  cent.,  differ- 
ent rates,  according  to  the  business  of  the  year;  what  we  thought 
we  could  spare. 

' "i 

Q.  All  that  you  thought  you  could  spare  out  of  the  working 
capital?  A.  Yes. 

Q.  But  for  four  years  prior  to  the  consolidation  no  dividends 
had  been  paid?  A.  Well,  three  or  four. 

Q.  Was  to  your  knowledge  any  ratio  established  on  the  basis 
of  earning  capacity  or  profits  in  the  distribution  of  the  stock  of 
the  United  States  Rubber  Company  for  the  companies  that  were 
acquired  or  the  stock  of  the  companies  that  were  acquired  by  it? 
A.  Not  that  I know  of. 

Q.  Did  you  not  in  selling  your  own  stock  investigate  as  to 
whether  or  not,  as  compared  with  others,  you  were  receiving  a 
fair  proportion  of  the  increase  in  stock  made?  A.  Well,  it  was 
understood  that  the  property  would  be  valued  by  responsible  per- 
sons, and  we  should  be  treated  alike,  by  those  companies. 

Q.  Did  you  know  at  the  time  that  you  deposited  your  stock  for 
transfer  to  the  United  States  Rubber  Company  what  your  com- 
pany was  about  to  receive  for  it  and  what  each  of  the  other 
concerns  coming  into  the  combination  was  to  receive  for  their 
respective  stock?  A.  Well,  my  father  made  the  original  agree- 
ment; but  so  far  as  I know  he  did  not  know,  and  I think  I would 
have  known  if  he  had. 

Q.  You  know  from  him  that  he  did  not  know?  A.  No. 

Q.  Now,  do  you  wish  to  be  understood  here  as  saying  that  you 
put  your  concern  into  a consolidation  involving  some  14  or  15 


784  [Senate, 

other  plants  and  a capitalization  of  $26,000,000  at  six  to  one  for 
nominal  of  tlie  shares,  without  knowing  what  anv  of  the  other 
concerns  were  receiving  for  their  stock?  A.  No;  I knew  the 
others  were  not  to  get  any  more  than  actual  value  and  we  were 
not  to  get  any  more  than  actual  value,  and  those  values  were  to 
be  determined  by  honorable  men,  as  appraisers,  for  instance. 

By  Mr.  Bedell: 

Q.  How  could  you  get  actual  value  for  yours  on  stock  that 
had  not  paid  any  dividends  for  four  years?  A.  Simply  by  having 
property  there;  assets;  it  is  for  that  reason  I want  to  state  that 
$200,000  was  not  the  capital,  it  was  only  the  capital  stock. 

By  Mr.  Lexow: 

Q.  Was  the  nominal  share  capital?  A.  Yes,  the  nominal. 

Q.  And  each  share  had  a nominal  value  of  $100?  A.  Yes,  had 
the  nominal  face  value  of  it. 

Q.  And  it  was  exchanged  at  the  rate  of  $600  of  the  United 
States  Rubber  Company  nominal  for  nominal  one  hundred  of  the 
old  company?  A.  Yes. 

Q.  Were  the  other  companies  that  were  consolidated  in  the 
issue  of  that  $26,000,000  of  stock  on  a par  with  you  as  to  the 
declaration  of  dividends  for  the  previous  three  or  four  years? 
A.  I couldn’t  say  as  to  that. 

Q.  There  had  been  competition  in  the  open  market  as  between 
these  concerns  that  had  prevented  you  from  declaring  dividends 
in  those  four  years,  had  there  not?  A.  No. 

Q.  No?  A.  No;  that  was  not  the  reason  we  did  not  declare 
dividends. 

Q.  Why  didn’t  you  declare  dividends?  A.  Why,  we  were  put- 
ting money  in  our  goods  in  making — raising  them  up — and  even- 


785 


iNo.  40.]  ( 

tually  so  as  to  make  them  of  better  quality;  in  other  words,  in- 
stead of  trying  to  make  profit  we  put  it  in  our  goods,  in  the  sense 
of  advertisement,  to  make  them  better  quality  and  getting  a bet- 
ter price  for  them. 

Q.  And  it  took  four  years  to  accomplish  that  and  the  loss  of 
dividends  in  the  meanwhile?  A.  Yes. 

Q.  Do  you  mean  to  be  understood  as  saying,  Mr.  Ford—  A. 
Oh,  no;  excuse  me — • 

Q.  (Continuing)  That  a company  that  had  been  accustomed  to 
pay  from  25  to  50  per  cent,  divedends  upon  its  stock  voluntarily, 
for  the  purpose  of  raising  the  grades  of  its  stock,  relinquished 
the  payment  to  its  shareholders  of  any  dividend  at  all?  A.  I 
have  just  stated  that,  and  it  is  a fact! 

Q.  Do  you  know  whether  competing  concerns  that  were  consol- 
idated with  the  United  States  Rubber  Company  at  the  same  time 
as  yours  had  also  failed  to  pay  dividends  for  three  or  four  years 
prior  to  the  consolidation?  A.  No. 

Q.  Do  you  know  anything  about  it?  A.  I think  most  of  them 
paid  dividends. 

Q.  Most  of  them  did?  A.  Yes. 

Q.  Didn’t  you  keep  yourself  informed  on  that  matter?  A.  It 
is  very  hard  to  do  it  in  the  rubber  business;  they  are  close  cor- 
porations. 

Q.  They  were  all  close  corporations?  A.  Well,  yes;  in  other 
words,  we  do  not  know  very  much  about  them;  it  is  very  hard 
work  to  find  out. 

Q.  And  was  the  organization  of  the  United  States  Rubber  Com- 
pany for  the  purpose  of  changing  them  from  close  to  open  and 
public  corporations?  A.  No;  the  object  of  the  United  States 

Rubber  Company  was  that  we  could  get  together  all  these  differ- 
50 


”86  [Senate, 

ent  people  who  each — one  man  would  be  good  in  one  thing  and 
another  in  another — and  we  could  get  the  benefit  of  this  united 
experience  and  talent;  at  the  same  time  we  could — 

Q.  Is  it  not  the  fact  that  the  stock  of  the  Meyer  Rubber  Com- 
pany was  substantially  held  by  one  man?  A.  My  father  owned 
most  of  it. 

Q.  Almost  all  of  it?  A.  Well,  the  family  owned  it  all;  him. 
my  brother,  my  sister  and  myself. 

Q.  And  notwithstanding  the  fact  that  you  had  voluntarily 
abandoned  your  dividends  for  four  years  as  you  say,  for  the  pur- 
pose of  raising — A.  I think  it  was  only  three. 

Q.  (Continuing)  The  value  of  your  product,  you  went  into  this 
organization,  and  abandoned  the  fruits  of  your  enterprise  over 
this  four  years,  to  receive  this  stock?  A.  Well,  we  thought  it 
would  be  a hopeless  thing  to  raise  it  up — we  thought  it 
would  be  a good  thing  to  get  in  with  these  other  people;  we 
thought  it  was  more  than  equivalent  for  the  benefit  of  their 
knowledge. 

Q.  Those  others  had  been  and  were  then  competing  with  you, 
were  they  not?  A.  Well,  like  any  two  stores,  you  can  say — one  is 
a competitor  of  the  other,  not  necessarily  so,  though;  they  will 
sell  to  different  people. 

By  Mr.  Bedell: 

Q.  One  thing,  I would  like  to  establish,  Mr.  Ford;  for  instance, 
here  is  a catalogue  of  the  Wells,  Goodyear  Company.  (Produc- 
ing catalogue.)  A.  Yes. 

Q.  That  is  one  of  the  companies  of  the — A.  That  is  of  the 
Naugatuck;  it  is  of  the  Goodyear  Metallic  Rubber  Shoe;  that  is 
a sort  of  trade  mark. 


No.  40.]  , 787 

Q.  You  see  certain  prices  quoted  in  here;  for  instance,  ‘‘  lumber- 
men’s overshoes,  $1.35,  list  price;”  what  does  that  mean?  A. 
Why,  all  of  our  goods  are  sold  by  discount  off  from  the  list  price; 
just  let  me  see  this  please  (takes  catalogue).  A.  The  retailer  can 
sell  for  whatever  he  wants;  he  can  give  them  away  if  he  chooses 
to. 

Q.  But  he  shan’t  sell  them  for  more  than  that?  A.  No;  the  ob- 
ject of  this  list  price  is  this  thing;  I can’t  show  it  here,  as  well  as 
if  I had  another  (indicating). 

By  Mr.  Mazet : 

Q.  Is  that  the  price  to  the  retailer  or  the  price  at  which  you 
sell?  _ 

By  Mr.  Bedell: 

Q.  Here  is  the  catalogue.  A.  Just  let  me  explain;  this  list 
price  is  the  price  for  Arctic  shoes,  25 — or  any  shoes — now,  we 
have  changed  the  list  price  from  it;  the  price  generally  was 
changed,  which  would  make  a great  amount  of  work  in  correct- 
ing, and  so  on;  and,  therefore,  it  has  been  the  custom  in  this 
trade,  as  it  is  in  many  others,  to  have  a list  price  and  sell  by  dis- 
count off  of  that. 

By  Mr.  Bedell: 

Q.  Well,  who  does  that  list  price  apply  to,  and  to  whom  do 
you  sell  at  that  price  mentioned  in  the  book?  A.  WThy,  we  sell 
to  the  jobber  for  list  price,  so  much  discount,  just  as  this  contract 

tells  you  (indicating). 

Q.  And  how  does  he  sell  to  the  retailers?  A.  Well,  he  sells  off 
again  from  the  list  price. 


788  [Senate, 

Q.  Then  there  is  a list  price  for  the  retailer?  A.  Same  list 
price. 

Q.  The  same  one?  A.  Yes,  sir;  we  have  this  printed  on  little 
sheets. 

Q.  Then,  that  is  the  basis?  A.  That  is  the  starting  point. 

Q.  Now,  for  instance,  there  is  the  “Emperor,  Picadilly  toe,  rub- 
ber”— look  at  this  now  (showing  witness  list).  A.  These  are  all 
here,  don't  you  see. 

Q.  Well,  it  is  the  same  thing,  isn’t  it?  A.  Well,  that  shows 
how  many  different  kinds  we  have. 

Q.  Well,  I will  take  one  sample  of  the — we  can  demonstrate 
this  by  just  one  illustration:  That  says  “List  Price,  $2.25”;  now 
— A.  Yes. 

Q.  The  jobber  gets  that  for  $2.25,  less  a certain  discount?  A. 
Exactly.  , 

Q.  And  the  retailer  gets  it  from  the  jobber  for  $2.25,  less  a cer- 
tain discount?  A.  Exactly. 

Q.  And  the  retailer  can  then  sell  it  for  what  price  he  feels — 
A.  Certainly — give  it  away,  if  he  chooses  to. 

Q.  Yes;  that  is  the  basis  of  the  price  for  the  jobber  and  for  the 
retailer?  A.  Yes. 

Q.  Well,  -who  fixes  the  discount  that  the  jobber  gives  to  the 
retailer?  A.  Why — you  see  that  agreement. 

Q.  That  agreement  fixes  that?  A.  Yes,  sir. 

Q.  And  that  agreement  also  fixes  the  discount  -which  is  given 
to  the  jobber?  A.  Yes. 

Q.  So  you  control  the  jobber  in  his  sale  to  the  retailer?  A. 
Well,  yes,  because  we  guarantee  him  the  price  through  which — 

Q.  I understand;  but  you  control  the  price  that  the  jobber 


No.  40.] 


789 


shall  sell  to  the  retailer;  is  that  not  the  fact?  A.  Partially  do; 
don’t  always  do  it,  though. 

Q.  Well,  you  try  to  do  it,  do  you  not?  A.  Well,  that  has  been 
the  custom  of  this  trade  for  ten  or  fifteen  years. 

By  Mr.  Mazet : ( 

Q.  You  sell  to  the  jobber  or  either  to  the  retailer  or  the  jobber? 
A.  No,  we  sell  to  the  jobber;  not  to  the  retailer;  no,  you  see  if 
we  did,  they  wouldn’t  buy  from  us. 

Q.  But  the  retailer  cannot  buy  from  you,  can  he?  A.  No. 

By  Mr.  Bedell: 

Q.  Suppose  the  jobber  is  handling  your  goods;  is  he  permitted 
to  handle  anybody’s  else?  A.  Anybody  he  can  buy  of;  and  they 
do  it,  too. 

Q.  Is  there  any  restriction  as  to  the  price  at  which  he  should 
sell  expensive  grades  which  are  placed  on  sale?  A.  Well,  there 
was  in  some  of  that  Boston  Rubber  Shoe  Company,  and  others  I 
know;  and  there  are  a good  many  others  that  are  not. 

Q.  Well,  you  restrict  what  he  shall  sell?  A.  Only  so  far  as 
we  give  them,  and  only  so  far  as  we  have  guaranteed  the  price 
on  them;  that  is  a very  important  thing,  guaranteeing  the  price. 

Mr.  Lexow:  In  the  matter  of  the  Wall  Paper  Company,  are  the 
statistics  now  obtainable  with  reference  to  labor? 

Mr.  Burn:  I did  not  leave  here  with  the  idea  this  morning  of 
furnishing  statistics.  I was  not  requested  to  do  so. 

By  Mr.  Lexow: 

Q.  That  is  the  main  proposition  that  we  want  developed;  I 
understood  that  I had  asked  you,  after  recess,  to  furnish  us  with 
those  statistics?  A.  I did  not  so  understand  it;  I told  you  this 


790  [Senate, 

morning  that  it  would  require  probably  two  weeks’  time  to  pre- 
pare them. 

Q.  Ob,  we  can  not  give  that  time  to  it?  A.  It  certainly  would 
require  that  length  of  time. 


Henry  Burn  recalled: 

Examined  by  Mr.  Lexow: 

Q.  You  produced  a factor’s  agreement  this  morning  which  is 
in  use  in  your  system  of  conducting  business;  did  you  have 
another  kind  of  agreement  that  was  in  use  in  1894?  A.  Our 
sales  run  from  1st  of  July  to  1st  of  July;  the  same  agreement 
was  in  force  in — this  agreement  was  in  force  in  1895  to  ’6,  and 
for  the  present  year — the  present  season;  the  only  other  form 
that  we  had  was  the  rebate  system,  to  which  I referred  this 
morning;  the  rebate  system  prevailed  the  first,  second  and  third 
years  of  our  company. 

By  Mr.  Mazet: 

Q.  Twenty  per  cent,  rebate?  A.  It  was  10  per  cent,  the  first 
year  and  20  per  cent,  the  two  succeeding  years. 

By  Mr.  Lexow: 

Q.  Have  you  got  a copy  of  that  particular  rebate  agreement 
which  you  then  operated  under?  A.  I have  not,  and  I doubt  very 
much  whether  I could  get  one  readily;  I presume  there  are  some 
in  existence. 

By  Mr.  Mazet: 

Q.  Is  there  any  on  file  in  the  office  of  the  company?  A.  I say, 
there  may  possibly  be  one,  but  I don’t  know. 


No.  40.] 


791 


By  Mr.  Lexow: 

Q.  Did  your  rebate  system,  in  operation  during  those  years  that 
you  have  mentioned  include  the  proposition  that  if  the  factor  sold 
the  goods  of  any  other  concerns  his  agreement  would  come  to  an 
end  and  the  rebate  would  not  be  allowed?  A.  It  did  not  operate 
that  way;  they  had  no  rebate. 

Q.  Did  it  operate  at  all  to  that  effect?  A.  No,  sir;  no,  sir; 
under  the  rebate  system  we  offered  an  option  to  every  one;  to 
those  who  availed  themselves  of  that  option  to  purchase  their 
goods  exclusively  from  the  company  during  the  season  we  al- 
lowed a rebate  at  the  end  of  the  season,  the  first  year  of  10  per 
cent.,  the  two  succeeding  years  20  per  cent. 

Q.  I understood  you  to  say  that  you  had  no  rebate  system  in 
operation  now?  A.  No,  sir. 

Q.  That  you  placed  in  the  year  1S95  the  jobber  upon  the  same 
footing  as  the  retailer,  offering  no  discount  to  the  jobber  in  ad- 
vantage over  the  retailer?  A.  In  the  seasons  of  1893  to  1894, 
and  1894  to  1895,  we  offered  no  special  discounts  to  jobbers. 

Q.  Do  you  now?  A.  Yes,  sir. 

Q.  Offer  a discount  to  the  jobbers?  A.  Yes,  sir. 

Q.  Under  the  form  of  this  agreement  that  you  put  in  evidence 
this  morning?  A.  Yes,  sir. 

Q.  Now,  was  not  the  result  of  your  discontinuing  the  rebate 
system  during  the  years  mentioned  the  destruction  of  a large  per- 
centage of  the  jobbers  who  were  then  doing  business  with  you? 
A.  No,  sir;  it  was  not. 

Q.  Do  you  know  how  many  were  compelled  to  discontinue  busi- 
ness? A.  I know  of  no  cases  where  they  were  compelled  to  dis- 
continue business. 


792  [Senate 

Where  they  did  discontinue  business?  A.  I know,  I think, 
two  or  three  cases  where  they  did  discontinue  business. 

Q.  Was  not  that  discontinuance  due  to  the  fact  that  you  cut 
them  off  from  the  rebates  that  they  had  theretofore  secured?  A. 
In  the  two  or  three  instances  to  which  I make  reference? 

Q.  Yes?  A.  No,  sir;  it  was  poor  judgment  on  their  part  in 
going  out  of  business  at  the  time;  they  were  apprehensive;  they 
had  no  occasion  for  that  apprehension. 

By  Mr.  Bedell: 

Q.  What  were  they  apprehensive  of?  A.  Why,  they  were  ap- 
prehensive that — I don’t  know  what  their  apprehension  was,  ex- 
cepting that  they — 

Q.  How  do  you  know  that  they  were  apprehensive?  A.  Well, 
I know  in  the  c so  of  Mr.  Smith;  he  was  apprehensive. 

Q.  Of  what?  A.  Of  not  being  able  to  realize  a sufficient  profit. 

Q.  For  what  reason?  A.  Because  we  had  given  the  benefit  of 
their  discount  to  the  dealers  as  well. 

Q.  To  the  retailer?  A.  To  the  retailer. 

Q.  So  that  the  retailer  had  the  same  benefit  as  the  jobber?  A. 

Yes,  sir. 

Q.  The  jobber  had  no  opportunity  to  make  any  profit  at  the 
time  except  he  could  sell  to  the  retailer  at  a higher  price  than 
you  would  sell  to  the  retailer;  is  that  it?  A.  That  is  right;  and 
from  the  time  that  we — 

By  Mr.  Lexow: 

Q.  In  other  words,  you  having  theretofore  done  business  with 
the  jobber  and  giving  him  a profit  which  enabled  him  to  live,  went 
directly — or  your  system  changed  so  that  you  went  directly  to 


No.  40.] 


793 


the  customer  of  the  jobber,  and  gave  the  jobber  no  advantage 
over  the  retailer;  is  that  the  effect  of  it?  A.  The  jobber  had  no 
monopoly  of  the  customer. 

By  Mr.  Bedell: 

Q.  He  asks  if  that  was  the  effect  of  it?  A.  Not  entirely;  the 
jobber  was  competing  for  the  same  customers  that  we  were,  to  a 
certain  extent. 

By  Mr.  Lexow : 

Q.  Was  it  not  the  fact  that  at  that  time  you  had  consolidated 
into  one  business  so  much  of  the  productive  capacity  of  the  coun- 
try that  the  jobbers  thus  cut  off  from  rebates  were  unable  to  se- 
cure the  goods  to  fill  the  demand  of  their  customers?  A.  That  is 
not  so,  as  is  demonstrated  by  the  fact  that  the  jobbers  did  remain 
in  business  and  are  flourishing  to-day;  and  in  the  case  of  Mr. 
Smith,  Mr.  Smith  had  already  made  contracts  for  a large  amount 
of  goods  with  a competitive  concern  at  the  time  that  he  came  to 
me  and  made  the  proposition  to  sell  out  his  business. 

By  Mr.  Warner: 

Q.  These  prices  that  you  say  are  ruling  to-day;  are  they  under 
consignment  agreements  with  you?  A.  No,  sir. 

Q.  Do  you  have  such  agreements  now?  A.  We  never  had  a 
consignment  agreement;  absolute  sale. 

By  Mr.  Mazet: 

Q.  What  were  the  conditions  on  which  your  customers  were  to 
have  these  rebates  referred  to  under  this  option  agreement ; under 
what  conditions  were  they  to  have  the  rebates?  A.  Under  the — 
if  they  availed  themselves  of  the  option. 


794  [Senate, 

Q.  And  that  consisted  of  what?  A.  The  option  was  the  privi- 
lege to  the  customer  to  buy  entirely  from  the  company  during  the 
year,  and  at  the  end  of  the  year  to  receive  the  rebate. 

By  Mr.  Bedell: 

Q.  Not  only  the  privilege,  but  the  agreement  to  buy?  A.  No, 
sir;  no,  sir;  there  was  no  agreement  at  all. 

By  Mr.  Mazet: 

Q.  Well,  if  he  should  buy  from  any  competitor  he  forfeited  his 
right  to  any  rebate;  is  that  true?  A.  Most  assuredly;  in  other 
words,  he  bought  his  goods — 

Q.  You  expected  him  to  be  restricted  to  your  goods  in  order 
to  get  the  benefit  of  the — A.  No  ; we  did  not  restrict  him. 

Q.  Is  not  that  the  result;  the  effect?  A.  That  did  not  result. 

By  Mr.  Warner: 

Q.  Wasn’t  that  the  verbal  agreement?  A.  There  was  no  ver- 
bal agreement. 

Q.  Or  understanding?  A.  No,  sir;  there  was  an  option ; he  had 
the  privilege  of  buying  as  he  pleased;  the  option  issued  at  the 
commencement  of  the  season,  and  the  customer  knew  perfectly 
well  that  if  he  availed  himself  of  the  option  he  would  get  the 
benefit  of  the  rebate;  in  other  wrords,  if  he  bought  his  goods  at 
wholesale  he  would  get  any  quantity — he  would  get  them  cheaper 
than  if  he  only  bought  a small  quantity. 

By  Mr.  Lexow: 

Q.  If  he  bought  them  exclusively  from  you?  A.  Exactly;  that 
would  be  buying  in  quantity. 


No.  40.] 


795 


By  Mr.  Bedell : 

Q.  And  if  he  bought  them  of  some  one  else  he  lost  the  rebate? 
A.  Assuredly. 

By  Mr.  McCarren : 

Q.  Is  your  stock  listed?  A.  No,  sir;  our  stock  is  not  listed; 
we  have  an  express  provision  in  our  agreements  whereby  the 
stock  cannot  be  sold  by  the  original  holders  until  after  the  ex- 
piration of  ten  years;  that  is  done  to  assure  the  good  will  that  we 
have  purchased,  and  in  order  that  the  public  may  not  be  solicited 
to  buy  the  stock  until  its  actual  value  has  been  demonstrated  by 
the  experience  of  ten  years. 

Q.  Then,  I understand  you  substantially  to  say  that  the  public 
cannot  purchase  stock?  A.  No,  sir;  they  cannot. 

By  Mr.  Mazet: 

Q.  And  also  enabling  the  original  stockholders  to  carry  out  the 
line  of  policy  adopted  by  them  at  the  time  of  the  organization  of 
the  company;  that  would  be  the  natural  result,  would  it  not — 
they  are  keeping  control  of  the  stock?  A.  Their  keeping  control 
of  the  stock  would  secure  to  us  their  services  in  the  business  that 
we  required  of  them. 

Q.  And  the  fulfilling  of  the  line  of  policy  under  which  and  for 
Which  the  company  was  organized?  A.  Yes,  sir. 

By  Mr.  McCarren : 

Q.  Mr.  Burn,  did  these  individual  concerns  that  were  purchased 
or  absorbed  by  your  company  have  agreements  with  their  custom- 
ers similar  to  the  one  now  in  use  by  you?  A.  Yes,  sir;  excepting 
in  respect  to  the  restriction  in  regard  to  purchasing  from  other 
manufactories ; the  agreements  that  the  original  factors  had  with 


796  [Senate, 

their  customers  was  that  in  consideration  of  special  discounts 
given  to  jobbers,  those  jobbers  would  maintain  the  prices  of  the 
respective  concerns. 

By  Mr.  Mazet: 

Q.  Those  agreements  did  not  restrict  them  from  buying  from 
other  parties?  A.  No,  sir;  because  they  could  not  get  the  variety 
from  any  one  manufactory. 

By  Mr.  McCarren : 

Q.  Well,  do  you  know  anything  about  the  question  as  to  wheth- 
er the  Supreme  Court  ha,s  ever  passed  on  the  validity  of  the  ven- 
dors’ agreements?  A.  The  Supreme  Court  has  passed  upon  the 
validity  of  the  agreements,  and  it  is  declared  to  be  strictly  in  ac- 
cordance with  law;  and  I would  say  in  this  connection  that  in 
that  suit  these  affidavits  of  Mr.  Smith,  upon  the  basis  of  which 
this  inquiry  rests,  were  introduced;  and  likewise  an  attempt  was 
made  to  obtain  the  evidence  of  employes  in  regard  to  the  sup- 
posed injurious  effects  on  labor;  and  the  only  affidavit  that  they 
were  able  to  obtain  was  that  of  Youngs,  in  regard  to  whom  I was 
questioned  this  morning. 

By  Mr.  McCarren : 

Q.  How  did  you  acquire  the  property  of  Mr.  Smith?  A.  We 
acquired  the  property  of  Mr.  Smith  by  purchase;  Mr.  Smith  de- 
cided to  go  out  of  business,  and  urged  us  to  buy  his  stock  off,  and 
we  finally  concluded  to  do  so,  although  very  reluctantly  we  as- 
sured him  that  he  had  no  cause  for  apprehension;  that  he  would 
be  able  to  do  a prosperous  business  if  he  continued,  but  he  was 
advanced  in  years  and  perhaps  a little  more  apprehensive  on 
that  account;  we  filially  agreed  to  buy  his  stock,  and  did  buy  his 


Yo.  40.] 


797 


stock  at  the  price  that  he  had  paid  us  for  the  goods;  we  bought 
his  fixtures  at  his  inventory  price;  we  assumed  his  lease  and  we 
took  over  his  employes. 

By  Mr.  Lexow: 

Q.  The  Supreme  Court  did  not  hold  anything  more  in  that  case, 
did  it,  than  that  it  was  perfectly  valid  for  you  in  purchasing  a 
business  and  good  will,  to  attach  to  it  a condition  that  the  par- 
ties selling  should  not  compete  with  you;  that  was  all,  wasn't  it? 
A.  Well,  that  was  the  main  point  of  the  entire  agreement. 

Q.  I understand  the  Supreme  Court  has  never  passed  upon  the 
factors' agreement  that  you  have  with  the  consignees?  A.  That 
was  part  of  the  evidence — certainly,  it  was  passed  upon. 

Q.  It  was  not  passed  upon  in  that  case  judicially,  was  it,  as  to 
the  validity  or  propriety  of  any  of  these  factors’  agreements — 
that  did  not  form  an  issue  in  that  case,  did  it?  A.  Well,  there 
were  no  factor  agreements,  but  the  rebate  system. 

Q.  Yes.  Mr.  Marshall — 

Mr..Marshall  (counsel):  Yes;  the  record  in  that  case  contained 
a copy  of  the  rebate  agreement,  and  also  all  the  testimony  of  Mr. 
Smith;  and  also  all  of  the  facts  concerning  which  questions  have 
been  put,  with  respect  to  the  plan  of  organization  of  the  company. 

Mr.  Lexow:  I understand;  but  the  simple  fact  as  to  the  fac- 
tors’ agreement  in  that  case,  was  it  not  as  to  the  validity  of  it — 
that  clause  of  the  agreement  that  prevented  the  competition 
against  you  after  the  sale  of  the  property  by  you  ? 

Mr.  Marshall:  Yes — if  you  will  permit  me,  Mr.  Chairman — 

Mr.  Lexow:  Was  that  true? 

Mr.  Marshall:  That  was  the  main  point.  We  brought  an 
action  for  the  purpose  of  enforcing  a covenant  in  that  agreement, 


798  [Senate, 

which  prohibited  Mr.  Hobbs  from  engaging  in  business  in  viola- 
tion of  that  covenant;  and  the  claim  was  made  on  behalf  of  Mr. 
Hobbs  that  the  entire  organization  was  a conspiracy  against 
trade.  And  for  the  purpose  of  establishing  that  these  various 
agreements  vcere  put  in  evidence — the  fact  that  some  of  the  fac- 
tories were  shut  down,  the  fact  of  this  rebate  agreement,  the  fact 
that  Mr.  Smith  testified  that  he  went  out  of  business  at  the  time 
of  the  organization  of  this  company — these  were  circumstances 
which  have  been  here  adduced — all  these  facts  were  passed  upon 
and  the  court  held  after  hearing  all  this  evidence  that  the  agree- 
ment and  the  organization  were  entirely  valid. 

By  Mr.  McCarren  (to  the  Witness  Burn) : 

Q.  Mr.  Burn,  I understood  you  to  say  this  morning,  either  di- 
rectly or  inferentially,  that  some  of  your  stock  was  issued  for  the 
purchase  of  good  will  and  patents,  improvements,  etc.;  is  that  so? 
A.  That  was  correct. 

Q.  Did  you  ever  have  any  opinion  from  the  Attorney  General 
of  the  State  as  to  the  validity  of  the  issue  of  stock  for  good  will? 
A.  Yes,  sir;  the  Attorney  General  of  this  State  decided  that  good 
will  was  property,  and  that  we  issued  that  stock  in  accordance 

with  law. 

By  Mr.  Mazet : 

Q.  Nobody  has  ever  disputed  that  proposition  that  you  know 
of?  A.  Yes,  sir. 

Q.  That  good  will  was  not  property?  A.  Yes,  sir. 

By  Mr.  Warner: 

Q.  Was  that  opinion  of  the  Attorney  General  given  at  your 
instance?  A.  No,  sir;  it  wras  in  a suit  brought  against  us  to  re- 


No.  40.] 


799 


quest  permission  of  the  Attorney  General  to  bring  suit  for  the 
dissolution  of  our  company,  and  alleging  this  as  one  of  the  rea- 
sons; that  we  had  issued  stock  for  good  will  and  that  good  will 
was  not  property. 

By  Mr.  McCarren : 

Q.  That  was  the  contention  of  the  parties  bringing  the  suit? 
A.  That  was  the  contention  of  the  parties  bringing  the  suit. 

Mr.  Marshall:  The  United  States  Court  has  also  said — 

The  Witness  (interrupting):  I -would  say,  too,  that  the  United 
States  Court  has  affirmed  the  same  fact. 

Mr.  Lexow:  The  fact  presented  in  the  application  before  the 
Attorney  General,  was  it  not,  that  good  will  was  not  absolute 
property  as  against  which  stock  might  be  issued,  but  that  after 
good  will  had  been  severed  from  the  property  to  which  it  attached, 
that  then  it  ceased  to  be  property  for  jvhieh  stock  might  issue; 
was  that  not  the  contention  before  the  Attorney  General? 

Mr.  Marshall : No;  the  contention  before  the  Attorney  General 
was  that  the  issuance  of  common  stock  was  for  good  will  in  the 
manner  in  which  it  was  issued  by  this  company;  and  under  the 
vendors'  agreements  here  in  evidence — was  not  a valid  issue  of 
stock.  That  question  was  very  thoroughly  discussed  and  argued 
here,  and  he  wrote  a very  elaborate  opinion  sustaining  the  valid- 
ity of  this  precise  organization — our  organization.  And  that,  I 
may  also  say.  was  followed  by  the  decision  of  the  United  States 
Supreme  Court,  in  a suit  which  -was  instituted  by  the  same  indi- 
vidual. -who  sought  intervention  of  the  Attorney  General. 

Mr.  Lexow : The  question  before  us  is  not  so  much  whether  the 
issue  of  stock  was  legal  under  the  existing  law,  but  whether  a 
condition  presents  itself  that  requires  additional  legislation  that 


800  [Senate, 

will  prevent  the  issue  of  stock  upon  the  lines  followed  in  this 
case.  I do  not  say  that  it  is  not  perfectly  proper;  that  is  a ques- 
tion for  us  to  consider  upon  the  whole  testimony. 

By  Mr.  McCarren : 

Q.  Mr.  Burn,  what  was  the  object  sought  to  be  accomplished 
by  the  formation  of  the  company  that  you  represent?  A.  Well, 
the  main  object  sought  to  be  attained  by  the  formation  of  the 
company  was  to  avoid  a curtailment  of  the  business  and  the  pos- 
sible death  of  the  industry;  inferior  grades  of  goods  were  being 
introduced,  and  that  had  a tendency  to  make  w'all  paper  unde- 
sirable as  a decorative  medium  wdth  the  people  at  large,  and  in 
that  event  w7hy  the  business  would  have  been  curtailed  and  grad- 
ually extinguished;  people  wmuid  have  been  thrown  out  of  em- 
ployment, capital  would  have  been  wasted;  in  order  to  avoid  that 
possible  state  of  affairs  this  company  wras  considered,  because  it 
was  felt  that  writh  the  experience  that  it  possessed  it  would  bring 
about  improvements  in  the  class  of  goods  that  would  be  produced; 
and  one  of  the  first  steps  that  the  company  took  after  its  forma- 
tion was  to  improve  the  different  grades  of  goods  and  establish  a 
uniform  quality  for  the  respective  grades  and  amongst  all  the 
factories;  and  as  the  result  of  that  are— all  goods  that  are 
bought  in  trade  are  now  judged  by  our  standard. 

By  Mr.  Lexow: 

Q.  And  the  prices  fixed  by  you  followed?  A.  The  prices  as  I 
have  already  stated  were  not  advanced;  on  the  contrary  they 
were  reduced;  the  prices  were  reduced,  the  quality  was  enhanced. 

By  Mr.  Warner: 

Q.  That  don’t  answer  the  questions. 


No.  40.] 


801 


(Question  read.)  , 

A.  I don’t  understand  that  question. 

Q.  Do  you  mean  to  say  that  your  competitors  followed  your 
prices?  A.  All  their  quotations  are  based  on  our  prices. 

By  Mr.  Mazet: 

Q.  As  a standard?  A.  Yes. 

By  Mr.  Lexow : 

Q.  You  set  the  standard  and  they  fix  theirs  accordingly?  A. 
Yes,  sir. 

Q.  Did  I understand  you  to  say  that  the  form  in  which  you 
capitalized  was  to  take  the  percentage  of  profit  and  multiply  by 
16  to  ascertain  the  capital  ? A.  I stated  that. 

Q.  Was  that  the  fact?  A.  That  we  ascertained  the  net  profits 
of  the  preceding  year  and  multiplied  that  by  16 ; that  formed  the 
basis  of  the  total  issuance  of  stock. 

Q.  So  that  if  there  were  net  profits  of  one  hundred  thousand 
dollars  you  would  issue  as  against  that  a capital  stock  of  16  hun- 
dred thousand  dollars?  A.  We  would  issue  against  that  stock 
of  16  hundred  thousand  dollars;  but  we  would  in  issuing  that — 

Q.  Tangible  assets,  being  the  debenture  stock  and  the  balance 
in  common  stock?  A.  In  common  stock. 

Q.  And  that  was  true  with  reference  to  every  transaction  which 
you  made,  except  in  the  individual  case  that  you  specified  where 

4 

there  was  not  profit  and  where  you  simply  issued  for  the  tangible 
property?  A.  There  were  a number  of  such  instances;  it  was  not 
a single  instance;  there  were  a number  of  those  instances;  in 
other  words,  that  when  the  company  was  formed  some  of  those 
parties  claimed  profits  and  their  books  apparently  indicated  that 


51 


802  [Senate, 

they  earned  profits,  but  the  profits  there  shown  depended  upon 
the  collection  of  certain  accounts;  at  the  expiration  of  a certain 
time  it  was  found  that  those  accounts  had  not  been  paid,  and  con- 
sequently they  were  charged  against  profits,  in  many  cases  wip- 
ing them  out  altogether. 

Q.  In  that  case  you  only  issued  debenture  stock?  A.  That  is 
all., 

Q.  For  the  appraised  tangible  assets  you  issued  debenture 
stock?  I do  not  think  we  will  need  your  testimony  any  further 
than  for  the  purpose  of  getting  statistics  that  we  will — or  need 
witnesses  subpoenaed  with  reference  to  your  company. 

Mr.  Marshall : That  relieves  us  from  further  attendance? 

Mr.  Lexow:  We  would  like  evidence  on  this  labor  question. 

(Adjourned  to  10:15  o’clock  to-morrow  morning.) 

The  following  form  was  marked  “Feb.  19,  H.  C.  L.” 

This  memorandum  of  agreement,  made  and  entered  into  the 
first  day  of  February,  1892,  between  Messrs.  H.  B.  Hollins  & Com- 
pany, Mr.  Charles  R.  Flint,  Mr.  Joseph  P.  Earle  and  Mr.  Richard 
Sibley. 

Whereas,  The  parties  hereto  are  interested  in  bringing  about 
the  consolidation  into  one  parent  or  consolidated  corporation  in- 
terests in  several  companies  now  engaged  in  the  manufacture  of 
rubber  boots  and  shoes  throughout  the  United  States;  and 

Whereas,  It  has  been  agreed  between  the  parties  hereto  that  a 
condition  of  the  participation  in  said  consolidation  by  each  of 
said  companies  is  that  a certain  commission  shall  be  paid  by  such 
consolidated  company  to  Messrs.  H.  B.  Hollins  & Company;  and 

Whereas,  It  has  been  agreed  that  each  of  the  parties  hereto 
shall  participate  in  said  commission  to  the  extent  and  in  the  man- 
ner set  forth  in  this  agreement; 


No.  40.] 


803 


Now,  In  consideration  of  one  dollar  in  Land  paid  by  each  party 
hereto  to  each  of  the  others,  the  receipt  whereof  is  hereby  ac- 
knowledged, and  in  further  consideration  of  the  services  in  and 
about  said  consolidation  heretofore  contributed  and  hereafter  to 
be  contributed  by  each  party  hereto  for  the  benefit  of  each  of  the 
other  of  said  parties. 

It  is  hereby  agreed  as  follows : 

First,  Said  commission,  which  is  payable  in  the  common  stock 
of  the  consolidated  company  as  shall  be  paid  by  said  company  to 
Messrs.  H.  B.  Hollins  & Company  as  above  receipted,  shall  be 
divided  as  follows : 

A.  M.  Flint  shall  receive  of  such  stock  at  par  $200,000;  Messrs. 
H.  B.  Hollins  & Company,  $100,000;  Mr.  Earle,  $100,000. 

B.  Such  balance  as  shall  remain  shall  be  divided  into  four 
equal  parts;  one  part  shall  belong  to  and  be  paid  over  to  Mr. 
Flint;  one  part  to  Messrs.  H.  B.  Hollins  & Company,  and  part  to 
Mr.  Earle;  and  one  part  to  Mr.  Sibley. 

(Signed)  H.  B.  H.  & CO.,  C.  R.  F. 

Second,  This  agreement  is  in  lieu  of  and  is  substituted  for  any 
other  understanding  as  to  the  subject  matter  of  this  agreement 
whether  written  or  oral,  heretofore  entered  into  between  the  par- 
ties hereto. 

In  witness  whereof,  The  parties  hereto  have  hereunto  and  unto 
three  other  originals  hereof  set  their  hands  and  seals  the  day  and 
year  first  above  written. 

(Signed)  H.  B.  HOLLINS  & CO. 

(Signed)  CHAS.  R.  FLINT. 

(Signed)  RICH’D  C.  SIBLEY. 

(Signed)  JOS.  P.  EARLE. 


804 


[Senate, 


(Endorsed  on  back  as  follows): 

We,  Joseph  P.  Earle  and  Charles  R.  Flint,  for  value  received, 
have  assigned,  transferred,  set  forth,  and  by  these  presents  do 
assign,  transfer  and  set  forth  unto  the  New  York  Commercial 
Company,  Limited,  a corporation  of  the  State  of  New  York,  all 
our  right,  title  and  interest  in  and  to  the  within  agreement,  and 
in  and  to  all  our  rights,  interests  and  privileges  thereunder. 

New  York,  February  1, 1892. 

Witness  to  signatures  of  Joseph  P.  Earle  and  Chas  R.  Flint. 

(Signed)  HENRY  EARLE. 

(Signed)  JOS.  P.  EARLE. 

(Signed)  CHAS.  R.  FLINT. 

Following  form  was  marked  “Feb.  19,  Exhibit  B.” 

Memorandum  of  agreement  between 

of (called  the  purchaser)  and  the  National  Wrall 

Paper  Company  of  New  York,  N.  Y.  (called  the  company). 

1.  The  purchaser  agrees  to  select  and  order  from  and  out  of 
jobbing  lines  of  the  machine  made  goods  of  the  company  on  or 
before  October  1,  1896,  wall  paper  to  the  aggregate  amount  of 


$ , which  ....  hereby  request  the  company  to  manu- 
facture for prior  to  April  1,  1897,  goods  to  be  delivered  F.  0. 


B.  at  New  York,  or  at  the  respective  places  of  manufacture. 

2.  The  terms  of  this  sale  are  four  (4)  months  from  date  of  in- 
voice, with  a discount  at  the  rate  of  one  per  cent,  per  month  for 
anticipated  payments.  Goods  shipped  between  October  15th  and 
March  1st  to  date  from  March  1st,  and  orders  for  goods  not 
shipped  before  March  1,  1897,  may  be  cancelled  by  either  party  to 
this  agreement. 

3.  The  purchaser  expressly  guarantee  and  agree  that  between 
September  1,  1896,  and  June  30,  1897,  will  not  purchase  or  ac- 


No.  40.] 


805 


quire  any  wall  paper  or  hangings  the  product  of  any  person  or 
corporation  other  than  the  company,  and  that  will  give  additional 
and  duplicate  orders  prior  to  July  1,  1897,  to  the  amount  of 

$ , and  in  consideration  of  such  guarantee  and  upon 

the  performance  thereof  company  shall  credit  the  purchaser  with 
the  discounts  hereinafter  named  on  the  attached  schedule  on  all 
purchases  from  the  jobbing  lines  of  the  machine  made  goods  of 
the  company  between  said  dates.  Such  discounts  shall  be  figured 
and  credited  upon  the  basis  of  the  shipments  made  hereunder  and 
the  discounts  shall  be  calculated  upon  the  gross  prices  published 
by  the  company  in  its  price  list  for  the  patterns  selected  by  the 
purchaser.  The  purchaser  guarantee  as  a condition  of  the  allow- 
ance of  such  discounts  to  refrain  from  making  such  use  thereof 
among  the  trade  as  to  interfere  with  the  uniformity  of  the  com- 
pany’s  price  and  terms,  and  that  (the  purchaser)  will  at  all  times 
during  this  contract  maintain  the  company’s  road  prices. 

4.  The  company  agrees  to  extend  the  same  line  of  discounts 
referred  to  above  to  such  goods  as  are  contained  in  the  exclusive 
lines  of  the  machine  made  goods  of  the  company,  on  the  express 
guarantee  that  such  goods  will  be  used  only  for  the  retail  depart- 
ment of  the  purchaser  in  the  city  of , and  will  not  be 

offered  at  wholesale  within  his  store  or  on  the  road. 

This  contract  shall  at  all  times  and  for  every  purpose  be 
deemed  to  have  been  made  and  executed  at  the  principal  office  of 
the  company,  in  the  city  of  New  York,  and  it  shall  for  every  pur- 
pose be  construed  under  the  laws  of  the  State  of  New  York. 

Dated,  the  city  of  New  York, 1896. 

National  Wall  Paper  Company, 


President. 


806  [Senate, 

Schedule  of  discounts  referred  to  in  the  foregoing  agreement: 

On  goods  to  4c.  inclusive per  cent,  discount 

D:tto  above,  4c.  to  5c per  cent,  discount 

Ditto,  5c.  to  6c per  cent,  discount 

Ditto,  6c.  to  8c per  cent,  discount 

Ditto,  8c.  to  12ic per  cent,  discount 

Ditto,  12ic per  cent,  discount 


The  discounts  on  borders  follow  the  discounts  on  the  hangings 
which  they  match.  The  purchase  of  the  first  grade  is  to  be  re- 
stricted to  — per  cent,  of  the  entire  order. 


ELEVENTH  PUBLIC  HEARING.  COMMON  COUNCIL 
CHAMBER,  NEW  YORK,  FEBRUARY  23, 1897,  10  A.  M. 

Mr.  Lexow:  A quorum  being  present  the  committee  will  now 
come  to  order. 

Mr.  Lexow:  Is  Mr.  Elverson  in  the  room?  (No  answer.) 

G.  Waldo  Smith,  being  duly  sworn,  testified  as  follows: 
Examined  by  Mr.  Lexow: 

Q.  What  is  your  full  name?  A.  G.  Waldo  Smith. 

Q.  Residence?  A.  313  West  Forty-sixth  street. 

Q.  And  age?  A.  Sixty-six  years. 

Q.  What  is  your  occupation?  A.  Wholesale  grocer. 

Q.  Have  you  any  official  relation  to  what  is  known  as  the 
Wholesale  Grocers’  Association?  A.  I have. 

Q.  What  is  that?  A.  President. 

Q.  Is  that  an  incorporated  body?  A.  It  is  not. 

Q.  Membership  association?  A.  Yes,  sir. 

Q.  Consisting  of  whom?  A.  Wholesale  grocers. 


No.  40.] 


807 


Q.  Limited  to  any  particular  territory?  A.  It  covers  New 
York,  New  Jersey  as  far  as  Paterson,  Connecticut,  part  of  Mas- 
sachusetts, New  Hampshire,  Vermont  and  up  the  Hudson  as  far 

as  Poughkeepsie. 

Q.  Has  it  any  other  name  than  just  Wholesale  Grocers’  Asso- 
ciation? A.  The  Wholesale  Grocers’  Association  of  New  York 
and  Vicinity. 

Q.  Meaning  New  York  city  and  vicinity?  A.  Yes,  sir. 

Q.  Is  there  a State  association  ? A.  There  is. 

Q.  A national  association?  A.  No,  sir;  not  now. 

Q.  There  was?  A.  There  have  been  attempts  to  form  one,  but 
never  fairly  succeeded;  it  has  been  partially  organized,  but  it 
never  came  into  actual  existence  so  far  as  I know. 

Q.  What  is  necessary  to  membership  in  your  association?  A. 
To  be  distributers  of  food  products  at  wholesale. 

Q.  What  is  known  as  a jobber?  A.  Yes,  sir ; some  large  retail- 
ers have  applied  for  admission  and,  I think,  have  been  admitted ; 
I thmk  Park  & Tilford  and  Acker,  Merrill  & Condit. 

Q.  Have  you  by-laws?  A.  Yes,  sir. 

Q.  Have  you  a constitution?  A.  Yes,  sir. 

Q.  Which  is  signed  by  all  the  members  composing  the  associa- 
tion? A.  I think  not;  I have  no  recollection  of  ever  signing  it. 

Q.  What  are  the  membership  fees?  A.  Ten  dollars  per  annum 
for  each  partner. 

Q.  For  each  partner?  A.  Yes;  in  each  firm. 

Q.  Have  you  any  affiliation  with  the  other  Wholesale  Grocers’ 
Associations  of  the  various  States  of  the  Union?  A.  No,  sir. 

Q.  What  is  the  jurisdiction  of  these  Wholesale  Grocers’  Associ- 
ations? A.  The  Southern  Wholesale  Grocers’  Association  com- 
mences at  Richmond  and  runs  down  to  New  Orleans,  Nashville 


808  [Senate, 

and  Chattanooga;  well,  St.  Louis  has  withdrawn;  it  used  to  in- 
clude that  city. 

Q.  It  takes  in  the  Southern  planters’  territory — the  sugar  ter- 
ritory of  the  Southern  Louisiana  planters?  A.  Yes,  sir. 

Q.  And  has  jurisdiction  over  the  sale  of  sugar  within  that  ter- 
ritory? A.  It  has  no  jurisdiction  over  the  sale  of  sugar  any- 
where. 

Q.  I mean  in  the  sense  that  it  represents  jobbers?  A.  In  a 
certain  sense,  possibly. 

Q.  And  through  its  control  over  the  jobbers  in  that  section 
controls  to  the  extent  of  the  membership  in  the  association  the 
sales  made  by  those  jobbers?  A.  In  no  manner,  way  or  shape, 
so  far  as  I know. 

Q.  Well,  that  is  true  with  reference  to  New  York  City  Associ- 
ation, is  it  not?  A.  No,  sir. 

Q.  Do  you  mean  to  be  understood  as  saying  that  you  do  not 
exercise  any  control  over  the  sale  by  the  jobbers  composing  your 
asociation  of  the  food  products  that  they  handle?  - A.  I do,  sir. 

Q.  Do  you  say  so  without  reservation?  A.  Yes,  sir;  so  far  as 
my  knowledge  goes. 

Q.  Who  does  exercise  that  control?  A.  No  one. 

Q.  And  you  say  that  equally  without  reservation?  A.  I do, 
ttfir. 

Q.  Then,  you  mean  to  say  that  neither  as  a result  of  direct 
action  by  the  Wholesale  Grocers’  Association,  nor  as  the  result 
of  the  producer  of  the  material  disposed  of  by  the  jobbers  form- 
ing your  association,  is  control  exercised  over  the  jobbers?  A.  I 
don’t  know  as  I understand  the  question. 

(Question  repeated.) 

A.  There  is  no  control  as  an  association  of  any  name  or  nature; 


]STo.  40.]  809 

the  only  control  possible  might  be  that  our  secretaries  send  out 
notices  of  the  change  of  price. 

Q.  Change  of  price  of  food  products?  A.  Of  sugar  only. 

Q.  Then  why  do  you  make  a distinction  between  sugar  and  the 
other  food  products?  A.  Simply  because  it  is  the  most  impor- 
tant article  in  our  trade. 

Q.  You  so  regard  it?  A.  By  all  means. 

Q.  And  that  sale  of  sugar  is  absolutely  indispensable  to-  the 
prosperity  of  the  jobber?  A.  Yes,  sir;  absolutely. 

Q.  And  that  is  why  you  make  a distinction  between  sugar  and 
the  other  products?  A.  We  make  no  distinction;  simply  because 
our  secretary,  by  some  means,  has  commenced  sending  out  no- 
tices of  the  change  of  price. 

Q.  You  are  president  of  the  association?  A.  Yes,  sir. 

Q.  Does  the  secretary  assume  to  so  act  without  knowledge  or 
notice  or  authority  from  the  president?  A.  Done  with  my  con- 
currence. 

Q.  What  actuates  you  in  concurring  with  such  action  by  the 
secretary?  A.  The  sugar  refiners  dictated  certain  terms  of  sale 
and  we,  in  order  to  make  those  terms  of  sale  effective  or  useful  to 
us,  simply  send  out  notice  of  the  change  of  price. 

Q.  Then  your  action  in  sending  out  those  notices  was  taken 
subsequent  to  the  action  of  the  sugar  refineries  in  fixing  the  con- 
ditions? A.  We  could  not  of  course  do  it  until  the  conditions 
were  fixed. 

Q.  And  the  fixing  of  the  conditions  on  the  part  of  the  sugar  re- 
finers was  an  affirmative  act  by  them  without  reference  to  you? 
A.  Without  reference  to  us;  taken  at  our  solicitation. 

Q.  How  did  that  occur?  A.  It  originally  occurred  six  years 
ago  last  June. 


810  [Senate, 

Q.  Between  whom  were  the  negotiations?  A.  Between  Mr. 
Havemeyer  and  Mr.  Searles  and  others;  I think  at  that  time  Har- 
rison & Frazier  of  Philadelphia  and  others,  and  individuals  who 
were  wholesale  grocers. 

Q.  At  a meeting  between  them  and  Mr.  Havemeyer  and  Mr. 
Searles?  A.  At  a conference  granted  to  us  by  the  sugar  people; 
they  had  various  interviews. 

Q.  Who  besides  Mr.  Searles  and  Mr.  Havemeyer  was  present 
representing  the  sugar  refiners?  A.  Different  gentlemen  whose 
names  I cannot  recall,  at  different  times. 

Q.  Was  a representative  of  the  Mollenhauer  Company  there? 
A.  That  was  not  in  existence  at  the  time. 

Q.  Was  a representative  of  the  Howells  present?  A.  Mollen- 
hauer and  Howell  are  all  one,  are  they  not?  Howell  is  agent  for 
Mollenhauer,  if  I remember  rightly. 

Q.  Are  these  two  sugar  refining  companies,  one  B.  H.  Howell, 
Son  & Co.,  and  the  other,  the  Mollenhauer  Company,  in  this  State, 
in  apparent  competition  with  the  American  Sugar  Refining  Com- 
pany? A.  My  knowledge  is — I have  no  definite  knowledge;  we 
buy  largely  of  the  Mollenhauer  Sugar  Refining  Company,  and 
Howell  is  their  agent;  I know  neither;  I have  never  seen  them  to 
my  knowledge;  I know  they  are  agent  for  the  Mollenhauer  Com- 
pany. 

Q.  Were  they  not  in  existence  then?  A.  I think  not. 

Q.  Was  there  any  competing  concern  in  the  State  present  at 
that  interview?  A.  I think  not,  sir. 

Q.  Was  McCahan  of  Philadelphia?  A.  No,  sir. 

Q.  The  Franklin?  A.  It  did  not  extend  to  Philadelphia;  we 
were  only  trying  to  take  care  of  ourselves  at  that  time. 

Q.  Are  you  affiliated  with  the  Wholesale  Grocers’  Association 


No.  40.] 


811 


that  has  jurisdiction  over  Philadelphia?  A.  Simply  know  them, 
some  of  them;  have  no  official  relation  with  them  whatever. 

Q.  Are  you  now  in  communication  with  the  Wholesale  Gro- 
cers’ Association  of  the  various  States?  A.  We  occasionally  get 
a letter  from  some  one  relating  to  certain  matters;  some  question 
of  information;  that  is  about  all. 

Q.  Are  not  the  policies  dictated  by  you  the  policies  which  are 
in  vogue  among  the  various  Wholesale  Grocers’  Associations  of 
the  United  States;  the  policies  or  practices?  A.  We  have  no  prac- 
tices as  an  association  whatever  of  any  name  or  nature  except 
simply  to  send  out  these  notices  of  the  price;  we  have  not  passed 
resolutions  of  any  kind  nor  appointed  a committee  in  many  years. 

Q.  Where  do  you  get  the  prices?  A.  Those  prices  come  from 
the  sugar  refiners  every  morning. 

Q.  From  whom?  A.  Somebody  hangs  them  up  in  the  office. 

Q.  Who  gets  the  price?  A.  The  secretary. 

Q.  Of  your  association?  A.  Yes,  sir. 

Q.  Don’t  he  get  the  prices  of  any  other  food  products?  A.  No, 

sir. 

Q.  Limited  entirely  to  sugar?  A.  Yes,  sir. 

Q.  Don’t  you  know  that  he  gets  the  price  from  the  American 
Sugar  Refining  Company?  A.  I have  an  impression  that  the 
price  is  hung  up  in  the  office  of  the  American  Sugar  Refining 
Company  and  that  he  goes  every  day  and  looks  at  it. 

Q.  Don’t  you  know  whether  he  has  instructions  from  you,  or 
from  a body  that  you  represent,  to  go  to  the  American  Sugar  Re- 
fining Company  and  get  its  price  list  to  be  sent  around  to  the 
wholesale  grocers?  A.  I don’t  know  where  he  goes  after  it;  only 
I have  an  impression  that  he  goes  to  the  American  Sugar  Refining 
Company’s  office  and  sees  this  paper  hung  up;  I have  never  been 


812  [Senate, 

there  myself,  and  have  never  exchanged  a word  within  several 
years  with  them. 

Q.  Who  draws  up  the  rules  and  regulations  that  governs  the 
action  of  this  grocers’  association?  A.  The  only  rules  and  regu- 
lations ever  drawn  up  were  drawn  up  by  a committee  appointed 
at  the  first  meeting  we  had;  I can  hardly  tell  you  who  were  there; 
it  was  nearly  nine  years  ago. 

Q.  Have  those  rules  and  regulations  never  been  amended  since 
then  ? A.  Never,  sir,  to  my  knowledge. 

Q.  Would  you  know  if  they  had  been?  A.  I ought  to  know; 
must  have  known,, 

Q.  Does  the  American  Sugar  Refining  Company  itself  issue  the 
rules  and  regulations  under  which  the  wholesale  grocers  act? 
A.  No,  sir;  not  at  all. 

Q.  Be  a little  careful;  so  far  as  they  have  dictated  what  is 
known  as  the  terms  of  sale,  have  they  not?  A.  No,  sir. 

Q.  Will  you  swear  that  they  do  not?  A.  I swear  that  I do  not 
kno  w that  they  do. 

Q.  Who  prints  them?  A.  I could  not  tell  you,  sir. 

Q.  Have  you  ever  had  a fund  in  your  association  providing  for 
the  printing  and  distribution  of  the  rules  governing  the  action 
of  the  grocers?  A.  Originally  we  had. 

Q.  I mean  since  nine  years  ago  ? A.  It  is  a long  time — 

Mr.  Lexow  (interrupting):  They  certainly  have  had  the  origi- 
nal rules  printed  since  that  time?  A.  Not  to  my  knowledge. 

Q.  You  never  have  known  of  the  disbursement  of  a dollar  for 
the  printing  of  rules  and  regulations  governing  the  sales  of  sugar 
by  factors  employed  in  your  Wholesale  Grocers’  Association  for 
nine  years  back?  A.  I would  not  know,  sir,  if  it  was  done. 


No.  40.]  , 813 

Q.  Why?  A.  Because  I have  nothing  to  do  with  accounts  and 
payments  of  the  bills ; I have  never  seen  any. 

Q.  Who  has?  A.  The  treasurer. 

Q.  Who  is  the  treasurer?  A.  Mr.  Cowing  of  the  Cowing  Sugar 
Company;  his  office  is  in  Washington  street. 

Q.  Do  you  know  his  first  name?  A.  No,  sir. 

Q.  You  don’t  know  his  first  name?  A.  Cannot  recall  it  just  at 
this  moment. 

Q.  How  frequently  have  you  seen  him?  A.  Not  more  than 
once  or  twice  in  three  or  four  years,  I think. 

Q.  How  frequently  have  you  seen  him  during  the  nine  years  in 
which  this  Wholesale  Grocers’  Association  has  been  established? 
A.  In  the  first  four  or  five  years  frequently;  but  since  then  I have 
no  recollection  of  seeing  him  at  all. 

Q.  Have  you  any  recollection  of  the  disbursement  of  a single 
dollar  in  the  printing  and  distribution  of  the  rules  and  regula- 
tions governing  the  wholesale  grocers  in  the  sale  of  sugar?  A. 
No,  sir;  I have  never  had  anything  to  do  with  the  financial  part 
of  the  enterprise. 

Q.  Has  it  any  financial  part?  A.  Simply  dues  paid  in  or  ex- 
pended by  the  secretary.. 

Q.  Disbursed  for  what?  A.  Such  as  stenographer,  typewriter 
and  office  rent. 

Q.  If  any  other  expenditures  were  made  you,  as  president, 
would  know  of  it?  A.  No,  sir. 

Q.  Would  not?  A.  No,  sir. 

Q.  Don’t  you  audit  the  accounts  of  the  treasurer?  A.  No,  sir; 
have  never  seen  accounts. 

Q.  Never  presented  to  you?  A.  It  has  been  presented  at  the 


814  [Senate, 

meeting  and  referred  to  the  auditing  committee;  sometimes  we 
have  only  a yearly  meeting  for  the  election  of  officers. 

Q.  You  have  a meeting  once  a year?  A.  Yes,  for  the  election 
of  officers,  and  we  have  to  send  all  over  town  to  get  a quorum 
then. 

Q.  Isn’t  it  true  that  you  send  all  over  town  to  get  a quorum  be- 
cause those  who  form  the  association  are  simply  instruments  in 
the  hands  of  the  American  Sugar  Refining  Company?  A.  They 
are  not,  sir,  in  any  sense. 

Q.  Have  you  ever  seen  that  before?  (Hands  witness  book.) 
A.  I have  no  recollection  of  having  seen  it;  I may  have. 

Q.  Are  those  the  rules  and  regulations  governing  the  Whole- 
sale Grocers’  Association?  Just  look  at  that  carefully  a minute. 
A.  They  seem  to  be,  so  far  as  my  knowledge  goes. 

Q.  You  have  no  knowledge  as  to  the  authenticity  of  that  docu- 
ment? A.  No,  sir;  but  I have  no  recollection  of  ever  seeing  it. 

Q.  Explain  to  this  committee  how  it  is  that  these  rules  and  reg- 
ulations of  the  association  could  be  amended,  revised,  printed 
and  disbursed  to  the  members  of  that  association  without  you,  as 
president,  knowing  about  it?  A.  Because  I have  had  but  little 
to  do  with  it  for  several  years. 

Q.  Can  you  name  to  this  committee  any  person  who  has  suffi- 
cient knowledge  upon  these  rather  important  details  of  the  busi- 
ness to  be  able  to  answer?  A.  I supposed  that  has  been  formu- 
lated by  the  sugar  people,  so  far  as  I know;  I don’t  know;  they 
are  the  terms  of  sale,  I suppose. 

Q.  Is  that  the  only  explanation  that  you  can  make?  A.  Yes. 
sir;  they  have  dictated  certain  terms  of  sale  at  our  demand  or  re- 
quest. 

Q.  At  your  demand?  A.  And  request;  yes,  sir. 


No.  40.] 


815 


Q.  They  have  revised  them,  from  time  to  time,  at  your  demand 
or  request?  A.  No,  sir;  we  have — this  New  York  association — 
has  had  nothing  to  do  with  this  matter  since  six  years  ago;  the 
last  i hange  was  made  at  the  solicitation  of  the  West;  New  York 
had  absolutely  nothing  to  do  with  it,  so  far  as  I know. 

Q.  Do  you  know  whether  the  Louisiana  planters  solicited 
a revision  of  the  Wholesale  Grocers’  rules  and  regulations?  A. 
Sugar  planters?  necessarily  not,  sir. 

Q.  I mean  the  small  sugar  refiners  of  Louisiana?  A.  Probably 
not;  I don’t  know. 

Q.  Who  raised  the  rawr  sugar  on  their  plantations  or  make  it  on 
their  plantations?  A.  1 ha  >7e  no  knowledge  of  it,  sir. 

Q.  Don  t you  know  that  they  have  protested  against  the  rales 
and  regulations  of  the  Wholesale  Grocers’  Association  made  by 
the  American  Refining  Company?  A.  I don’t  know. 

Q.  For  the  purpose  of  excluding  them  absolutely  from  compe- 
tition in  the  United  States?  A.  I don’t,  sir;  never  heard  a word 
of  it  in  my  life;  if  the  chairman  will  allow  me  I will  explain. 

Q.  Yes;  glad  to  have  any  explanation.  A.  Five  or  six  years 
ago  the  wholesale  grocers  of  the  United  States,  so  far  as  I know — 
I can  speak  for  New  York — were  selling  sugar  at  net  cost  and 
with  a loss  of  the  expense  of  doing  business;  it  was  producing 
ruin  and  disaster  to  the  trade  and  would  have  resultel  in  bank- 
ruptcy. 

Q.  To  what  trade?  A.  The  wholesale  grocers’  trade. 

Q.  How  about  the  sugar  refiners?  A.  That  we  had  nothing  to 
do  with. 

Q.  How  about  the  consumers?  A.  The  consumers  are  willing 
to  pay  for  the  actual  service  performed  for  them;  same  as  I paid 
five  cents  to  ride  down  in  the  cable  car  to-day. 


816  [Senate, 

Q.  They  were  getting  sugar  for  nothing?  A.  Same  as  I would 
have  had  I not  paid  to  come  down  in  the  cable  car  this  morning. 
Now  they  are  getting  it  for  two-thirds  of  the  actual  cost. 

Q.  They  are  not  getting  it;  the  factors  are  getting  3-16  of  a 
cent?  A.  That  is  about  two-thirds  of  the  actual  cost  of  doing  the 
business. 

Q.  Have  you  read  the  testimony  of  Mr.  Searles?  A.  Some  of 
it. 

Q.  That  the  profit  to  them  on  sugar  was  only  one-quarter  and 
that  they  were  giving  the  factors  3-16?  A.  Yes,  sir. 

Q.  Do  you  believe  that?  A.  I know  nothing  about  their 
profits;  I know  our  own;  we  are  making — I had  a paper  in  my 
pocket — I thought  I had  lost  it — we  are  making  as  I estimated 
yesterday  for  three  years  in  the  way  of  an  average  of  about  4.42 
per  cent. ; the  wholesale  grocers  to-day — the  average  cost  of  doing 
business,  so  far  as  I can  estimate,  is  6^  per  cent.;  so  we  are  losing 
now  about  one-third  of  the  cost  of  doing  business;  whereas,  for- 
merly we  lost  the  entire  cost  of  doing  business  in  sugar. 

(Answer  repeated.) 

Q.  Then  you  mean  to  say  that  notwithstanding  the  concession 
of  3-16  per  cent,  you  are  still  handling  sugar  at  a loss?  A.  I de- 
sire to  correct  those  figures;  I find  it  is  about  4.32  per  cent,  for 
three  years ; our  gross  profit  was  4.32  per  cent. 

Q.  When  you  speak  of  “our”  whom  do  you  mean?  A.  I mean 
my  own  firm  individually. 

Q.  You  don’t  handle  sugar  only?  A.  No,  sir;  we  handle  all 
kinds  of  groceries;  but  sugar  is  30  per  cent,  of  the  trade,  a very 
large  item. 

Q.  You  mean  to  say  that  in  your  own  individual  business  your 
system  of  distribution  is  such  that,  so  far  as  you  are  concerned, 


]STo.  40.] 


817 


you  don’t  handle  sugar  at  a profit  even  with  3-16  per  cent.?  A. 
As  near  as  I can  estimate. 

Q.  You  don’t  assume  to  speak  for  anybody  but  yourself?  A. 
Only  that  we  are  a type  of  the  rest;  as  it  is  with  us,  it  is  with 
others  in  the  same  line  of  business. 

Q.  How  do  you  know?  A.  General  observation. 

Q.  What  observation  have  you  had?  A.  Forty  years  in  busi- 
ness; I know  the  general  cost  of  doing  business. 

Q.  What  peculiar  situation  has  presented  itself  whereby  you 
have  been  able  to  judge  of  the  profits  made  by  others?  A.  Sim- 
ply know  the  general  cost  of  doing  business. 

Q.  I call  your  attention  to  the  third  subdivision  of  this  code  of 
rules.  “Changes  in  price  of  sugars  shall  take  effect  as  follows: 
In  that  district,  known  as  the  Eastern  Time  District,  the  price 
shall  take  effect  at  the  same  moment  that  the  American  Sugar 
Refining  Company  makes  the  change  in  price.  Factors  in  the 
Central  Division  of  Time  shall  make  change  of  price  thirty  min- 
utes later  than  that  of  points  in  the  Eastern  Division.  Factors 
in  the'Western  Division  shall  make  change  one  hour  later  than 
that  of  points  in  the  Eastern  Division.  Example : If  the  market 
changes  at  refining  point  at  10  o’clock  A.  M.,  Eastern  Standard 
Time,  at  points  in  the  Central  Division,  change  shall  take  place 
at  9:30  o’clock  A.  M.  Central  Standard  Time,  and  at  points  in 
the  Western  Division  prices  shall  change  at  9 o’clock  A.  M., 
Western  Standard  time.” 

Q.  That  is  a rule  and  regulation  that  is  obligatory  upon  the 
promulgation  of  this  uniform  code  of  rules,  so-called,  upon  every 
wholesale  grocer  belonging  to  your  association  and  the  other 
associations  of  the  United  States?  A.  Every  one  who  expects 
to  get  a rebate. 


52 


818  [Senate, 

Q.  Every  one  who  expects  to  become  a factor  under  the  agree- 
ment of  the  American  Sugar  Refining  Company,  or  any  other 
sugar  refining  company  in  the  country?  A.  Yes;  those  are  the 
terms  of  sale. 

Q.  As  I understand  you  now,  it  is  they,  the  sugar  refiners,  who 
have  formulated  and  fixed  this  uniform  code  of  rules  which  has 
been  adopted  by  the  various  wholesale  grocers’  associations? 
A.  No,  sir;  never  been  adopted  by  any  association,  to  my  knowl- 
edge; certainly  not  by  ours;  never  been  any  authority  of  any 
name  on  nature. 

By  Mr.  Mazet: 

Q.  Acquiesced  in?  A.  Yes,  as  individuals;  but  not  by  any  act 
of  the  association. 

By  Mr.  Lexow: 

Q.  Do  I misunderstand  you  then ; you  said  it  was  the  direct  ac- 
tion of  the  Wholesale  Grocers’  Association  that  secured  in  the 
first  instance  the  promulgation  of  the  rules?  A.  Secured  in  the 
first  place  six  years  ago ; the  adoption  by  the  refiners  of  what  is 
called  the  “ limited  price  system;  that  was  a voluntary  system; 
this  new  system  was  adopted  on  the  16th  of  October  last,  when 
we  became  factors  upon  the  solicitation  of  the  west  and  south; 
all  the  knowledge  I have  of  that  is  the  fact  that  I heard  from  time 
to  time  that  they  were  coming  here  from  the  West  and  South  and 
asking  the  refiners  to  adopt  a factors’  system;  I have  no  definite 
knowledge;  I never  saw  any  of  them. 

Q.  Simply  rumors  that  came  to  your  ears?  A.  The  New  York 
Association,  so  far  as  I know,  had  nothing  to  do  with  it. 

Q.  Have  you  never  had  any  relation  with  the  Western  and 
Southern  Wholesale  Grocers’  Associations?  A.  No,  sir. 


No.  40.] 


81» 


Q.  Never?  A.  I attended  a convention  at  Cleveland  two  or 
three  years  ago;  had  an  invitation  to  attend  their  banquet;  this 
matter  was  not  considered;  no  business  was  done  in  connection 
with  sugar. 

Q.  Then  you  wish  to  be  understood,  do  you,  that  these  rules 
and  regulations  are  the  rules  and  regulations  established  by  the 
refiners?  A.  They  are  their  terms  of  sale. 

Q.  It  is  entitled  “ Uniform  Code  of  Kules;  ” I now  ask  you  to 
answer  the  question  whether  you  wish  to  be  understood  as  stat- 
ing that  this  uniform  code  of  rules  is  the  code  of  rules  for  which 
the  refiners  are  responsible,  and  not  the  Wholesale  Grocers’  As- 
sociation? A.  I have  no  knowledge  in  relation  to  the  formation 
of  that  code  of  rules  and  nothing  whatever  to  do  with  it. 

Q.  You  have  knowledge  of  the  printing  of  the  original  code  of 
rules,  have  you  not?  A.  Of  the  original,  six  years  ago? 

Q.  Yes,  sir.  A.  There  was  no  code  of  rules  so  far  as  I know 
or  remember;  simply  a notice  from  the  refiner  that  if  those  who 
bought  sugar  maintained  the  price  they  would  receive  a rebate 
of  18f. 

Q.  At  the  end  of  each  month?  A.  Yes,  sir. 

Q.  Then  the  change  was  made  to  the  end  of  three  months?  A. 
I think  I am  mistaken;  I think  it  was  taken  off  at  the  end  of 
each  bill;  not  at  the  end  of  the  month. 

Q.  Paid  at  once?  A.  Allowed  on  the  bill — on  each  bill. 

Q.  It  is  not  so  now?  A.  No,  sir. 

Q.  Now  it  is  three  months?  A.  Yes,  sir. 

Q.  Who  made  that  change?  A.  Made  by  the  refiners  at  the 
solicitation  of  the  West  and  South,  so  far  as  I know. 

Q.  The  three  months’  rule?  A.  Yes,  sir. 

Q.  When  did  the  West  and  South  form  itself  into  a Wholesale 


820  [Senate, 

Grocers’  Association?  A.  Not  as  an  association;  as  individuals, 
as  my  knowledge  goes;  by  the  wholesale  grocers  from  different 
States. 

Q.  Individually?  A.  Yes,  sir. 

Q.  Not  in  the  form  of  an  association?  A.  It  is  possible  they 
represented  an  association ; never  met  them  when  they  were  here; 
I heard  of  their  being  here. 

Q.  I will  read  again : “Factors  in  the  central  division  of  time 
shall  make  change  of  price  thirty  minutes  later  than  that  of 
points  in  the  eastern  division.”  You  see,  this  is  figured  down  to 
a mathematical  nicety;  do  you  know  anything  about  this  partic- 
ular regulation?  A.  Only  as  it  relates  to  us  as  one  of  the  factors. 

Q.  Only  as  tj'  the  terms  and  conditions  upon  which  the  Ameri- 
can Sugar  Refining  Company  would  sell  sugar  on  the  rebate  sys- 
tem as  made  known  to  you  by  them?  A.  To  us  as  individuals; 
as  an  individual  house. 

Q.  As  a factor?  A.  Yes,  sir. 

Q.  I read  further : “Factors  in  the  western  division  shall  make 
change  one  hour  later  than  that  of  points  in  the  eastern  division.” 
Do  you  mean  to  say  that  the  Wholesale  Gocers’  Association  has 
had  no  knowledge  or  notice  of  this  regulation  or  regulations  or 
changes  or  revisions  in  them?  A.  Not  to  my  knowledge. 

Q.  I read:  “Example:  If  the  market  changes  at  refining  point 
at  10  o’clock  A.  M.,  eastern  standard  time,  at  points  in  the  cen- 
tral division,  change  shall  take  place  at  9:30  o’clock  A.  M.,  cen- 
tral standard  time,  and  at  points  in  the  western  division  prices 
shall  change  a.t  9 o’clock  A.  M.,  western  standard  time.” 

Q.  Do  you  know  anything  about  that  rule  or  regulation?  A. 
Only  as  we  received  it  as  factor. 


No.  40.] 


821 


Q.  You  received  it  as  factor  only?  A.  Yes,  sir;  I suppose  so: 
I have  no  definite  knowledge  of  that;  it  would  not  come  to  me. 

Q.  Did  your  association  in  soliciting  the  refiners  solicit  them 
to  fix  the  price  of  the  American  Sugar  Refining  Company’s  prod- 
uct as  the  standard  for  the  price  of  refined  sugar  throughout  the 
United  States  of  America?  A.  Our  association  has  had  nothing 
to  do  since  six  years  ago;  then  it  only  appertained  to>  New  York. 

Q.  But  you  say  that  you  acquiesced  in  this  revision  of  the  rules, 
terms  or  conditions  upon  which  the  refiners  do, business?  A.  As 
factors. 

Q.  Do  you  mean  to  say  that  it  was  not  your  association,  but 
you  as  individuals — you  and  your  associates — that  solicited  the 
refiners  of  this  country  to  fix  in  the  rules  and  regulations  estab- 
lished the  price  for  your  association  or  the  members  of  it — the 
price  of  the  American  Sugar  Refining  Company  as  the  standard 
whereby  all  refined  sugars  in  the  United  States  should  be  sold? 
A.  I have  had  nothing  to  do  with  the  matter  of  fixing  the  price 
or  making  any  arrangement  since  six  years  ago  last  June,  last 
May  or  June. 

Q.  Then  it  is  the  refiners  themselves  -who  have  caused  this  reg- 
ulation to  be  made?  A.  At  the  solicitation  of  these  grocers  from 
the  West  and  South. 

Q.  Do  you  mean  to  say,  Mr.  Smith — I am  asking  you  now  to  be 
deliberate  in  your  answer — that  the  grocers  of  the  West  and 
South  have  solicited  the  refineries  of  this  country  to  fix  the  price 
of  the  American  Sugar  Refining  Company’s  product  as  the  stand- 
ard "whereby  all  sugar  in  the  American  market  should  be  sold? 
A.  I have  no  knowdedge  "with  regard  to  refiners,  the  American 
Sugar  Refining  Company  as  separate  from  other  refineries. 


822  [Senate, 

Q.  They  are  all  connected?  A.  I have  not  been  in  their  office 
in  six  years. 

Q.  They  are  all  together  in  your  judgment?  A.  So  far  as  I 
know. 

Q.  All  work  upon  one  uniform  plan?  A.  We  buy  as  much 
from  one  firm  as  from  another. 

Q.  But  you  as  factor  under  a regulation  established  by  some 
unknown  power  fix  the  price  of  all  sugar  you  sell  in  the  market 
according  to  the  price  given  to  yon  by  the  American  Sugar  Be 
fining  Company?  A.  Our  brokers  telephone  it;  we  fix  it  as  tele- 
phoned to  us  by  brokers,  as  individuals. 

Q.  Do  you  fix  it  in  conformity  with  a uniform  plan  which  you 
say  you  receive  as  factor,  and  which  if  you  violate  you  lose  your 
commission?  A.  We  only  lose  our  commission  if  we  sell  under 
the  daily  price;  if  we  sell  for  less  than  we  pay;  we  sell  it  for  ex- 
actly what  we  pay  for  it;  we  sell  it  at  4|  and  get  a rebate  in  three 
months  and  ten  days. 

Q.  You  can’t  get  that  rebate  unless  you  make  an  affidavit  that 
you  have  compiled  with  the  rules  and  regulations  established? 
A.  We  cannot — no;  I beg  your  pardon — we  cannot  get  it  unless 
we  testify  that  we  have  not  sold  within  the  daily  price;  that  is 
the  only  difference  in  the  rules  or  regulations  that  I know  of;  and 
the  daily  price  is  given  to  us  by  the  broker  over  the  telephone. 

Q.  Do  you  mean  to  say,  then,  that  these  rules  stand  for  nothing 
except  upon  the  question  of  under-selling?  A.  Don’t  stand  for 
anything  so  far  as  I know. 

Q.  That  that  third  regulation  don’t  mean  anything?  A.  I 
have  no  knowledge  as  to  the  rules  whatever;  I don’t  know  as  I 
have  ever  seen  them. 

Q.  Have  you  not  testified  that  you  received  a copy  of  this  as 


No.  40.] 


823 


an  individual  factor?  A.  I have  not;  it  would  not  come  to  me; 
it  would  go  to  the  man  who  manages  the  sugar  business;  I have 
no  definite  knowledge  as  to  the  particular  instance. 

Q.  So  far*  as  you  are  concerned  in  your  business  you  make  no 
distinction  between  the  American  Sugar  Refining  Company’s 
goods,  McCahau  goods,  the  Mollenhauer  goods  or  the  goods  of  any 
other  sugar  refining  company  in  the  Union,  do  you?  A.  Only 
markets  open  are  the  American  Sugar  Refining  Company  and  the 
Mollenhauer  in  this  city;  we  make  no  difference;  we  buy  as  much 
from  one  as  from  the  other. 

Q.  And  you  pay  eactly  the  same  price  to  one  that  you  do  to  the 
other?  A.  I think  so;  although  I do  not  buy;  I know  nothing 
about  it. 

Q.  You  sell  upon  the  same  terms  and  conditions  with  reference 
to  the  one  concern  as  you  do  with  reference  to  the  other?  A. 

Yes,  sir. 

Q.  Same  discounts?  A.  Yes,  sir. 

Q.  Same  rebates?  A.  We  got  the  same  rebates. 

Q.  .Same  allowance?  A.  We  get  the  same  allowance. 

Q.  Same  credits?  A.  We  get  the  same  credits. 

Q.  Same  percentage  in  every  respect?  A.  Yes,  sir. 

Q.  There  is  absolutely  no  difference  between  one  or  the  other; 
it  is  uniform  in  the  entire  trade?  A.  Of  thousands  of  different 
articles;  we  have  no  agreement  or  contract;  if  we  get  1 per  cent, 
on  cash  on  butter,  cheese  and  flour  we  are  satisfied;  there  has 
never  been  any  arrangement  of  any  name  or  nature. 

Q.  It  was  so  before  this  agreement  system  was  established? 
A.  Yes,  sir. 

Q.  Didn’t  you  sav  that  it  was  so  ruinous  that  you  could  not 
make  ary  money  out  of  the  business,  and  hence  this  uniform  sys- 


824  [Senate, 

tem  and  plan  was  adopted?  It  has  not  always  been  the  case?  A. 
It  has  always  been  the  case  that  we  can  get  1 per  cent,  discount 
for  cash  in  ten  days;  it  has  been  so  for  a number  of  years;  this  has 
been  done  through  fierce  competition;  1 per  cent,  is  the  difference 
between  success  and  failure. 

Q.  The  product  of  the  Mollenhauer  concern  is  fixed  by  the  price 
of  the  product,  by  equality  rates,  of  the  American  Sugar  Refining 
Company?  A.  I have  no  knowledge  on  that  question. 

Q.  Isn’t  it  a fact,  Mr.  Smith?  A.  I suppose  that  the  prices  are 
the  same;  I never  bought  a cent’s  worth  in  my  life,  personally. 

Q.  Now  that  you  have  seen  this  code  of  rules  that  applies  to 
what  is  called  the  eastern  district  and  the  fixing  of  the  American 
price  as  the  standard  of  price  for  all  sugar  have  you  any  doubt 
that  the  factors  operating  under  this  agreement  fix  the  Mollen- 
hauer product  according  to  the  price  of  the  product  of  the  Ameri- 
can Sugar  Refining  Company?  A.  I have  no  knowledge  con- 
cerning it  whatever. 

Q.  You  do  it?  A.  Do  what? 

Q.  Fix  the  price?  A.  We  fix  the  price  as  telephoned  to  us  by 
our  brokers,  which  comes  about  9:30  or  10  o’clock;  the  price 

fixed  for  the  day. 

Q.  You  fix  the  price  in  conformity  with  the  system  of  rules 
adopted  to  guide  you  in  your  transaction  of  the  business  under 
the  factors’  agreement?  A.  The  only  question  by  which  we  are 
guided  is  to  maintain  the  price  telephoned  to  us  by  our  brokers; 
that  is  all  the  knowledge  that  I have. 

Q.  Have  you  a copy  of  the  agreement?  A.  No,  sir. 

Q.  I think  I can  show  you  one?  A.  I have  seen  them;  I saw 
them  when  they  were  first  promulgated. 


No.  40.] 


825 


Q.  Now,  Mr.  Smith,  I am  sorry  that  we  know  more  about  your 
business  than  you  do?  A.  That  is  not  wonderful  at  all,  sir. 

Q.  Just  look  at  this  agreement  and  state  whether  or  not  that  is 
the  general  plan  under  which  you  operate?  (Hands  witness  copy 
of  American  Sugar  Refining  Company’s  factors’  agreement.)  A. 
That  seems  to  be;  I have  not  seen  that  paper. 

Q.  How  many  conditions  are  mentioned  on  the  face  of  that 
plan  in  addition  to  the  simple  question  of  cost?  A.  Well,  first 
condition  discount  within  thirty  days;  that  has  always  been  the 
condition  of  all  sales  of  merchandise;  less  1 per  cent,  if  within 
seven  days;  that  is  the  second  condition;  “sugars  when  sold  billed 
in  your  name;”  that  we  have  always  done;  “that  we  are  to  pay  all 
expense  and  assume  all  risk;”  that  we  have  always  done.  Here  is 
the  only  one  that  affects  us:  “none  of  the  sugar  sold  or  disposed 
of  by  you,  either  directly  or  indirectly,  for  less  than  daily  quota- 
tions, with  freight  added,  as  per  quality  rate  book,  nor  on  more 
liberal  terms;”  that  is  the  only  rule  that  we  are  guided  by;  that  is 
all  there  is  on  that. 

Q.  Then  you  mean  to  say  that  this  third  rule  is  the  only  rule 
that  you  are  to  be  guided  by?  ‘A.  If  it  is  the  third  rule. 

Q.  Say  whether  it  is?  A.  It  is  the  rule  as  to  price,  so  far  as  I 

know.  ! 

Q.  The  third  rule?  Was  it  the  suggestion  of  the  Wholesale 
Grocers’  Association  thav  you  should  net  only  adhere  to  the  rules, 
but  that  in  order  to  be  certain  you  should  make  oath  and  file  a.n 
affidavit  showing  that  you  had?  A.  We  file  an  affidavit  at  the 
end  of  each  month  that  we  maintained  the  price. 

Q.  You  do?  A.  So  far  as  I know  I have  never  signed  one. 

Q.  Who  in  your  establishment  does?  A.  A Mr.  ; I may 

have  occasionally. 


826  [Senate, 

Q.  And  that  is  the  same  recollection  that  you  hare  with  refer- 
ence to  the  agreement;  that  all  that  you  swear  is  that  you  have 
maintained  the  price?  A.  Yes,  sir;  that  is  all  there  is,  so  far  as 
I know. 

Q.  Look  at  that  form  of  affidavit  and  state  whether  or  not  that 
is  the  form  of  affidavit  that  you  make?  (Witness  examines  pa- 
per.) A.  That  question  relates  to  the  price  at  which  it  is  sold. 

Q.  Is  that  the  form  of  affidavit  that  you  make?  A.  Yes,  sir. 

Q.  Doesn’t  this  affidavit  compel  you  to  swear  that  you  have 
complied  with  the  conditions  upon  which  the  sugar  was  consigned 
to  you?  A.  Yes,  sir;  those  conditions  were  then  subsequently 
stated. 

Q.  Do  you  mean  to  say  that  the  only  condition,  notwithstand- 
ing that  two  additional  conditions  are  mentioned,  is  the  condi- 
tion as  to  sale?  A.  The  usual  conditions  as  to  terms  of  payment; 
of  course  that  is  in  every  contract,  and  implied  in  all  our  pur- 
chases whether  it  is  or  not. 

Q.  You  have  heard  of  the  “equality  rate  book,”  have  you  not? 
A.  Yes,  sir. 

Q.  You  referred  to  it  in  that  affidavit;  you  refer  to  it  in  the 
affidavit  you  sign?  A.  My  business  does  not  use  the  equality 
rate  book;  I have  never  paid  any  attention  to  it. 

Q.  Do  you  mean  that  your  concern  has  signed  this  affidavit 
referred  to  in  the  equality  rate  book  which  contains  the  rules  and 
regulations  governing  factors  under  their  agreement  without 
knowing  its  contents?  A.  It  does  not  govern  our  house  in  the 
city;  the  equality  book  has  no  application  in  the  city;  it  lias  no 
reference  to  city  trade. 

Q.  Now,  did  the  wholesale,  grocers  solicit  the  sugar  refiners  to 
compel  them  to  make  an  affidavit  such  as  this?  A.  The  only  so- 


No.  40.] 


827 


licitation  that  the  wholesale  .grocers  made  was  six  years  ago, 
when  they  solicited  them  to  dictate  a limited  price  and  rebate 
system;  they  did  not  require  the  affidavit;  since  then  I have  had 

nothing  to  do  with  it. 

Q.  And  these  new  tangled  ideas  that  have  since  been  intro- 
duced are  not  the  result  of  your  work,  but  are  the  result  of  the 
work  of  the  sugar  refiners?  A.  Result  of  the  work  of  the  grocers 
from  the  West  and  South,  who  importuned  them  to  do  it,  Mr. 
Chairman;  let  me  explain  why;  they  would  handle  sugar  for  net 
cost;  we  found  that  ruin  stared  the  jobbers  and  grocers  in  the 
face;  we  went  to  the  American  Sugar  Refining  Company  and  asked 
them  for  relief;  we  went  there  six  times  and  spent  three  hours 
each  time  before  they  would  consent;  finally  they  said,  “We  will 
get  you  a list  of  the  customers  in  New  York  and  New  England 
and  the  nearby  towns  tributary,  and  if  you  will  get  95  per  cent, 
of  the  people  to  ask  for  what  you  ask  for,  if  they  agree  with  you, 
we  will  accord  you  those  terms;”  we  immediately  went  to  work 
and  got  99  per  cent,  of  the  grocers  in  New  England  and  New 
York,  Paterson,  Newark,  up  the  river  as  far  as  Poughkeepsie,  to 
ask  the  refiners  to  dictate  a rebate  system ; and  they  finally,  upon 
the  presentation  of  that  paper  said  they  would;  I will  explain 
further  why  the  change  was  made. 

Q.  Then  it  was  the  American  Sugar  Refining  Company  who 
handed  you  the  list  of  their  customers  and  authorized  you  to  get 
up  an  association  for  this  purpose?  A.  It  was  not  an  association  ; 
as  individuals. 

Q.  Individuals  agreeing  together  on  a certain  plan?  A.  Half 
of  these  customers  never  belonged  to  any  association  that  signed 
that  paper. 


828  [Senate, 

Q.  Then  there  were  those  outside  of  the  Wholesale  Grocers’ 
Association?  A.  All  of  their  customers. 

Q.  Your  people  went  to  all  of  their  customers  upon  the  list 
handed  you  by  the  American  Sugar  Refining  Company?  A.  Yes 
sir.  i 

Q.  You  secured  this  meeting  of  minds  upon  a definite  plain,  fix- 
ing a definite  price  and  definite  profits  on  the  sugar  trade  within 
your  association  district;  is  that  true?  A.  We  asked  them  to 
grant  what  we  called  a limited  price  and  rebate  in  some  form  in 
which  they  would  agree;  there  was  nothing  stated  as  to  what 
that  would  be;  we  merely  asked  them  for  protection. 

Q.  And  they  protected  you  by  enabling  you  to  form,  or  to 
bring  together  99  per  cent,  of  those  dealing  in  sugars,  to  come  in 
under  a uniform  plan  formulated  by  them,  the  refiners,  acqui- 
esced in  by  you;  is  that  right?  (Question  repeated.)  A.  We 
asked  them — 

Mr.  Lexow,  interrupting:  Is  that  right?  A.  That  ques- 
tion is  very  long  and  very  difficult. 

Q.  Question  repeated.  A.  No,  sir;  we  simply  asked  them  to 
dictate  some  form  of  rebate  and  limit  that  would  prevent  cutting 
in  this  territory;  I have  no  recollection  of  what  that  document 
was  whatever. 

Q.  You  permitted  them  arbitrarily  to  fix  the  price  of  sugar  for 
the  district  covered  by  your  jurisdiction?  A.  Price  under  which 
we  should  sell. 

Q.  Yes,  sir;  is  that  true?  A.  They  fixed  the  price  that  we 
should  sell  no  less  than  we  paid;  we  paid  41  cents;  we  were  sell- 
ing for  less  then.  j 

Q.  In  plain  English,  you  permitted  them  to  fix  what  the  price 
would  be  for  sugar  in  your  jurisdiction,  you  agreeing  to  sell  at 


No.  40.] 


829 


that  price  and  receive  the  profit  in  the  form  of  rebate  of  3-16?  A. 
The  sugar  was  sold  to  everybody  alike;  if  we  maintained  the 
price  we  were  entitled  to  a small  rebate;  sugar  is  sold  to-day  to 
everybody  on  earth  under  the  same  conditions  which  they  give  to 
those  whom  they  employ  to  distribute  their  goods,  which  entitles 
them  to  a certain  rebate. 

Q.  Do  you  mean  to  have  it  remain  on  the  record  that  through- 
out the  world  there  is  no  competition?  A.  If  there  is  no  compe- 
tition? ( 

Q.  If  it  is  sold  at  the  same  price  everywhere  throughout  the 
world  how  can  there  be  competition?  A.  We  don’t  extend  all 
over  the  world. 

Q.  Then  you  don’t  want  to  use  the  word  “world.”  A.  (An- 
swer repeated.) 

Q.  The  earth  is  about  as  large  as  the  world?  A.  That  was  a 
mistake;  I mean  in  this  territory. 

Q.  You  mean  in  the  United  States?  A.  All  that  I know  of  is 
the  territory  included  within  the  original  agreement. 

Q.  What  territory  was  that?  A.  New  York,  New  England, 
Long  Island,  Hudson  river  as  far  as  Poughkeepsie,  Paterson, 
Elizabeth;  that  was  six  years  ago. 

Q.  And  except  as  to  those  original  rules  have  been  revised  by 
the  sugar  refiners  they  apply  to  that  territory  to-day?  A.  The 

new  system  applies  to  the  factor  system ; the  factor  system  ap- 

* 

plies  now;  those  rules  are  gone. 

Q.  The  system  mentioned  in  this  document?  A.  In  the  agree- 
ment which  they  established. 

Q.  This  book?  A.  I suppose  so,  although  I am  not  familiar 
with  that  book;  I have  no  recollection  of  that  book;  will  you  al- 
low me  to  explain  why  these  men  demanded,  asked  for  a change? 


830  [Senate, 

Q.  We  will  have  someone  on  the  stand  to  explain  that.  A.  Can 
I explain  why  the  demand  was  made  for  this  change? 

Q.  Done  so  by  the  north  and  west?  A.  Right  here  in  New 
Y ork ; I know  why  it  was  demanded,  why  it  was  needed.  It  was 
needed  because  one  wholesale  grocer’s  broker  telephoned  that 
sugar  had  advanced;  he  immediately  got  the  telephone,  and  be- 
fore notice  was  received  by  his  competitors  he  had  sold  one  thou- 
sand barrels  of  sugar  at  an  advantage  over  the  rest  of  us. 

Q.  Before  the  telephone  message  came  that  sugar  had  de- 
clined? A.  It  was  just  the  same  then;  of  course,  there  was  no 
system;  that  was  the  time  of  competition;  there  was  no  rule  then. 

Q.  There  is  no  law  of  competition  that  has  not  been  repealed  by 
the  factors’  agreement?  A.  The  law  of  competition  in  one  sense; 
it  is  not  in  another  sense;  we  sell  at  a uniform  price. 

Q.  Therefore,  the  law  of  competition,  so  far  as  human  ingenuity 
could  devise  a plan  to  destroy  it,  has  been  successfully  destroyed 
under  this  factors’  plan;  that  is  true,  is  it  not?  A.  Under  the 
same  principle  that  a drowning  man  grasps  a straw. 

Q.  And  on  the  same  principle  applying  to  every  trade  in  the 
country,  a factor’s  system  of  this  description,  there  would  not  be 
a single  article  sold  in  the  open  markets  of  the  United  States  but 
that  a syndicate  would  fix  the  price  on  everything  from  a plough- 
share to  a twenty-five  story  building?  A.  If  all  the  goods  of 
uniform  quantity,  quality  and  price  were  left  to  competition  they 
would  be  sold  at  absolutely  net  cost  on  the  whole  trade  in  the 
United  States;  trade  would  be  absolutely  ruined  and  worse  pros- 
tration and  disaster  than  now  exists  would  soon  occur  all  over 
this  country. 

Q.  Why  has  that  not  been  the  case  for  the  last  eighteen  hun- 
dred years  of  the  Christian  era  prior  to  the  organization  of  these 


No.  40.] 


831 


syndicates  and  these  non-competitive  associations?  A.  Simply 
because  twenty-five  years  ago  there  was  not  5 per  cent,  of  all  the 
goods  sold  at  retail  that  were  of  uniform  quality,  quantity  and 
price;  at  that  time  there  were  goods  upon  which  a margin  could 
be  made;  a margin  was  always  maintained  on  sugar,  which  was 
sold  in  hogsheads;  now  I should  estimate  that  75  per  cent,  of  all 
goods  that  we  sell  are  of  uniform  quality,  price,  quantity  and 
cost ; and  the  price  of  the  one-hundredth,  the  other  ninety-nine, 
must  immediately  follow. 

Q.  A splendid  chance  for  the  consumer?  A.  The  consumer 
simply  has  to  remunerate  us  for  the  service  we  perform ; same  as 
I paid  the  five  cents  to  ride  in  the  cable  car ; and  the  consumer 
does  not  find  fault. 

Q.  Don’t  you  know  that  when  you  paid  five  cents  for  the  ride 
that  that  price  was  fixed  by  law,  and  the  State  assumed  to  con- 
trol and  regulate  the  price?  A.  Yes,  sir. 

Q.  Now,  do  you  not  say  that  under  a system  of  this  kind  the 
result  would  be  as  I indicated  in  my  former  question?  A.  I 
think- the  more  Congress  and  the  Legislatures  lets  business  alone 
the  better  for  the  entire  country,  the  entire  community,  the  mer- 
chants and  laboring  men,  whose  interests  are  the  same;  the  mer- 
chant and  the  laboring  man  are  one  and  inseparable;  and  any 
effort  to  restrict  the  channels  of  trade  will  result  disastrously  to 
all  three  classes. 

Q.  Admitted;  but  is  not  this  a restriction  of  the  channels  of 
trade  when  you  create  a cast  iron  anti-competitive  or  anti-opposi- 
tion agreement  covering  the  whole  United  States  of  America  on 
one  of  the  necessaries  of  life?  Is  there  or  was  there  ever  any 
greater  restriction  conceived  of  by  man  than  this?  A.  I have  no 
knowledge  of  what  restrictions  were  conceived  of. 


832  [Senate, 

Q.  How  about  coffee;  have  you  any  factors’  agreement?  A. 
We  don’t  handle  any  coffee  of  that  kind. 

Q.  You  don’t  handle  the  Arbuckle  brands?  A.  I am  very 
thankful  to  say  we  don't;  if  that  particular  Arbuckle  brand  be- 
comes popular  the  last  solvent  wholesale  grocer  will  soon  be 
seen;  it  will  not  become  popular,  because  it  is  inferior  goods;  peo- 
ple want  the  best  goods. 

Q.  Do  you  say  that  the  Wholesale  Grocers’  Association  has 
taken  no  action  on  coffee?  A.  On  anything. 

Q.  On  sugar?  A.  Not  in  the  seven  years  that  I have  named  of 
any  name  or  nature;  I have  no  recollection. 

Q.  Nor  on  soda?  A.  No,  sir;  not  to  my  knowledge. 

Q.  It  has  been  admitted  on  the  stand  that  the  Wholesale  Gro- 
cers’ Association,  operating  through  factors’  agreements  for  the 
benefit  of  Church  & Dwight,  control  substantially  the  package 
soda  business  of  the  State;  was  that  testimony  true  or  false?  A. 
I only  know  that  our  association  had  nothing  to  do  with  it. 

Q.  It  is  with  special  reference  to  your  association?  A.  You 
are  mistaken. 

Q.  It  is  with  reference  to  the  State  of  New  Jersey  and  New 
Jersey  is  under  your  system;  it  is  charged  one  cent  more  than 
any  other  State  in  the  United  States?  A.  I am  very  sure  that 
our  association  have  never  taken  any  action ; never  appointed  any 
committee  in  relation  to  the  subject;  if  there  has  I have  no  knowl- 
edge. 

Q.  Isn’t  the  Wholesale  Grocers’  Association  simply  the  tail  to 
the  kite  of  the  American  Sugar  Refining  Company?  A.  No,  sir; 
in  no  sense. 

Q.  In  its  interest?  A.  So  far  as  I know  the  Wholesale  Grocers’ 
Association  has  nothing  to  do  with  the  sugar  refining  business  or 
with  the  price  as  sent  out  in  the  notices. 


No.  40.] 


833 


Q.  How  do  you  make  that  square  with  the  statement  on  the 
back  of  this  code  of  rules  revised  and  approved  by  the  sugar  re- 
finers? A.  I have  no  recollection  of  that  pamphlet. 

Q.  You  have  no  doubt  about  its  authenticity?  A.  Who  wrote 
it  and  who  prepared  it,  I have  no  knowledge  whatever. 

Q.  Can’t  you,  as  President  of  the  association  so  largely  inter- 
ested in  this  question,  make  a guess?  A.  No,  sir;  I could  not 
intelligently;  I have  no  knowledge;  I am  not  a good  guesser. 

Q.  Mr.  Walker,  Treasurer  of  the  Church  & Dwight  Company, 
swore  under  oath  on  the  stand  here  that  the  Wholesale  Grocers’ 
Association  coerced  their  company  into  the  making  of  these  fac- 
tors’ agreements;  do  you  mean  to  state,  as  President  of  that  asso- 
ciation, Mr.  Smith,  that  Mr.  Walker  was  mistaken  when  he  made 
that  statement?  A.  I think  he  was  if  it  relates  to  our  associa- 
tion. 

Q.  It  does?  A.  He  is  mistaken;  some  of  the  individuals  may 
have;  nothing  has  been  done  in  that  association,  as  I have  never 
appointed  a committee. 

Q.  What  have  you  appointed  a committee  to  do?  A.  I have 
not  appointed  a committee  in  six  years  to  do  anything. 

Q.  Was  it  then  at  your  own  instance  that  you  were  examined  in 
Washington  on  the  sugar  schedules?  A.  Never  was. 

Q.  WTere  you  not  there?  A.  I have  no  recollection;  I have 
been  there  so  many  times  on  so  many  questions. 

Q.  Were  you  not  examined  with  reference  to  sugar  within  the 
last  year?  A.  No,  sir;  I am  absolutely  certain. 

Q.  Somebody  bearing  the  same  name?  A.  I was  there  last 
month  to  attend  the  National  Board  of  Trade  meeting. 

Q.  Was  any  committee  appointed  by  your  association?  A. 

No,  sir;  we  have  not  had  the  sugar  question  under  consideration 
53 


834  [Senate, 

in  our  association  in  six  years,  in  a meeting  of  any  kind  or  de- 
scription that  I am  aware  of. 

Q.  You  wish  to  be  understood,  do  you,  that  you  were  operating 
as  you  understood  under  the  original  rules,  except  as  they  might 
be  revised  or  amended  by  the  sugar  refiners?  A.  I understood 
that  the  sugar  refiners  simply  dealt  with  us  as  individuals  and 
not  as  an  association ; the  association  has  not  amounted  to  much 
for  a great  while. 

Q.  It  has  not?  A.  No,  sir;  cannot  get  an  attendance  together 
in  the  city. 

Q.  Do  you  report  to  the  American  Sugar  Refining  Company, 
or  any  other  refiners,  violations  of  this  so-called  factors’  agree- 
ment ? A.  I have  no  knowledge  of  any  reports ; no  knowledge  of 
any  violations. 

Q.  Have  you  ever  reported  violations?  A.  Not  under  the 
factors’  agreement;  no  m 

Q.  Has  the  Wholesale  Grocers’  Association  ever  called  the  at- 
tention of  the  refiners  to  any  violation  of  agreements,  factors’ 
agreements?  A.  I have  no  knowledge  of  any. 

Q.  Would  you  know  if  the  Wholesale  Grocers’  Association  had 
called  the  attention  of  refiners  to  the  violation  of  the  factors’ 
agreement?  A.  I wouldn’t  know  if  anybody  had  written  a letter 
or  called  attention;  I know  there  has  been  no  action  of  the  asso- 
ciation of  that  nature. 

Q.  Then,  if  it  has  been  testified  to  here  that  suspensions  of  fac- 
tor*5 agreements  have  been  had  at  the  instance  of  the  Wholesale 
Grocers’  Association  that  testimony  is  not  true?  A.  I don’t 
know  anything  about  it. 

Q.  You  would  know  if  it  ever  occurred?  A.  If  it  occurred  a a 


an  official  act. 


No.  40.]  ( 835 

Q.  I am  talking  about  that.  A.  There  has  been  no  action  of  the 
association  in  many  years  except  to  elect  officers  and  have  a din- 
ner; once  in  two  years  we  have  had  a dinner;  we  have  had  no  ex- 
ecutive committee  meeting  in  more  than  a year;  can’t  get  a quo- 
rum. 

Q.  Isn’t  it  true  that  the  American  Sugar  Refining  Company 
has  adopted  for  its  plan  a system  of  destroying  direct  sales  to 
retailers?  A.  No,  sir;  not  to  my  knowledge. 

Q.  That  it  refuses  to  sell  to  the  retailer?  A.  I am  sure  that  it 
does  not  refuse  to  sell  to  the  retailer. 

Q.  Do  you  know  that  is  a fact?  A.  I know  a large  number  of 
retailers  who  are  regular  buyers. 

Q.  They  refuse  to  sell  to  those  who  deal  in  foreign  sugars?  A. 
No,  sir;  it  does  not. 

Q.  Do  you  state  that  as  a fact?  A.  To  my  knowledge. 

Q.  What  is  your  knowledge?  A.  There  has  never  been  a word 
said  about  it;  we  can  buy  all  the  foreign  sugar  we  wish. 

Q.  Do  you  ? A.  It  is  unprofitable. 

Q.  Do  you?  A.  We  have  never  wanted  to. 

Q.  Isn’t  it  a fact  that  you  could  undersell  that  company  about 
a half  a cent  per  pound  if  you  did  thereby  vitiate  your  factors’ 
agreement;  and  if  you  did  so  you  would  receive  no  more  sugar 
from  that  company?  A.  I have  never  heard  a word  from  the  re- 
fining company  that  would  prevent  us  from  buying  all  foreign 
sugars,  either  here  or  in  Europe,  that  we  desired  to  buy. 

Q.  Isn’t  there  an  understanding  with  the  wholesale  grocers 
that  they  shall  not  buy?  A.  I never  heard  of  such  an  under- 
standing. 

Q.  Do  they  as  a fact?  A.  I don’t  know. 


836  [Senate, 

Q.  Don’t  you  know  as  a fact  that  they  do  not  deal  in  a ton  of 
foreign  sugar?  A.  I know  that  we  don’t. 

Q.  Does  anybody  who  operates  under  this  factor’s  system  as- 
sume to  sell  a single  pound  of  sugar  outside  of  those  contained  in 
the  pool,  the  price  of  which  is  not  fixed  by  the  American  Sugar 
Refining  Company?  A.  I would  have  no  means  of  knowing. 

Q.  Do  you  know?  A.  I do  not  know. 

Q.  Do  you  not  know  that  the  American  Sugar  Refining  Com- 
pany has  withdrawn  its  factors’  agreements  from  those  operating 
under  that  agreement  who  have  assumed  to  sell  at  retail  at  some 
time?  A.  No,  sir;  a large  number  of  retailers  have  factors’ agree- 
ments or  buy  their  sugar;  I can  name  a large  number. 

Q In  lots  of  less  than  100  barrels?  A.  They  don’t  sell  lots 
less  than  that  and  never  did. 

Q.  You  don’t  know  of  any  one  who  deals  in  lots  of  less  than  100 
barrels?  A.  I don’t  think  we  could  buy  99  barrels;  that  is  my 
judgment. 

By  Mr.  McCarren: 

Q.  You  mean  to  get  the  rebate,  the  percentage?  A.  At  any 
price,  so  far  as  my  knowledge  goes. 

Q.  Could  you  buy  25  barrels?  A.  I am  not  certain;  my  im- 
pression is  that  we  could  not  buy  less  than  100. 

By  Mr.  Lexow: 

Q.  You  say  that  you  sell  the  Mollenhauer  sugar?  A.  Yes,  sir. 

Q.  Do  you  do  that  under  a factor’s  agreement?  A.  Yes,  sir. 

Q.  In  words  and  figures  the  same  as  that  signed  by  you  in  your 
transactions  with  the  American  Sugar  Refining  Company?  A. 
I have  never  compared  them,  but  they  seem  to'  be  the  same. 


No.  40.] 


837 


Q.  Exactly  the  same?  A.  I don’t  know ; they  employ  the  same 
rules  without  doubt. 

Q.  You  make  the  same  affidavit?  A.  Yes,  sir. 

Q.  Now,  you  say  that  the  sale  of  sugar  is  absolutely  indispens- 
able to  the  prosecution  of  a successful  jobbing  business?  A.  I 
believe  so,  sir. 

Q.  Have  you  not  stated  that  that  was  absolutely  true?  A.  In 
my  judgment;  I never  knew  a wholesale  grocers  house  that  didn’t 
deal  that  way;  I should  think  it  would  be  business  paralysis  to 
give  up  sugar., 

Q.  Hence,  the  making  or  unmaking  of  a jobber  in  the  United 
States  depends  entirely  upon  whether  or  not  that  jobber  secures 
a factor’s  agreement  from  the  American  Sugar  Refining  Com- 
pany or  its  allies;  is  that  true?  A.  The  making  and  unmaking 
depends  upon  whether  he  can  get  a profit  on  sugar. 

Q.  He  cannot  get  it  unless  he  can  be  received  in  good  order  by 
the  American  Sugar  Refining  Company  and  its  allies  in  this  coun- 
try? A.  He  cannot  secure  it  except  by  the  aid  of  the  refiners. 

Q.  I put  the  question  to  you  directly;  therefore  the  making  or 
destruction  of  a grocer  in  the  wholesale  business  in  the  United 
States  depends  upon  the  arbitrary  decision  of  the  American  Su- 
gar Refining  Company  or  its  allies?  A.  The  destruction  of  the 
wholesale  grocer  depends  upon  whether  he  is  left  to  the  laws  of 
fierce  competition  for  existence;  it  is  the  business  of  the  Ameri- 
can Sugar  Refining  Company  and  all  owners  of  100  or  more  sta- 
ple articles  to  come  to  the  rescue  of  the  grocers  by  giving  to  us 
the  aid  of  a rebate  system;  the  destruction  does  not  depend  upon 
the  refiners  nor  upon  the  owners  of  soap,  milk  nor  starch;  that  is 
what  prevents  destruction ; they  have  come  to  our  aid  very  gen- 
erously and  said  if  you  will  help  to  handle  our  staple  goods  we 


838  [Senate, 

will  help  you  to  obtain  a reasonable  margin  of  profit;  and  most 
of  the  margins  we  get  are  less  than  the  actual  cost  of  doing  the 
business;  for  instance,  on  Royal  Baking  Powder  we  get  a percent- 
age on  the  cost  of  doing  business. 

Mr.  Lexow:  The  stenographer  will  please  repeat  the  question. 

(Question  repeated.) 

Q.  In  the  granting  or  withholding  of  a factor’s  agreement?  A. 
The  law  of  competition — 

Mr.  Lexow  (interrupting) : Now,  that  is  a fair  question.  (Ques- 
tion repeated.)  That  is  a fair  question,  is  it  not — that  is  true,  is 
it  not?  A.  The  only  power  that  can  rescue  the  wholesale  grocers 
from  destruction  is  that  of  the  sugar  refiners  of  America;  there 
are  two  classes  of  grocers;  the  one  whoi  has  a large  importing 
business;  I mean  the  dealer  in  staple  goods  who  buys  and  sells 
staple  goods;  there  are  large  institutions  that  are  great  import- 
ers; they  handle  mostly  imported  goods;  but  the  dealer  in  staple 
goods,  so  far  as  my  40  years  experience  in  the  business  enables 
me  to  judge,  must  have  the  profit  on  sugar  in  order  to  maintain 
his  business  at  the  ratio  of  1 per  cent,  net  profit;  without  that  he 
cannot  maintain  himself. 

Q.  I will  put  the  question  so  simply  that  yon  cannot  avoid  the 
conclusion;  therefore,  the  making  or  unmaking  of  a wholesale 
grocer  depends  upon  whether  the  sugar  refiners  operating  under 
this  factor’s  system  grant  him  or  refuse  to  grant  him  this  factor’s 
agreement?  A.  I cannot  answer  “yes”  or  “no;”  is  is  impossible 
without  making  an  explanation;  the  unmaking  of  a wholesale 
grocer  is  a question  entirely  without  the  control  of  the  sugar  re- 
finers; the  making  of  him  is  largely  within  their  control. 

Q.  I will  put  the  question  this  way:  If  a wholesale  grocer, 
operating  under  a factor’s  agreement  for  the  sale  of  sugar,  is 


No.  40.] 


839 


compelled  to  surrender  that  agreement;  that  factor's  agreement 
does  not  destroy  him  as  a business  man?  A.  He  would  find  it 
pretty  hard  sliding  to  get  along. 

Q.  As  competing  with  those  who  are  permitted  to  operate  un- 
der factors’  agreements  it  means  his  financial  destruction?  A. 
It  means  certain  financial  loss;  I could  not  say  destruction;  that 
depends  upon  his  financial  condition  and  the  capacity  of  the  man. 

Q.  You  have  stated  that  a man  must  handle  sugar  in  order  to 
do  a profitable  business,  and  that  business  could  not  be  conducted 
without  this  3-16  rebate  is  paid;  now,  I ask  you  whether  a man 
not  operating  as  a factor  in  the  wholesale  grocery  business  can 
do  a profitable  business?  A.  He  would  be  put  to  a great  disad- 
vantage in  competition  with  his  competitors;  that  is  the  most  I 
can  say. 

By  Mr.  McCarren: 

Q.  Suppose  the  wholesale  grocers  of  the  State,  individually  or 
collectively,  requested  the  American  Sugar  Refining  Company  to 
cancel  all  the  agreements  now  in  existence  between  the  wholesale 
grocers  and  the  American  Sugar  Refining  Company,  doyou think 
the  American  Sugar  Refining  Comany  would  cancel  them?  A.  I 
think  they  would  be  delighted  to  cancel  them,  as  it  involves  an 
enormous  amount  of  work;  the  only  motive  that  led  them  to  as- 
sume this  enormous  amount  of  work  was  this,  they  have  a large 
amount  of  money  in  accounts  receivable  of  wholesale  grocers — 
very  large — and  they  should  maintain  the  wholesale  grocers  in  a 
solvent  condition ; if  they  didn’t  they  would  have  a very  large 
amount  of  loss  in  accounts  receivable;  that  is  the  only  motive  we 
ever  presented  to  them. 

Q.  In  other  words,  did  the  wholesale  grocers  request  the  can- 


840  [Senate, 

collation  of  agreements  now  existing  between  the  refiners  and  the 
wholesale  grocers,  in  any  event,  every  grocer  would  be  a factor 
provided  he  had  sufficient  financial  standing;  suppose  that  the 
agreements  were  all  cancelled  would  not  every  grocer,  wholesale 
or  retail,  in  the  United  States  be,  so  to  speak,  a factor,  provided 
the  American  Sugar  Refining  Company  thought  he  had  sufficient 
financial  responsibility?  A.  If  the  factor  plan  was  withdrawn. 

Q.  Yes,  sir.  A.  If  that  was  withdrawn  there  would  not  be  any 
factor;  we  would  be  fighting  each  other  for  the  business;  and 
having — 

Mr.  Mazet,  interrupting:  And  each  grocer  could  make  the  best 
terms  possible  with  the  company  from  which  he  was  buying 
goods?  A.  That  would  make  a uniform  price  and  we  would  sell 
the  goods  for  cost. 

Q.  Was  there  a uniform  price  before  this  system  was  intro- 
duced? A.  Always. 

Q.  How  do  you  apply  this  rule  of  uuiversal  price  of  sugar; 
so  far  as  I know  there  is  no  such  regulation  in  clothing;  yet,  the 
clothiers  seem  to  be  getting  along,  and  they  are  not  all  being 
ruined  or  driven  out  of  the  business;  and  if  that  is  the  case,  why 
should  not  your  rule  apply  to  all  industries  of  the  kind  I have  in- 
dicated? A.  For  the  simple  reason  nobody  can  tell  within  5,  10 
or  15  per  cent,  of  the  actual  cost  of  a suit  of  clothes;  nobody 
could  tell  except  an  expert;  not  being  a retail  clothier,  I could 
not  tell;  therefore,  there  is  always  room  for  a margin;  every  re- 
tail grocer  looks  in  the  paper  the  first  thing  in  the  morning  and 
he  knows  the  price  of  sugar. 

Q.  Isn’t  that  because  it  is  fixed  and  published;  it  is  fixed  each 
day  by  the  refiners?  A.  They  read  it  in  the  paper. 


No.  40.] 


841 


Q.  Don’t  they  fix  it  from  the  figures  that  are  given  out  by  the 
refiners?  A.  Same  as  every  article  on  earth. 

Q.  Precisely;  you  take  the  current  quotations?  A.  They  have 
the  market  quotations. 

Q.  Well,  people  who  handle  other  other  classes  of  goods,  the 
prices  of  which  are  published  in  the  newspapers,  seem  to  be  pros- 
perous without  any  such  agreement?  A.  Simply,  because  two 
cargoes  of  oats  or  wheat  are  not  of  the  same  value;  they  have  a 
fluctuating  value  and  varying  quotations. 

Q.  That  is  begging  the  question;  they  fluctuate  because  there 
is  no  fixed  standard?  A.  Granulated  sugar  is  granulated  sugar 
in  dollars  and  cents. 

Q.  And  an  oat  is  an  oat?  A.  No,  sir;  oats  are  worth  from  80 
to  40  cents. 

Q.  Well,  the  same  quality  of  oats,  the  same  standard  or  brand ; 
or  wheat  or  rye?  A.  There  are  certain  brands  that  are  well 
known;  there  are  now  two  brands  that  have  a regular  standard 
value,  the  price  of  each  one  is  fixed;  on  each  one  separate,  you  can 
make  a little  money;  you  can  make  a little  money  on  flour,  be- 
cause nobody  knows  exactly  the  value;  but  you  take  granulated 
sugar  and  it  is  dollars  and  cents;  everybody  knowrs  to  a fraction 
what  it  is  worth;  when  the  duty  was  taken  off  of  sugar  it  declined 
from  21  to  14  in  one  night;  in  order  to  obviate  that  sugar  was 
manufactured  in  bond  and  sold  in  bond;  it  was  kept  in  the  cus- 
tom house  until  the  morning  of  the  first  day  of  April;  we  bought 
sugar  in  bond  and  sold  in  bond,  at  41  net  to  get  4|  on  the  whole 
trade;  finally,  the  one  hundredth  man  offered  sugar  for  4i,  and 
result  was  that  thousands  of  tons  of  sugar  were  sold  in  New 
York  city  at  41  because  the  one  hundredth  man  wanted  to  get 
the  best  of  the  rest  of  us  that  is  the  principle  of  competition;  we 


842  [Senatb, 

were  compelled  to  store  sugar  and  pay  storage  upon  it  and  then 
sell  it  absolute  net  cost,  4A,  under  the  laws  of  the  one  hundredth 

man. 

By  Mr.  McCarren: 

Q.  Do  you  know  what  the  practice  of  the  refiners  was  prior  to 
the  Wholesale  Grocers’  agreement  with  them;  that  is  to  say, 
with  reference  to  the  selling  of  sugar;  was  there  any  variation  in 
the  price  between  the  grocers  that  purchased  from  the  American 
Sugar  Refining  Company;  did  the  refiners  make  any  difference  in 
price?  A.  Perhaps  for  very  large  quantities  they  made  conces- 
sions that  is  done  in  nearly  all  businesses;  but  I think  there  was 
uniformity  of  price  before  the  formation  of  the  so-called  associa- 
tion; you  could  go  into  Wall  Street  and  they  would  all  make  their 
own  price. 

By  Mr.  Lexow: 

Q.  That  was  considered  a terrible  condition  of  trade?  A. 
There  was  no  time  that  he  sold  a barrel  of  sugar  that  he  lost  less 
than  half  a dollar;  Mr.  Harrison,  of  Harrison  & Frazier,  of  Phila- 
delphia, told  me  that  there  was  no  time  that  he  had  manufac- 
tured a barrel  of  sugar  that  he  had  not  lost  half  a dollar;  that 
was  told  to  me  by  either  Mr.  Harrison  or  Mr.  Frazier  eight  years 
ago. 

Q.  Don’t  you  know  whether  the  American  and  other  refiners 
have  refused  to  sell  sugar  to  wholesale  grocers  unless  under  a 
factors'  agreement?  A.  No,  sir;  only  as  a matter  of  credit. 

Q.  Was  there  any  reason  then  other  than  the  suspicion  of 
credit,  in  your  judgment,  tlmt  would  prevent  the  making  of  an 
agreement  between  the  refiner  and  the  grocer  applying  for  that 
agreement?  A.  No  other. 


No.  40.] 


843 


By  Mr.  Mazet: 

Q.  Was  there  not  another  reason  that  they  would  not  sell 
under  a certain  number  of  barrels?  A.  They  sell  in  100  barrel 
lots,  but  maybe  they  sell  25  barrels  at  higher  prices;  we  have 
never  bought  in  small  quantities;  I have  an  impression  that  they 
never  sell  less  than  100  barrels;  they  used  to  wrhen  the  competi- 
tion was  fierce. 

S 

By  Mr.  McCarren: 

Q.  In  buying  your  soap  or  canned  goods  or  butter  what  is  your 
practice  in  dealing  with  the  person  from  whom  you  buy?  A.  In 
what  way? 

Q.  With  reference  to  the  time  in  -which  to  pay,  with  reference 
to  discount  or  rebate  or  elements  of  trade  that  enter  into  your 
negotiations?  A.  Almost  every  article,  everything  that  is 
bought  on  Monday  is  paid  for  on  the  next  Monday. 

Q.  As  to  uniformity  in  the  price,  is  there  any  difference  in  the 
price  of  the  same  grade  of  butter?  A.  I am  not  a butter  buyer. 

Q;  Is  there  any  difference  in  the  same  grade;  isn’t  most  of  it 
sold  on  a limited  price  system?  A.  Uniform  price — limited 
price. 

Q.  What  do  you  mean  by  limited?  A.  Rebate  for  maintaining 
the  price. 

Q.  Does  that  involve  a uniformity  of  price?  A.  That  is  abso- 
lute; we  have  over  60  different  articles  of  manufacture  sold  on 
limited  price. 

By  Mr.  Barry: 

Q.  As  the  result  of  combinations?  A.  If  a man  wants  us  to 
handle  his  goods  we  will  do  so  at  a slight  profit. 


844 


[Senate, 


By  Mr.  McCarren: 

Q.  So  that  practically  in  buying  your  soap  or  other  articles  a 
factor’s  agreement  is  substantially  in  existence,  although  no 
agreement  is  entered  into?  A.  No  word  or  agreement;  we  send 
our  theck  and  take  out  our  profit;  no  word  or  agreement  of  any 
kind  in  existence;  they  simply  say  to  us,  you  take  our  goods  and 
we  will  allow  you  the  profit  if  you  make  no  reduction. 

Q.  No  written  agreement?  A.  No,  sir. 

By  Mr.  Mazet: 

Q.  You  said  a moment  ago  that  the  grocers  have  been  edu- 
cated to  demand  these  terms?  A.  Yes,  sir. 

Q.  This  limited  price  system;  that  would  simply  corroborate 
Mr.  Walker,  who  said  that  his  company  was  coerced  into  making 
this  agreement?  A.  By  individual  grocers. 

Q.  You  make  the  distinction  that  it  is  not  done  by  the  Whole- 
sale Grocers’ Association?  A.  Simply  as  individuals. 

Q.  So,  that,  to  a considerable  extent,  manufacturers  are  under 
the  domination  of  the  association,  not  as  an  association,  but  as  in- 
dividuals? A.  They  are  not  under  domination  in  any  sense;  if 
they  want  to  avail  themselves  of  the  use  of  our  plan  for  the  dis- 
tribution of  their  goods  and  we  want  to  sell  them  there  is  no 
domination ; we  have  60  different  articles  and  there  are  no  rules. 

Q.  But  you  expect  them  to  fix  a price  and  you  maintain  it;  you 
compel  them  to  fix  a price?  A.  No,  sir;  we  don’t  compel;  we  sim- 
ply say  that  we  don’t  want  to  handle  the  goods. 

Q.  That  is  another  way  of  doing  the  same  thing?  A.  Well, 
possibly;  they  didn’t  compel  me  to  ride  on  the  cable  car,  but  I did 
and  paid  them  five  cents. 


No.  40.] 


845 


By  Mr.  McCarren : 

Q.  Then,  the  action  on  the  part  of  individuals,  or  wholesale 
grocers,  in  importuning  the  Sugar  Refining  Company  to  make 
this  agreement  by  which  you  are  not  permitted  to  sell  under  the 
daily  quotations,  was,  in  other  words,  a request  on  your  part  to 
save  you  from  yourselves?  A.  That  is  it  exactly;  to  save  us  from 
the  law  that  enables  the  one-hundredth  man  to  fix  a price  at 
which  the  other  99  must  sell ; nobody  will  pay  more  than  the  list 
price  named  by  any  man  in  the  trade. 

By  Mr.  Barry: 

Q.  Would  yon  consider  those  factors’  agreements  necessary  if 
there  were  50  different  refiners  in  the  United  States?  A.  I don’t 
think  that  would  be  possible  if  there  was  another  refiner;  if  the 
Arbuckles  build  a refinery  it  will  put  an  end  to  the  whole  busi- 
ness; I never  supposed  it  would  last  three  months  when  it  com- 
menced; do  not  suppose  now  it  will  last  three  months. 

By  Mr.  Lexow: 

Q.  Why  then  have  Mollenhauer’s  lasted?  A.  Simply  because, 
as  Mr.  Harrison  says,  we  follow  the  “trust.” 

Q.  Because  they  have  an  agreement  between  themselves?  A. 
No,  sir;  Mr.  Harrison  or  Mr.  Frazier,  I don’t  remember  which, 
said,  “before  the  Trust  was  formed  we  lost  half  a dollar;  but 
while  we  are  opposed  to  trusts,  since  then  we  make  about  70 
cents  by  following  their  price  and  we  are  making  money”;  that 
is  what  one  of  those  gentlemen  told  me. 

By  Mr.  McCarren: 

Q.  Why  would  the  erection  of  a sugar  refinery  by  Arbuckle 
prevent  the  operation  of  an  agreement?  A.  Because  Arbuckle 
would  cut  the  price. 


846  [Senate, 

Q.  And  thefactorswouldceasetodeal  with  the  American  Sugar 
Refining  Company?  A.  They  would  buy  where  they  could  get  it 

the  cheapest;  he  would  be  the  one  hundredth  man  and  set  the 
price  for  America;  the  business  is  entirely  open  and  free  to  any- 
body that  wants  to  put  capital  into  it. 

Mr.  Mazet:  And  willing  to  hazard  it? 

Q.  According  to  your  theory  the  one  hundredth  man  could  fix 
the  price  of  any  kind  of  product,  even  drugs?  A.  No,  sir;  that 
is  not  of  uniform  quality;  but  take  Royal  Baking  Powder,  and 
the  one  hundredth  man  can  fix  the  price  for  which  it  is  sold  in 
the  territory  around  New  York;  he  could  not  in  drugs  or  in  but- 
ter, or  in  flour,  except  some  standard  brands  that  have  a large 
sale;  take  an  article  like  Babbitt's  soap,  and  he  can  absolutely  fix 
the  price. 

By  Mr.  Lexow: 

Q.  Mr.  Smith,  is  it  not  true  that  all  future  competition  in  the 
sugar  business  is  practically  removed  by  the  system  of  factors’ 
agreements  and  the  fear  of  factors  that  they  will  not  be  able  to 
recover  a lost  agreement  of  the  present  sugar  syndicate  if  they 
should  buy  from  a new  concern?  A.  I don’t  see  how  the  element 
of  fear  enters  into  it;  there  is  no  fear  about  it. 

Q.  The  larger  the  syndicate  that  controls  the  sugar  system  the 
greater  the  ability  to  buy  up  any  competing  concerns  and  retain 
that  control;  isn’t  that  true?  A.  Under  this  system  every  whole- 
sale dealer  can  sell  sugar  and  buy  it  on  equal  terms  with  the 
very  largest  house  in  the  trade;  a great  house  that  overshadows 
the  rest  of  us  has  no  superiority  over  us  in  the  sugar  line;  it  buys 
on  an  exact  equal  basis. 

Q.  You  must  always  provide  that  the  smaller  house  refrains 


No.  40.]  847 

from  competition  by  adopting  the  price  set  through  the  factors 
by  the  larger  house?  A.  The  price  is  set  by  the  refiners;  we 
don’t  make  any  price. 

Q.  I am  speaking  of  refiners;  I am  speaking  of  sales  to  you  or 
through  brokers?  A.  They  all  pay  the  same  price. 

Q.  And  whether  Tom,  Dick  or  Harry  sells  to  you,  or  whether 
you  get  it  directly  from  the  American  Sugar  Refining  Company, 
or  through  the  medium  of  an  intermediary,  you  are  bound  under 
your  factors’  agreement  to  sell  that  sugar  at  the  price  fixed  from 
day  to  day  by  the  American  Sugar  Refining  Company?  A.  We 
do;  it  is  all  one  price. 

Q.  In  this  way  you  are  able  to  and  are  building  up  an  instru- 
ment for  the  perpetuation  of  a substantial  monopoly  in  the  hands 
of  the  present  sugar  refining  company?  A.  No,  sir;  for  the  rea- 
son that  it  is  open  to  all  capitalists  to  enter  into  the  business; 
they  can  be  broken  up  in  three  months. 

Q.  Is  it  not  true  that  fear  of  the  factors  violating  this  factors’ 
agreement,  which  you  say  is  the  basis  of  successful  business,  is 
the  thing  which  deters  him  from  giving  any  recognition  to  a com- 
peting concern?  A.  I don’t  know  as  I understand  you.  (Ques- 
tion repeated).  A.  There  is  no  element  of  fear  in  it. 

Q.  The  fear  that  the  factors’  agreement  will  be  withdrawn 
from  him  by  the  syndicate  which  now  controls  100  per  cent,  of  the 
entire  sugar  output?  A.  That  would  be  all;  one  syndicate  con- 
trols— 

Mr.  Lexow,  interrupting:  You  have  so  testified?  A.  I have 
not  testified  to  that. 

Q.  You  have  testified  that  the  American  sets  the  price  and 
that  there  is  no  competition  between  the  price  of  refiners?  A.  I 
said  the  refiners  of  the  Atlantic  coast;  when  I speak  of  the  re- 


848  [Senate, 

flners  I mean  the  refiners  of  the  Atlantic  coast;  sometimes  they 
are  so  large  that  they  overshadow  the  rest — I mean  four  refiners. 

Q.  They  are  so  large  that  they  overshadow  all  others;  is  it  not 
true  that  you  are  lending  yourself  as  an  instrument  by  the  estab- 
lishment of  this  factor  system  to  perpetuate  that  monopoly?  A. 
No,  sir;  not  in  any  sense;  the  Mollenhauer  institution  has  come 
since  we  have  had  the  rebate  system;  they  built  their  refinery  and 
built  another  in  Yonkers — I think  it  belongs  to  them;  there  are 
two  more  in  operation  in  Philadelphia — independent  refineries. 

Q.  Since  when?  A.  Since  the  first  agreement. 

Q.  How  many  have  gone  out  of  existence?  A.  None,  except 
they  have  been  bought  out. 

Q.  Bought  out  and  closed  A.  I think  none  since  then;  there 
is  the  Revere  in  Boston. 

Q.  Don’t  you  know  that  the  Franklin  Refinery  is  out  of  blast; 
that  was  since  then;  it  is  only  six  months;  don’t  you  know  that 
the  Delaware  is  not  running?  A.  But  they  do  not  run  when 
there  is  no  market;  the  Revere  in  Boston  has  always  been  an  in- 
dependent refinery,  entirely  independent  of  the  so-called  Trust 
combinations. 

Q.  But  no  competition?  A.  Yes;  they  used  to  two  or  three 
years  ago;  they  would  sell  ten  barrels  to  a retailer  at  net  price. 

Q.  I am  speaking  now  as  regards  competition  under  your  fac- 
tors’ agreement;  there  is  no  competition  in  the  United  States  A. 
I think  the  Revere  sells  to  retailers  at  cut  price  to  day. 

Q.  Have  you  not  stated  that  you  have  produced  a situation 
where  sugar  is  worth  dollars  and  cents?  A.  Always  was. 

Q.  Do  you  mean  by  that  that  there  was  no  fixed  price  for 
sugar?  A.  No,  sir;  it  varies  every  day. 

Q.  Isn’t  everything  intrinsically  worth  something?  You  have 


No.  40.]  , 849 

fixed  a definite  ascertained  price  for  sugar?  A.  No,  sir;  the  law 
of  nature  has  fixed  the  price;  we  have  not  fixed  it;  the  law  of  sup- 
ply and  demand  has  fixed  the  price;  it  has  made  sugar  an  article 
of'equal  and  exact  value  every  day. 

Q.  Do  you  call  the  American  Sugar  Refining  Company  the  law 
of  nature?  A.  No,  sir;  but  I sav  raw  sugar  was  created  by  the 
law  of  nature., 

Q.  You  agree  to  sell  at  their  price?  A.  Yes,  sir. 
r 

Q.  That  company  fixes  the  price?  A.  Four  companies  fix  the 
price — I think  there  are  four — two  in  New  York. 

Q.  You  have  stated  on  the  stand,  Mr.  Smith,  that  the  American 
Sugar  Refining  Company  fixes  the  price  and  that  the  Mollenhauer 
follows?  A.  Whenever  I have  stated  “the  American”  I meant 
the  sugar  refiners  of  the  Atlantic  coast,  the  whole  of  them;  you 
say  custom;  that  has  application  to  the  whole  refiners;  I used  it 
in  that  sense. 

Q.  Is  it  true  or  is  it  not?  A.  When  I meant  the  American  I 
meant  the  Mollenhauer  as  well. 

Q.  How  could  you  have  meant  that  when  you  said  that  they 
followed?  A.  If  I did  make  a mistake;  I have  no  recollection  of 
saying  it. 

By  Mr.  McCarren : 

Q.  Is  it  not  true,  so  far  as  you  know,  that  the  independent  or 
outside  refiners  are  at  perfect  liberty  to  sell  at  lower  than  the 
rates  established  by  the  American  Sugar  Refining  Company  if 
they  see  fit  to  do  it?  A.  I have  no  reason  to  believe  that — 

Mr.  Lexow  (interrupting) : Through  factors?  A.  In  any  way 
they  choose. 


54 


850  [Senate, 

Q.  I mean  through  the  wholesale  grocers’  factors?  A.  Cer- 
tainly. , 

Q.  Then  I call  your  attention- 
witness  (interrupting) : So  far  as  I know. 

Q.  Then  limit  your  answer  to  your  own  association;  do  you 
mean  to  so  swear?  A.  Swear  to  what;  I don’t  know. 

Q.  Do  you  mean  to  swear  that  the  independent  refiners  could 
undersell,  cut  the  price  or  deal  in  sugar  at  all  through  factors  es- 
tablished under  the  Wholesale  Grocers’  Association  in  view  of 
the  third  rule  of  the  uniform  code  of  rules  governing  factors, 
which  reads  as  follows:  “Changes  in  price  of  sugars  shall  take 
effect  as  follows:  In  that  district  known  as  the  eastern  time  dis- 
trict, the  price  shall  take  effect  at  the  same  moment  that  the 
American  Sugar  Refining  Company  makes  the  change  in  price”? 
A.  It  would  seem  to  be  there;  that  is  with  the  American  Sugar 
Refinery  Company  and  not  with  the  Mollenhauer  Sugar  Com- 
pany ; it  has  no  application  to  that. 

Q.  That  is  the  plan;  are  you  trying  to  evade  the  question  by 
giving  that  answer?  A.  I am  not,  sir. 

Q.  This  is  the  Uniform  Code  of  Rules  for  the  sale  of  sugar 
under  the  factors’  agreement?  A.  Under  the  agreement  of  the 
American  Sugar  Refining  Company. 

Q.  Now,  I ask  you,  Mr.  Smith,  after  calling  your  attention  to 
the  rule,  whether  you  still  insist  that  any  competing  lefinery  can 
compete,  undersell,  or  put  its  product  upon  the  market  under 
factors’  agreement  except  as  its  price  fixed  by  the  American 
Sugar  Refining  Company?  A.  I know  of  nothing  to  prevent  the 
Mollenhauer  Company  from  selling  sugar  at  any  price  it  pleases. 

Q.  Then,  all  your  testimony  before  given  upon  this  point  in 
which  you  said  that  Mollenhauer  followed  the  price  fixed  by  the 


No.  40.]  ( 851 

American  Sugar  Refining  Company,  you  now  desire  to  correct? 
A.  I don't  think  that  I testified  to  any  such  statement. 

Q.  Have  you  testified  that  the  statement  is  true  or  false?  A. 
I testified  without  knowledge  if  1 did;  I have  no  knowle_ge  upon 
that  question. 

By  Mr.  Mazet: 

Q.  You  have  testified  that  the  factors’  agreement  and  affidavit 
are  substantially  the  same,  and  that  you  bought  from  Mollen- 
hauer  and  from  the  American  Sugar  Refining  Company?  A. 
That  does  not  prevent  us  from  buyiug  to-day  from  the  American 
at  4g  and  from  tlm  Mollenhauer  at  4 5-16;  in  each  case,  we  enter 
into  an  agreement;  we  could  not  sell  the  American  for  less  than 
4f,  but  if  we  bought  the  Mollenhauer  for  4 5-16,  we  could  sell  it 
*o  far  as  I know. 

By  Mr.  Lexow: 

Q.  Will  you  swear  that  you  can?  A.  I won’t  swear  that  I 
know  we  can;  I have  no  knowledge  to  the  contrary. 

Q.  Don’t  you  know  that  you  have  not  given  this  committee  a 

l 

direct  answer  to  the  question ; why  do  you  seek  to  evade  the 
question  in  that  way?  A.  I have  not  been  in  the  habit  of  stating 
for  a fact  something  that  I don’t  know. 

Q.  You  say  you  don’t?  A.  I don’t  know  that  there  is  any  rule 
to  prevent  tw o different  prices ; never,  any  more  than  I say  now. 

Q.  Is  that  book  referred  to  in  your  affidavit  that  you  file  for 
three  months’  sales  of  sugar?  A.  We  don’t  file  any;  we  don’t 
use  the  equality  book  in  our  business. 

Q.  Is  that  equality  rate  book  mentioned  in  the  affidavit?  A. 
We  don’t  use  it;  I suppose  that  is  the  one  referred  to. 

Q.  Do  you  know  whether  it  is  or  not?  A.  I think  so. 


852  [Senate, 

Q.  This  testimony  was  put  in  evidence  in  the  testimony  of  Mr. 
Post,  a representative  of  the  Mollenhauer  and  B.  H.  Howell,  Son 
& Co.?  A.  He  knows  about  it. 

Q.  Will  you  swear  that  this  is  not  the  equality  rate  book?  A. 

I stated  that  I have  a general  knowledge  that  there  is  a equality 
rate  book;  I suppose  that  is  the  book;  I have  never  had  occasion 
to  examine  it  or  use  it. 

Q.  You  have  never  looked  at  the  rules  or  regulations?  A.  No, 
sir;  not  to  my  knowledge;  I suppose  that  it  is  the  same  as  in  the 
factors’  agreement. 

Q.  Why  do  you  suppose?  A.  If  it  is  there;  same  thing  would 
be  there;  I don’t  know  as  to  their  rules  and  regulations;  in  our 
business  we  have  no  equality  rate  book  because  we  trade  in  the 
city. 

Q.  Will  you  name,  so  far  as  you  can  name,  the  sixty  different 
kinds  of  staple  articles  that  you  handle  as  factor?  A.  I could 
not  name  a quarter,  a tenth  of  them. 

Q.  Name  all  you  can?  A.  There  is  no  factors’  agreement  in 
any  sense;  they  simply  say  sell  our  goods  and  send  us  a check 
and  take  out  the  pay  for  the  work  you  have,done;  there  is  no 
agreement  of  any  name  or  nature. 

Q.  You  understand  the  characteristic  difference  between  sale 
and  consignment  under  a factors’  agreement,  don’t  you?  A. 
Yes,  sir. 

Q.  Now,  I ask  you  to  state  as  many  of  the  articles  that  you 
can  which  you  sell  under  a consignment  agreement,  whereby  the 
price  of  the  article  is  fixed  by  the  producer  and  you  receive  in 
compensation  for  a maintenance  of  that  price  a rebate  on  your 
sale?  A.  We  have  no  rule  or  consignment  agreement. 

Q.  Now?  A.  No,  sir. 


No.  40.] 


853 


Q.  When  you  testified  then  that  there  was  sixty  articles  that 
you  sold  under  agreement,  either  written  or  verbal,  on  the  con- 
signment plan  on  which  rebates  were  given  in  consideration  of 
maintaining  the  schedule  of  price  of  the  manufacturer,  were  you 
mistaken  or  not?  A.  No*,  sir;  I was  not  mistaken;  we  get  a re- 
bate, but  it  is  not  under  an  agreement  or  consignment;  we  buy 
the  goods  and  pay  for  them. 

By  Mr.  McCarren: 

Q.  On  conditions  imposed  by  the  sale?  A.  Some  on  conditions 
imposed  by  ourselves,  some  on  conditions  offered  by  the  manufac- 
turer; for  instance,  when  we  formed  an  association  we  went  to 
them  and  tried  to  get  some  kind  of  concession,  but  they  refused 
absolutely  to  aid  us  from  year  to  year;  and  finally,  a little  over  a 
year  and  a half  ago,  they  came  to  us  and  said,  “If  you  will  in- 
crease our  sales  10  per  cent,  during  the  current  year  we  will  give 
you  a bonus  at  the  end  of  the  year  of  5 per  cent”;  that  is  one 
of  the  styles  in  which  it  is  done. 

Q.  You  say  Royal  Baking  Powder?  A.  We  handle  their  goods 
for  net;  we  buy  a thousand  dollars  worth  and  it  does  not  make 
one  cent  difference. 

Q.  Have  you  any  written  agreement  to  that  effect?  A.  No;  of 
any  name  or  nature;  they  simply  made  that  proposition  to  inter- 
est us  in  selling  their  goods  so  that  we  will  push  their  goods  and 
increase  their  business;  they  say  if  you  will  do  this  we  will  give 
you  5 per  cent,  on  your  purchases;  that  is  all. 

By  Mr.  Lexow: 

Q.  Why,  Mr.  Smith,  in  answer  to  my  former  question  did  you 
apparently  seek  to  justify  the  American  Sugar  Refining  Com- 
pany’s factors’  agreement  by  reference  to  the  fact  that  you  did 


854  [Senate, 

practically  the  same  kind  of  business  in  the  sale  of  60  other  staple 
articles?  A.  The  refiners  were  the  first  ones  about  that  we 
asked,  as  that  is  a very  important  item  in  our  business,  and  the 
others  grew  out  of  the  various  conversations  and  importunities 
on  the  part  of  the  different  wholesale  grocers. 

Q.  You  seem  very  anxious  to  emphasize  the  fact  that  you  have 
been  coercing  these  manufacturers  and  importuning  and  solicit- 
ing them?  A.  I urged  the  manufacturers  that  if  they  wanted  our 
services  and  our  plan  of  distribution  for  their  goods  that  they 
must  see  to  it  in  some  form  which  might  be  devised  by  them  that 
we  would  be  remunerated  for  the  service  that  we  performed  in 
the  distribution  of  their  goods. 

Q.  Now,  you  wish  to  be  understood  that  with  reference  to  60 
other  staples  you  do  not  calculate  to  sell  without  the  assurance 
of  a profit  to  yourself  and  without  any  understanding  or  agree- 
ment of  any  kind  except  that  you  rely  upon  the  philanthropy  or 
generosity  of  the  producer  of  that  article  to  give  you  some  kind 
of  rebate?  A.  In  most  instances  absolutely;  we  have  sold  some 
articles  under  this  rebate  system  for  25  years. 

By  Mr.  McCarren: 

Q.  Don’t  grocers  like  Park  & Tilford  and  Acker,  Merrill  & Con- 
dit  and  others  do  this?  A.  Oh,  yes;  so  does  Butler  and  Callahan 
in  Vesey  street;  they  all  buy  sugar  same  as  we  do;  there  has 
never  been  any  effort  to  prevent  it;  I believe  in  the  most  open  and 
free  competition  consistent  with  a reasonable  margin  of  profit; 
when  the  merchant  performs  service  for  the  manufacturer  and  the 
public  he  should  have  adequate  remuneration;  any  system  that 
would  be  opposed  to  this  would  be  against  public  policy  and  the 
best  interests  of  all  the  people. 


No.  40.] 


855 


Mr.  Lexow:  That  is  a self-evident  proposition;  I do  not  think 
anybody  disputes  that.  A.  Except  by  the  aid  of  a limited  price 
system  all  staple  goods  are  necessarily  sold  at  absolute  net  cost, 
and  I know  of  no  way  to  prevent  it;  I wish  somebody  would  in- 
vent or  discover  some  other  way;  what  this  country  wants,  above 
all  things,  is  at  least  1 per  cent,  profit  on  all  commercial  trans- 
actions; there  are  83,475,640,203  of  railroad  stocks  that  cannot 
earn  1 per  cent;  it  would  go  through  the  channels  of  trade  and 
restore  prosperity  at  once  if  they  could,  but  they  cannot  do  it  be- 
cause competition  has  driven  the  business  down  until  to-day  they 
are  carrying  at  one-fourth  of  the  rate  of  40  years  ago. 

By  Hr.  McCarren: 

Q.  I understand  that  you  regard  your  association  as  a sort  of 
vehicle  through  which  goods  are  transmitted  and  distributed, 
and  that  that  vehicle  is  charging  a certain  percentage  for  the  ser- 
vices performed  ? A.  I have  said  repeatedly  that  our  Wholesale 
Grocers’  Association  amounts  to  very  little;  we  cannot  get  them 
to  attend  a meeting;  at  the  time  when  we  have  an  annual  meet- 
ing to  elect  officers  we  have  to  hunt  around  the  streets  to  get 
enough  to  make  thirteen. 

Q.  Is  that  your  position  individually  or  collectively?  A.  The 
wholesale  grocers  individually  are  striving  to  catch  on  to  every 
straw  that  will  help  them. 

Q.  As  distributers?  A.  Yes.  j 

Q.  Getting  a percentage  for  services  performed?  A.  Yes;  get- 
ting remuneration  for  services  performed;  this  we  must  have;  we 
cannot  afford  to  serve  the  public  with  food  for  nothing. 

Mr.  Lexow:  Your  justification  is  that  in  order  to  secure  that 
you  are  compelled  to  maintain  the  price  fixed  by  the  refiners? 
A.  Of  all  manufacturers. 


856  [Senate, 

UNIFORM  CODE  OF  RULES  FOR  THE  SALE  OF  SUGAR 


UNDER  FACTOR  AGREEMENT. 


APPROVED  BY  THE  REFINERS. 
In  Effect  June  1,  1896. 


CODE  OF  RULES. 

For  the  guidance  of  factors  in  the  sale  of  refined  sugar  in  all 
territory  east  of  the  Rocky  mountains. 

In  view  of  the  necessity  for  uniform  rules  governing  the  sale 
of  refined  sugar  under  the  Factor  plan,  the  following  is  ordered 
as  effective  on  and  after  the  first  day  of  June,  1896,  in  all  the 
territory  above  mentioned.  A strict  compliance  with  the  fol- 
lowing rules  and  any  others  that  may  hereafter  be  adopted,  is 
essential  on  the  part  of  every  Factor,  in  order  to  make  the  plan 
efficient.  To  the  end  that  it  may  be  perpetuated,  violations  will 
be  subject  to  the  rigid  enforcement  of  the  conditions  of  the  plan 
without  favor. 


FIRST. 

All  sales  of  refined  sugar  must  be  made  strictly  according  to 
the  Equality  plan,  and  in  accordance  with  these  rules. 

SECOND. 

I order  to  equalize  cost  to  buyers  in  towns  where  local  jobbers 
deliver  free  of  cartage  to  customer’s  store,  outside  jobbers  may, 
if  they  choose,  allow  to  their  customers  five  cents  a barrel  to 
cover  cartage  from  the  railroad  station  to  store. 


No.  40.] 


857 


THIRD. 

Changes  in  price  of  sugar  will  take  effect  as  follows:  In  that 
district  known  as  the  Eastern  Time  District,  the  price  shall  take 
effect  at  the  same  moment  the  American  Sugar  Refining  Com- 
pany makes  the  change  in  price.  Factors  in  the  Central  Divis- 
ion of  Time  shall  make  change  of  price  thirty  minutes  later  than 
that  of  points  in  the  Eastern  Division.  Factors  in  the  Western 
Division  shall  make  change  one  hour  later  than  that  of  points  in 
the  Eastern  Division.  Example:  If  the  market  changes  at  re- 
fining point  at  10  o’clock  A.  M.,  Eastern  Standard  time,  at  points 
in  the  Central  Division,  change  shall  take  place  at  9:30  o’clock 
A.  M.,  Central  Standard  time,  and  at  points  in  the  Western  Di- 
vision, prices  shall  change  at  9 o’clock  A.  M.,  Western  Standard 
time.  , 

FOURTH. 

All  orders  for  sugar,  whether  taken  by  salesman,  or  sent  di- 
rect by  customers  by  mail,  telephone,  telegraph  or  otherwise, 
shall  and  must  be  billed  at  the  prices  ruling  at  the  hour  and 
minute  of  time  the  order  is  so  taken  or  sent;  the  time  of  taking 
or  forwarding  the  order  being  stated  on  same,  and  no  order  shall 
be  taken  to  be  billed  at  a future  date. 

FIFTH. 

I 

Sugars  must  not  be  sold  on  longer  time  than  thirty  days,  nor 
witli  a greater  discount  than  1 per  cent,  for  cash  within  ten  days 
sharp  from  date  of  invoice.  When  remittance  is  received  later 
than  the  tenth  day,  the  cash  discount  must  not  exceed  6 per  cent, 
per  annum  for  unexpired  time.  If  invoice  is  not  paid  at  matu- 
rity, interest  must  be  charged  to  purchaser’s  account  for  all  time 
over  thirty  days. 


858 


[Senate, 


SIXTH. 

All  sugars  must  be  billed  on  separate  invoices  from  other 
goods,  and  terms  printed  or  stamped  plainly  on  same. 

SEVENTH. 

A trade  discount  of  1 per  cent,  may  be  allowed  on  sales  of '100- 
barrel  lots  or  more,  which  must  be  sold,  charged  and  billed  at 
one  time,  and  to  one  purchaser. 

EIGHTH. 

No  shipment  shall  be  made  without  a bona  fide  order.  Any 
shipment  made  on  account  of  an  anticipated  change  in  price 
shall  be  considered  a direct  violation  of  the  Factor  plan  of  sell- 
ing sugars. 

NINTH. 

In  billing  sugars,  the  actual  date  and  time  order  was  taken  or 
sent  must  be  plainly  stamped  or  written  on  all  invoices. 

TENTH. 

As  the  Equality  plan  enables  competing  markets  to  equalize 
the  freight  to  all  selling  points,  thus  placing  all  upon  an  equal 
footing  as  to  delivery,  it  is  contrary  to  the  plan  for  Factors  to 
consign  sugars  to  any  point  whatever,  and  this  practice  is  ex- 
pressly prohibited. 

ELEVENTH. 

Factors  selling  through  brokers  can  allow  no  more  than  the 
customary  brokerage  of  ten  cents  per  barrel,  which  cannot,  and 
shall  not  be  divided  with  the  purchaser.  No  dealer  acting  as  a 
broker,  can  be  credited  with  brokerage  on  sugar  bought  for  his 


own  account. 


No.  40.] 


859 


TWELFTH. 

All  refined  sugars  must  be  graded  and  sold  ou  the  basis  of  re- 
finers’ New  York  card  price  for  corresponding  grade,  except  in 
that  portion  of  the  country  tributary  to  and  rated  upon  New  Or- 
leans, which  shall  use  the  card  price  of  the  American  Sugar  Re- 
fining Company,  New  Orleans. 

THIRTEENTH. 

Factors  may,  if  they  choose,  sell  to  one  another  at  refiners’ 
prices  and  terms,  provided  purchasing  Factors  maintain  full  list 
prices. 

FOURTEENTH. 

In  making  sales  of  sugar  to  National,  State,  County  or  City 
institutions,  when  bids  are  requested  and  submitted  the  prices 
prevailing  on  the  date  bids  are  made,  shall  govern,  regardless 
of  advances  or  declines  in  the  market  date  bids  are  accepted  or 
orders  received  by  factors.  Factors  are  privileged  to  name  net 
cash  bids  to  such  institutions,  which  are  the  Equality  prices 
less  1 per  cent,  in  less  than  100-barrel  lots,  or  less  1 per  cent, 
and  1 per  cent,  in  lots  of  100  barrels  or  more.  If  delivery  is 
made  at  jobbing  points  where  the  five  cents  per  barrel  drayage 
is  allowed,  this  allowance  can  only  be  deducted  from  the  face 
of  the  invoice,  and  not  from  prices  when  bids  are  made. 

FIFTEENTH. 

Factors  must  add  the  rate  of  freight  as  per  Equality  Rate 
book,  to  point  of  shipment,  whether  the  purchaser  is  located  on 
or  off  the  point;  whether  he  hauls  the  sugar  or  has  it  shipped; 
and  the  lowest  local  rate  of  freight  allowed. 


860 


[Senate, 


SIXTEENTH. 

1 

Where  sugars  are  shipped  in  carloads,  shipment  being  made 
direct  from  the  refiners,  the  Factor’s  invoices  must,  in  every  case 
be  dated  the  day  the  sugar  is  shipped  by  the  refiners. 

AMENDMENT  TO  RULE  14. 

The  cancellation  of  decimals  extending  beyond  the  third  deci- 
mal, is  permissible — as  per  example:: 


Equality  prices 5.37 

Less  1 per  cent 0537 

5.3163 

Less  1 per  cent 53163 

Net  cash 5.263137 


COMMON  COUNCIL  CHAMBER,  NEW  YORK,  FEBRUARY 
23,1897.  10:30  A.M. 

Duke,  James  B.,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow:  : 

Q.  What  is  your  full  name?  A.  James  B.  Duke. 

Q.  Your  age?  A.  Forty  years. 

Q.  Your  residence?  A.  Summerville,  N.  J. 

Q.  Have  you  any  official  relation  to  the  American  Tobacco 
Company;  if  so,  what?  A.  I am  President  of  that  company. 

Q.  And  have  been  how  long?  A.  Ever  since  the  company  was 
formed  in  1890. 

Q.  In  1890?  A.  Yes,  sir. 

Q.  Where  was  it  formed?  A.  In  the  State  of  New  Jersey, 


where  we  were  chartered. 


No.  40.] 


861 


Q.  You  organized  under  tlie  laws  of  the  State  of  New  Jersey? 
A.  Yes,  sir. 

Q.  What  concerns  were  incorporated  into  the  American  To- 
bacco Company?  A.  Allen  & Ginter,  a corporation  organized 
under  the  laws  of  Virginia;  W.  Duke’s  Sons  Co.,  organized  un- 
der the  laws  of  North  Carolina,  incorporated  rather;  McKinney 
Tobacco  Company,  of  New  York;  Goodwin  & Co.,  W.  S.  Kimball 
& Co.,  of  Rochester,  were  all  purchased  by  the  American  To- 
bacco Company. 

Q.  That  was  upon  the  organization  of  the  original  company? 
A.  Yes;  purchased  after  the  company  was  organized. 

Q.  Did  any  one  of  those  which  was  in  one  of  those  companies 
so  purchased  organize  under  the  laws  of  the  State  of  New  Jer- 
sey? A.  No',  sir;  the  were  not. 

Q.  They  were  organized  respectively,  where?  A.  I stated  in  my 
answer  that  Duke  & Sons  was  incorporated  in  the  State  of  North 
Carolina;  Allen  & Ginter  in  Richmond,  Virginia;  McKinney  To- 
bacco Company,  New  York  State;  W.  S.  Kimball  and  Goodwin 
were  firms  doing  business  in  the  State  of  New  York,  one  in  Roch- 
ester and  one  in  New  York  city. 

Q.  What  caused  you  to  organize  in  the  State  of  New  Jersey? 
A.  Because  it  was  more  favorable  to  corporations. 

Q.  Was  there  anything  in  your  organization  that  you  could 
do  under  the  laws  of  the  State  of  New  J ersey  that  you  could  not 
do  under  the  laws  of  the  State  of  New  York  as  then  existing? 
A.  I don’t  think  so. 

Q.  Then  I would  repeat,  what  was  there  in  the  situation  that 
justified  the  organization  of  the  company,  no  department  of 
which  was  situated  in  the  State  of  New  Jersey,  wrhere  it  had  no 
interest,  as  distinguished  from  four  States  in  each  of  which  it 


862  [Senate, 

bad  interests?  A.  Well,  the  taxation  policy  for  one  thing,  I 
think  that  had  some  thing  to  do  with  it,  and  the  counsel  advised 
us  to  organize  in  the  State  of  New  Jersey. 

Q.  Do  you  mean  the  preliminary  organization  tax?  A.  Yes, 
sir;  and  probably  the  yearly  tax. 

Q.  And  the  yearly  tax  as  well?  A.  Yes,  sir. 

Q.  Lower  than  those  obtaining  in  the  State  of  New  York?  A. 
That  is  my  impression. 

Q.  Was  it  not  one  of  the  clauses  in  the  law  of  the  State  of 
New  Jersey  which  permits  the  acquisition  by  a company  organ- 
ized under  those  laws  of  the  stocks  and  securities  of  compa- 
nies transacting  substantially  the  same  business;  that  was  one 
of  the  moving  causes  for  organizing  in  the  State  of  New  Jer- 
sey? A.  That  didn’t  move  me;  we  didn’t  propose  to  take  any 
stocks  in  any  other  corporations. 

Q.  Or  the  acquisition  of  the  businesses  of  companies  opera- 
ting in  the  same  line?  A.  I don’t  think  that  there  is  any  law 
in  this  country  against  that  in  any  State. 

Q.  Then  that  didn’t  enter  into  consideration  at  all?  A.  Not 
so  far  as  I was  concerned. 

Q.  So  far  as  you  were  concerned;  were  you  not  the  principal 
in  the  making  up  of  that  incorporation?  A.  I was  not  one  of 
the  incorporators. 

Q.  Then,  so  far  as  you  were  concerned,  the  primary  object  was 
the  question  of  taxation?  A.  Yes,  sir. 

Q.  Do  you  know  in  what  respect  the  laws  of  the  State  of  New 
Jersey  are  more  favorable  to  corporations  on  their  organization 
than  are  the  laws  of  the  State  of  New  York?  A.  I think  the 
laws  of  the  State  of  New  York  have  been  changed  somewhat 
since  the  formation  of  the  company. 


No.  40.] 


863 


Q.  Under  the  act  of  1892?  A.  Yes;  I don’t  know  wliat  act; 
I have  heard  that  the  laws  are  more  favorable. 

Q.  But  the  act  of  1892  substantially  enacts  of  the  law  of  New 
Jersey  with  reference  to  the  organization  of  corporations  by  per- 
mitting them  to  acquire  securities  and  stock  in  competing  com- 
panies; the  taxation  laws  have  been,  if  anything,  increased  in  ef- 
ficiency and  the  taxes  themselves  increased  in  size?  A.  I don’t 
know  about  that;  because  it  was  of  no  interest  to  me,  for  the 
reason  that  we  were  already  organized;  I paid  no  attention  to  it; 
I heard  somebody  say  that  the  tax  of  corporations  in  the  State 
of  New  York  had  been  reduced. 

Q.  That  is  not  so?  A.  I am  mistaken,  then. 

Q.  After  the  acquisition  of  these  original  concerns  did  you  ac- 
quire others?  A.  Yes,  sir. 

Q.  Name  them?  A.  We  bought  the  business  of  the  National 
Tobacco  Works  of  Louisville,  Kentucky,  manufacturers  of  plug 
tobacco;  we  bought  the  business  of  P.  Whitlock  & Co.,  of  Rich- 
mond, Virginia;  Marbert  Bros.,  and  G.  W.  Gail  & Ax  & Co.,  of 
Baltimore,  Md.;  do  you  want  all? 

Mr.  Lexow:  If  you  please. 

A.  We  bought  the  brands  and  machines  and  machine  contract 
of  Heinshein  & Co.,  of  New  Orleans;  we  bought  the  business  of 
T.  H.  Hall,  the  Consolidated  Cigarette  Company  of  New  York; 
the  H.  Ellis  Company  of  Baltimore;  we  bought  some  of  the 
brands  and  business  of  A.  H.  Motley  & Co.,  of  North  Carolina, 
Reedsville,  N.  C. 

Q.  Is  that  all?  A.  That  is  all  I remember  at  present. 

Q.  Making  a total  all  told?  A.  I have  not  figured  them  up. 
(The  stenographer  repeated  the  names  of  the  nine  companies). 

Q.  Making  fourteen,  all  told?  A.  If  he  has  counted  them 
right  that  is  correct. 


8G4  [Senate, 

Q.  Is  that  your  recollection?  A.  I don’t  remember  any  fig- 
ures; I don’t  think  that  I have  ever  counted  them  up;  I have 
mentioned  all  that  I remember  at  present. 

Q.  Were  all  these  companies  transacting  the  same  general 
line  of  business?  A.  They  were  all  manufacturing  tobacco  in 
different  forms  and  under  different  brands. 

Q.  In  the  form  of  cigarettes?  A.  Some  of  them  plug  tobacco, 
some  of  them  cheroots  and  some  of  them  smoking  tobacco,  inclu- 
ding snuff;  there  was  one  of  them  manufacturing  a brand  of  cig- 
arettes in  New  Orleans;  some  of  them  were  manufacturing  all 
tobaccoes  under  special  brands. 

Q.  Your  general  office  is  where?  A.  Main  office  in  Newark, 
N.  J.;  general  office  in  New  York  city  at  507  W.  22nd  street. 

Q.  Have  you,  since  the  establishment  of  your  incorporation 
in  New  Jersey  done  any  manufacturing  in  that  State?  A.  No, 
sir;  we  have  not. 

Q.  Have  you  anything  more  than  the  office  record  required  un- 
der the  laws  of  the  State  of  New  Jersey;  that  is  to  say,  the  office 
for  the  stock  transfer  books  of  the  corporation?  A.  We  carry 
some  supplies  there  and  ship  leaf  tobacco. 

Q.  In  Newark?  A.  No;  in  Jersey  City. 

Q.  You  mean  on  storage?  A.  Yes,  sir. 

Q.  In  warehouses  belonging  to  you?  A.  No,  sir;  they  do  not 
belong  to  us. 

Q.  You  simply  have  some  of  vour  goods  in  transit  there  on 
storage?  A.  Lots  of  them  there  in  transit  all  the  time. 

Q.  In  transit  or  storage  as  a matter  of  convenience?  A.  Yes, 

sir.  I! 

Q.  What  proportion  of  the  trade  was  represented  when  the 

consolidation  of  the  original  concerns  was  made?  A.  Well,  that 
would  be  pretty  hard  for  me  to  say. 


No.  40.] 


•865 


Q.  I am  speaking  for  an  approximation  simply?  A.  I sup- 
pose those  five  concerns  or  brands  had  about  SO  or  90  per  cent, 
of  the  business. 

Q.  After  the  acquisition  of  these  other  nine  establishments 
what  proportion  of  the  business  did  you  represent?  A.  Most  of  the 
nine  represented  different  lines  of  business;  the  first  five  were  in 
the  cigarette  business  and  the  largest  part  of  the  other  business 
was  smoking  and  plug  tobacco. 

Q.  Those  subsequently  acquired  represented  what  proportion 
of  the  business  that  they  transacted?  A.  I should  not  think 
that  they  represented  the  plug  tobacco — well,  about  5 per  cent, 
of  the  total  plug  tobacco  made  in  this  country;  smoking  tobacco 
I suppose,  may  be  10  per  cent.,  and  all  the  tobacco  grades,  I sup- 
pose they  made  50,  60  or  70  per  cent,  of  the  total  business. 

Q.  Of  all  the  tobacco  business?  A.  That  is  merely  a guess, 
because  I have  no  means  of  knowing  how  much  the  others  made. 

Q.  Are  all  those  original  factories  included  in  the  first  consoli- 
dation and  the  subsequent  acquisition  now  running?  A.  No, 
sir.  ■ 

Q.  What  were  closed?  A.  We  closed  the  factory  of  Good- 
win & Co.,  and  I think  that  the  Hall  factory  was  closed ; the  con- 
solidated Cigarette  Factory  was  closed  and  those  brands  were 
consolidated  into  twro  or  three  other  factories  that  we  are  opera- 
ting now. 

Q.  That  is  to  say,  the  manufacture  of  the  brands  made  in  the 
respective  establishments  that  you  closed  was  continued  in  the 
other  establishments?  A.  Yes,  sir;  we  don’t  own  the  building 
of  the  factories;  we  bought  out  their  brands  and  we  are  now 
manufacturing  those  brands  on  our  own  properties. 


55 


866 


[Senate, 


Q.  How  many  men  were  discharged  as  the  result  of  the  closing 
of  the  Goodwin  & Co.  concern?  A.  That  was  a very  small  con- 
cern, and  the  business,  the  brands  that  were  formerly  made  by 
Goodwin  & Co.  were  growing  less  in  popularity;  I cannot  say 
how  many  people  there  were;  I should  think  not  more  than  150, 
probably;  but  we  employed  more  people  in  Rochester,  where  we 
moved  it  to. 

Q.  I would  ask  for  a specific  answer;  you  can  make  explana- 
tions afterwards;  I will  give  you  an  opportunity  to  show  what 
the  difference  of  labor  was  later. 

Q.  Goodwin  & Co.  was  located  where?  A.  Grand,  street. 

Q.  In  this  city?  A.  Yes,  sir. 

Q.  Hall’s  factory  was  located  where?  A.  I have  forgotten 
the  street. 

Q.  In  the  city  of  New  York?  A.  Yes,  sir. 

Q.  How  many  men  were  discharged  at  the  time  of  the  closing 
of  that  factory?  A.  There  were  a great  many  of  them  that 
came  to  the  22d  Street  factory;  I don’t  know  how  many  left  our 
employment  to  go  south. 

Q.  Have  you  no  figures  whereby  you  can  establish  or  approxi- 
mate the  number  of  men  discharged  as  the  result  of  closing  that 
factory?  A.  I would  think  probably  there  were  150  or  200. 

Q.  Was  it  not  450?  A.  I don’t  think  that  Hall  had  that  many. 

Q.  Were  not  the  number  of  men  employed  there,  on  the  aver- 
age, about  450,  prior  to  the  time  of  the  closing  of  the  factory? 
A.  I don’t  think  that  was  the  average;  they  have  in  busy  sea- 
sons; when  we  bought  the  Hall  brands  they  had  a contract  for 
a machine  which  we  have  taken  up  and  are  now  using;  and  the 
changing  of  that  factory  over  to  the  other  place  didn’t  make  any 
difference  in  the  amount  of  people  that  would  have  been  em- 
ployed if  we  hadn’t  moved  from  the  old  Hall  building. 


No.  40.] 


•867 


Q.  Can  you  fix  within  reasonable  limits  the  number  of  men 
and  girls;  I understand  you  employ  a large  number  of  girls — 
that  a large  number  were  employed  in  the  Hall  factory  prior  to 
the  time  of  its  closing?  A.  I can  only  make  a guess. 

Q.  You  ought  to  be  able  to  guess  fairly  accurately?  A.  I 
should  guess  350,  maybe  450. 

Q.  At  times  450,  and  at  other  times  350?  A.  I should  judge 
that;  I don’t  really  know  how  many  they  employed. 

Q.  How  about  the  Consolidated  Cigarette  Factory;  how  many 
were  employed  there  at  the  time  of  the  closing  down  of  the  fac- 
tory? A.  I don’t  really  know. 

Q.  Where  was  that  located?  A.  That  was  located  in  Avenue 
D and  Tenth  street,  I believe;  I am  not  certain. 

Q.  In  the  city  of  New  York?  A.  Yes,  sir;  they  didn’t  use  as 
many  hands,  I think,  in  proportion  to  the  business  Hall  did,  for 
the  reason  that  they  used  machines. 

Q.  Would  300  cover  the  number  of  employees  of  that  concern? 
A.  I think  it  would  more  than  cover  the  number  for  the  amount 
of  business  they  did. 

Q.  Would  you  consider  300  a fair  figure?  A.  I should  think 
that  they  had  that  many ; they  did  not  give  them  very  steady  em- 
ployment. ' 

Q.  Where  was  the  other  factory  in  addition  to  those  mentioned 
by  you  that  was  closed  down?  A.  The  last  factory  was  in  Bal- 
timore; it  was  moved  over  to  our  building;  wre  put  part  of  the 
consolidated  business  down  in  that  factory. 

Q.  The  Ellis  factory,  of  Baltimore?  A.  Yes,  sir. 

Q.  The  Consolidated  Cigarette  factory  has  a branch  there? 
A.  We  manufacture  the  brands  of  the  Consolidated  factory  in 
Baltimore,  and  of  course  we  had  to  employ  a great  many  more 
hands  than  the  Ellis  Company  had  employed  theretofore. 


868  [Senate, 

Q.  That  is  to  say,  you  consolidated  in  Baltimore  the  Ellis  fac- 
tory there  with  the  Consolidated  factory  which  has  been  closed 
in  the  city  of  New  York?  A.  We  manufacture  all  the  brands; 
we  didn’t  buy  the  building.  ; 

Q.  Do  you  mean  by  transfer  of  the  machinery?  A.  Yes,  sir; 
machinery  and  all  the  employees  that  wanted  to  go  to  Baltimore 
had  a chance  to  go  there  and  work  in  the  factory;  we  owned 
a large  building  down  there  which  was  conducted  for  manufac- 
turing purposes,  and  we  opened  a large  factory  there  and  ran 
three  or  four  of  the  small  ones  from  different  points. 

Q.  Did  you  close  any  factory  in  Baltimore?  A.  The  Ellis  fac- 
tory was  closed;  we  closed  one  by  opening  another. 

Q.  Do  you  mean  to  say  that  the  Ellis  factory  in  Baltimore  was 
closed  and  that  you  opened  another  factory  in  Baltimore  which 
was  substantially  the  consolidation  of  the  Consolidated  Com- 
pany here  and  the  Ellis  factory?  A.  We  took  some  of  the 
brands  of  the  Consolidated  Company;  wherever  they  were  most 
adapted  to  go  we  sent  them. 

Q.  By  that  you  mean  that  you  took  them  to  the  most  favorable 
location  for  the  manufacture  of  particular  brands?  A.  Yes,  sir. 

Q.  But  without  reference  to  the  labor  employed  at  the  particu- 
lar place  that  you  vacated?  A.  Of  course  wre  have — 

Mr.  Lexow,  interrupting:  Did  you  take  that  into  considera- 
tion? A.  We  have  to  go  to  the  place  of  manufacture,  where 
there  is  labor  suitable  for  our  purpose. 

Q.  What  proportion  of  the  labor  that  was  discharged  in  the 
city  of  New  York,  amounting,  according  to  your  testimony  to 
about  900,  was  re-employed  in  any  of  these  consolidations  that 
you  have  mentioned?  A.  A great  number  of  them  went  to  the 
22nd  Street  factory,  and  a great  many  of  them  went  to  other  fac- 


No.  40.] 


869 


tories  that  were  started  or  had  been  started  some  time  prior  to 
that. 

Q.  Can  you  answer  the  former  question  any  more  specifically? 
A.  I could;  it  would  be  only  a guess. 

Q.  Have  you  kept  any  record  of  it,  Mr.  Duke?  A.  No,  sir;  I 
have  not.  , 

Q.  Does  your  company  keep  any  labor  statistics?  A We  know 
how  many  people  we  have  employed;  we  don’t  make  any  point  of 
that. 

Q.  Can  you  state  how  many  people  you  employ  as  compared 
with  the  employment  given  to  workers  prior  to  the  consolidation 
of  the  independent  companies?  A.  I think  we  have  given  em- 
ployment to  nearly  double  as  many  people  as  were  employed  by 
the  factories  that  we  bought;  brands  that  we  bought. 

Q.  Have  you  increased  the  output?  A.  Yes;  very  largely. 

Q.  Have  you  been  guessing  at  the  number,  or  do  you  state  that 
as  a fact?  A.  Well,  we  cannot  figure  exactly  the  number  of 
people  that  were  employed  by  the  different  factories  that  we 
bought. 

Q.  Do  you  mean  to  say  that  you  have  increased  the  size  and 
facilities  of  the  other  factories  that  you  have  incorporated  into 
this  company?  A.  Yes,  sir;  well,  not  factories;  we  cannot  go  by 
factories;  we  go  by  brands;  some  of  the  brands  have  increased, 
some  have  decreased. 

Q.  What  factory  did  you  increase  in  size  and  capacity 
after  the  organization?  A.  Well,  the  factory  at  Twrentv-second 
street  is  a great  deal  larger  than  it  was  before  we  bought  it. 

Q.  To  what  extent,  Mr.  Duke?  A.  I should  judge  that  there 
is  double  the  capacity  of  the  old  factory. 


870 


[Senate, 

What  was  the  capacity  of  the  old  factory?  A.  I don’t  know 
the  dimensions;  I am  guessing  now  because  I did  not  measure 

the  buildings. 

Q.  Are  you  able  to  give  this  committee  the  information  re- 
quired? A.  If  there  is  anybody  who  knows  what  the  size  of  the 
old  building  was  I can  have  the  present  one  measured;  but  the 
old  one  was  burned  and  this  was  built  in  its  place. 

Q.  Upon  the  organization  of  the  original  company  did  they  un- 
dertake the  books  of  the  five  companies;  did  they  receive  the 
books  of  the  five  companies  that  were  amalgamated?  A.  No, 
sir;  they  did  not. 

Q.  Did  they  receive  any  accounts  or  papers  showing  the 
amount  of  labor  employed  and  the  output  of  the  factories  that 
were  consolidated?  A.  Not  to  my  knowledge;  theydid  not  because 
the  company  did  not  buy  the  book  accounts  of  the  different  con- 
cerns; it  only  bought  the  property  and  trade  marks,  good  will, 
machinery  and  fixtures;  some  of  them  the  property;  that  is  to 
say,  the  real  estate. 

Q.  Were  the  books  preserved  by  the  original  companies?  A. 
I don’t  really  know  whether  they  have  been  or  not;  three  of  the 
companies  have  been  burned  since  the  company  bought  them;  I 
don’t  know  but  that  the  old  books  were  burned  with  them;  I am 
not  sure  about  that. 

Q.  What  factories  burned?  A.  The  McKinney  factory  in 
Twenty-second  street,  Allen  & Ginther,  Richmond,  and  the  Duke 
factory,  Thirty-eighth  street,  New  York  city. 

Q.  Have  they  been  rebuilt?  A.  The  Allen  & Ginther  factory 
was  rebuilt  and  the  McKinney  factory,  but  the  Duke  factory  was 
not  rebuilt  because  we  didn’t  own  the  property;  the  building  was 
under  lease. 


No.  40.] 


871 


Q.  Then  that  makes  two  more  factories  that  were  closed  inten- 
tionally or  accidentally?  A.  No,  sir;  it  does  not. 

Q.  Do  they  make  five  altogether?  A.  No;  we  moved  the  Duke 
factory  to  the  old  Goodwin  building,  and  after  the  larger  building 
was  constructed  in  Twenty-second  street  we  moved  from  that 
factory  there. 

Q.  Do  you  wish  to  be  understood  that  all  the  New  York  con- 
cerns were  concentrated  into  the  Twenty-second  street  factory? 
A.  Yes,  sir. 

Q.  And  that  its  capacity  was  about  doubled?  A.  Yes;  more 
than  double,  I should  think. 

Q.  Can  you  give  us  the  increase — the  figures  showing  the  in- 
crease in  capacity  of  the  New  York  factory  in  Twenty-second 
street?  A.  I can  from  a guess. 

Q.  But  you  have  statistics?  A.  Yes;  I suppose  that  can  be 
found  out. 

Q.  We  would  like  to  have  those  showing  the  amount  of  in- 
crease as  compared  to  the  amount  of  decrease  in  the  productive 
capacity  owing  either  to  fire  or  to  the  closing  of  factories?  A.  I 
think  you  will  find  that  we  make  more  goods  in  the  present  fac- 
tory than  in  all  the  others. 

Q.  Is  there  anybody  in  your  company  who  knows  about  this 
particular  matter  better  than  you  do?  A.  I don’t  suppose  any- 
body could  get  them  easier  than  I could. 

Q.  Does  Mr.  Browne  know  about  them?  A.  I don’t  know 
whether  he  knows  or  not. 

Q.  You  operate,  do  you  not,  through  what  is  called  a factors’ 
agreement’  A.  We  don’t  call  ours  a factors’  agreement;  we  call 
it  a ‘‘consignment  agreement.’’ 

Q.  Have  you  got  a copy  of  that  here?  A.  No,  sir;  I have  not, 
but  maybe  Mr.  Fuller  can  furnish  you  with  one;  he  is  our  counsel. 


872 


[Senate, 


(Witness  hands  paper  to  Mr.  Lexow.) 

Q.  Is  that  a copy  of  the  agreement  under  which  you  are  now 
operating?  A.  I suppose  it  is;  I have  not  looked  at  it.  (Witness 
examines  paper).  That  is  the  agreement. 

Q.  You  have  no  doubt  about  its  authenticity?  A.  I didn’t 
know  but  what  he  got  it  mixed  up  with  some  other  papers. 

Q.  You  have  established  a system,  have  you  not,  for  the  sale 
of  your  goods  through  the  agency  of  factors;  I mean  by  that,  by 
consignment  instead  of  sale?  A.  Yes,  sir;  under  the  agree- 
ment, as  you  have  it. 

Q.  And  you  constitute  those  dealings  in  tobacco  in  different 
parts  of  the  country  consignees  under  this  agreement?  A.  We 
don’t  everybody. 

Q.  I understand  that;  you  reserve  the  right  to  discriminate? 
A.  Yes,  sir.  (Marked  Exhibit  2,  February  23,  1897.) 

A.  Such  as  we  w7ant  or  require  to  distribute  our  goods. 

Q.  How  long  has  this  form  of  agreement  been  in  operation? 
A.  Since  the  latter  part  of  1895. 

Q.  You  stated,  I believe,  in  answer  to  a former  question,  that 
the  concerns  that  were  incorporated  in  this  company  represented 
an  output  of  between  80  and  90  per  cent,  of  the  cigarette  busi- 
ness? A.  That  is  my  guess;  I would  not  be  positive  about  that. 

Q.  Have  you  any  reason  to  believe  that  the  figures  are  not  ap- 
proximately correct?  A.  I think  they  are. 

Q.  After  the  consolidation  was  effectuated  by  the  purchase  or 
acquisition  of  these  nine  other  concerns,  how  many  competing 
concerns  were  left?  A.  I don’t  know  exactly  the  number  of  all 
kinds  of  tobacco  manufactured. 

Q.  I am  speaking  now  of  competition  in  the  line  in  which  you 
produce  from  80  to  90  per  cent,  of  the  product?  A.  I think  that 
the  revenue  figures  give  somewhere  around  100. 


No.  40.] 


873 


Q.  That  is,  100  producing  from  20  to  10  per  cent,  of  the  pro- 
duct? A.  Yes,  sir. 

Q.  How  many  in  the  State  of  New  York?  A.  I think  quite  a 
number, 

Q.  Do  you  consign  on  any  other  terms  than  those  mentioned 
in  this  exhibit  of  this  date?  A.  I don’t  think  that  we  do. 

Q.  Is  it  not  an  established  system  of  your  business  not  to  con- 
sign, excepting  under  the  conditions  mentioned  in  this  rebate  or 
percentage  agreement?  A.  It  is. 

Q.  Do  you  sell  direct  to  retailers?  A.  No,  sir;  we  do  not;  but 
if  anybody  should  come  and  ask  for  1,000  cigarettes  I suppose 
they  would  get  them;  we  do  not  make  any  difference  in  the 
price;  he  could  buy  them  from  agents  as  cheaply  as  from  us. 

Q.  You  consider  those  operating  under  this  agreement  your 
agents?  A.  Yes,  for  the  distribution  of  goods. 

Q.  Do  you  dispose  of  your  goods  in  any  other  way  than  con- 
tained in  this  exhibit?  A.  So  far  as  the  cigarettes  are  con- 
cerned, the  paper  cigarettes,  are  disposed  of  under  this  agree- 
ment. 

Q.  Have  you  other  agreements  with  reference  to  plug  tobacco 
and  other  brands?  A.  Quite  a different  lot  of  plans  that  we 
operate  under. 

Q.  Then  this  exhibit  No.  2 refers  exclusively  to  the  cigarette 
department  business?  A.  It  does. 

Q.  And  you  don’t  sell  cigarettes  except  under  the  terms  of  this 
agreement?  A.  No,  sir. 

Q.  Have  you  had  any  connection  with  the  Wholesale  Grocers’ 
Association?  A.  Not  with  reference  to  the  wholesale  grocers, 
because  they  distribute  very  few  of  the  cigarettes;  they  have  in- 


874  [Senate, 

sisted  at  all  times  that  we  should  fix  a profit  on  the  tobacco  trade 
largely  same  as  all  over  the  country. 

Q.  Do  the  jobbers  through,  whom  you  do  your  business  or  those 
whom  you  appoint  as  consignees  under  the  terms  of  this  docu- 
ment belong  to  the  Wholesale  Grocers’  Association?  A.  We 
don’t  know  how  many,  but  we  are  of  the  opinion  that  a small  per- 
centage of  the  tobacco  jobbers  have  any  connection  with  the 
Wholesale  Grocers’  Association;  I would  say  that  the  largest 
part  of  our  consignees  are  not  controlled  by  the  Wholesale  Gro- 
cers’ Association. 

Q.  Have  you  ever  had  any  formal  communication,  any  official 
communication  with  the  Wholesale  Grocers’  Association?  A. 
Well,  every  once  in  a while  we  get  a demand  of  some  kind  from 
the  association  about  fixing  a profit  on  the  different  goods  that 
they  handle  being  sold  at  cost. 

Q.  Have  you  received  those  yourself?  Have  you  ever  seen 
them?  A.  Yes,  sir. 

Q.  Coming  officially  from  the  Wholesale  Grocers’  Association? 
A.  Yes,  sir. 

Q.  Have  the  name  of  the  association?  A.  It  is  generally  by 
the  secretary ; it  may  be  sometimes  by  the  president. 

Q.  Have  you  drawn  up  these  factors’  or  consignees’  agreements 
with  any  reference  to  that  association?  A.  Well,  of  course,  any 
importunities  on  the  part  of  customers  we  always  listen  to,  but 
we  didn’t  fix  that  solely  on  account  of  coming  from  the  wholesale 
grocers;  it  was  different  tobacco  jobbers  before  the  formation  of 
the  American  Tobacco  Company  cigarettes  were  all  consolidated 
in  this  section  of  the  country,  and  of  course  everybody  tried  to 
get  them;  since  the  company  was  formed  we  decided  we  would 


No.  40.]  875 

give  them  a portion  of  our  profit  if  they  would  look  after  our  in- 
terests. 

Q.  Have  you  ever  had  occasion,  Mr.  Duke,  to  withdraw  these 
consignment  agreements  from  persons  holding  them?  A.  Yes, 
sir;  quite  a number  of  them. 

Q.  Because  of  a violation,  or  assumed  violation,  of  the  terms 
and  conditions  of  this  agreement?  A.  Because  they  cut  the 
price. 

Q.  And  with  special  reference  to  the  seventh  and  eighth  sub- 
divisions? A.  I don’t  know  what  they  are;  if  you  will  read  them 
I can  tell  you. 

Mr.  Lexow  reads  the  following:  “If  you  do  not  discriminate 
against  our  cigarettes  in  favor  of  those  of  other  manufacture,  and 
if  you  do  not  sell,  or  dispose  of,  any  of  our  cigarettes  at  less  than 
the  list  price,  and  if,  in  all  respects,  you  comply  with  the  terms 
of  this  agreement  we  will  pay  you  a commission  of  two  and  one- 
half  (2J)  per  cent,  on  the  amount  realized  by  you  from  the  sale  of 
the  cigarettes  wdiich  we  may  consign  to  you.”  A.  Yes;  we  have 
heard  of  some  of  them  cutting  the  price;  I don’t  know  whether  it 
is  those  who  get  24  or  the  10  per  cent.,  or  the  74  per  cent,  dif- 
ference where  they  handle  our  goods  exclusively. 

Q You  consider  yourself  justified,  under  the  terms  of  this 
agreement,  to  withdraw  consignments  if  they  violate  that  partic- 
ular clause  of  the  contract?  A.  If  they  violate  any  section  in  the 
contract;  we  try  just  as  hard  as  we  can  to  live  up  to  that  agree- 
ment religiously  and  to  have  everybody  else  live  up  to  it. 

Mr.  Lexow:  I call  your  attention  to  the  eighth  clause:  “If, 
however,  you  handle  cigarettes  of  our  manufacture  exclusively, 
and  do  not  sell  or  distribute,  or  in  any  way  aid  in  the  sale,  or  dis- 
tribution of,  cigarettes  of  other  manufacture,  and  if  you,  in  all 


876  [Senate, 

respects,  fully  comply  with  the  terms  and  conditions  of  this  agree- 
ment, we  will  pay  you  an  additional  commission  of  seven  and  one- 
half  (7i)  per  cent,  on  the  amount  realized  by  you  from  the  sale  of 
the  cigarettes  which  we  may  consign  to  you.” 

Q.  Do  you  consider  in  case  of  the  violation  of  that  eighth  sub- 
division in  this  agreement  that  you  are  entitled  to  withdraw  the 
agreement  and  to  refuse  to  sell?  A.  We  don’t  do  that;  we  gen- 
erally take  away  the  7-£  per  cent,  and  let  them  have  the  per 
cent,  provided  they  have  not  violated  the  agreement  in  any  other 
part. 

Q.  Provided  they  have  violated  the  sixth  clause  of  the  agree- 
ment, that  with  reference  to  maintenance?  A.  If  they  have  not 
cut  the  price  or  damaged  the  goods. 

Q.  That  is  the  single  point  of  this  factors’  agreement ; that  is 
to  say,  that  you  compel  the  consignee  to  maintain  the  price  of 
your  goods  as  fixed?  A.  Yes,  sir. 

Q.  And  you  add  to  that  this  other  qualification  that  if  they 
will  handle  your  goods  exclusively  you  will  pay  them  an  addi- 
tional percentage  of  7^  per  cent.;  isn’t  it  a fact,  Mr.  Duke,  that 
no  man  engaged  in  the  tobacco  business  can  successfully  compete 
unless  he  handles  vour  product,  so  great  has  been  the  demand 
created  therefor?  A.  He  can  compete  all  right  but  he  cannot 
make  as  much  money;  they  have  tried  it  several  times. 

Q.  Is  not  your  business  substantially  on  the  same  basis  as  the 
sugar  business?  A.  Entirely  different  business. 

Q.  That  a man  in  that  business  cannot  make  a profitable 
business  of  it  unless  hj  handles  your  goods,  the  same  as  the 
wholesale  grocer  cannot  do  a profitable  business  unless  he 
handles  sugar?  A.  There  is  a big  difference;  sugar  is  sold  as 
sugar,  and  tobaccoes  sold  by  brands;  we  manufacture  cigarettes 


No.  40.] 


877 


and  do  not  sell  them  as  cigarettes,  but  as  brands,  and  the  con- 
sumer buys  them  as  brands. 

Q.  Your  brands  are  so  well  known  and  have  such  a command 
of  the  market  that  the  seller  of  tobacco  cannot  exist  unless  he 
can  sell  your  brands?  A.  Yes;  they  do  do  it. 

Q.  Do  they  not  get  their  brands  in  some  other  way  than 
through  yon?  A.  Yes,  sir. 

Q.  In  such  a way  that  they  cannot  make  a profit  as  large  as 
they  could  under  your  agreement?  A.  Still  they  can  make  a 
profit;  they  can  get  2|  per  cent;  and  this  is  more  than  they  would 
make  if  we  did  not  fix  the  price,  for  they  used  to  sell  them  at  cost 
and  they  lived  then;  I don’t  see  how  they  can  live  now. 

Q.  I mean  when  you  withdraw  this  consignment  agreement  the 
person  from  whom  it  is  withdrawn  must  go  to  another  jobber  to 
get  his  goods,  and  the  percentage  or  the  rebate  is  given  to  that 
jobber,  so  that  the  retailer,  the  intermediary,  will  make  no  profit 
at  all?  A.  We  tried  that  condition  of  affairs  before,  but  we 
could  not  do  it  because  the  jobbers  would  divide  with  each  other; 
we  have  not  been  able  to  stop  it  so  far. 

Q.  That  is  your  object,  is  it  not?  A.  Yes,  sir. 

Q.  Don’t  you  consider,  Mr.  Duke,  that  the  successful  operation 
of  ;i  system  of  this  kind  must  inr-vilubly  'ead  to  a monopoly?  A. 
No,  sir. 

Q.  Why?  A.  That  for  the  simple  reason  that  we  make  and 
sell  our  brands,  and  anybody  else  can  go  into  the  manufacture  of 
cigarettes  and  sell  their  brands,  and  if  they  can  create  a market 
and  the  public  want  their  goods,  they  can  always  get  plenty  of 
people  to  distribute  them. 

Q.  Isn’t  it  a fact  that  you  have  created  by  the  consolidation  of 
these  various  brands  into  one,  or  under  one  head,  so  strong  a mar- 


878  [Senate, 

ket  for  jour  own  product  that  the  smaller  merchants  must  take 
your  brands  in  order  to  successfully  do  business;  and  don’t  you 
by  the  creation  of  this  intermediary  system  of  rebates  and  dis- 
counts, practically  secure  for  your  product  a monopoly  of  the 
market?  A.  No,  sir;  you  take  one  jobber  in  New  York  who  will 
take  the  agency  of  some  other  brand  of  cigarettes,  and  if  the  pub- 
lic wants  it  he  can  stop  the  whole  business;  it  is  not  necessary  to 
have  100  jobbers  in  New  York  to  handle  our  goods;  we  would 
rather  have  less;  we  don’t  want  to  do  any  injustice  to  anybody 
that  handles  the  goods  under  the  agreement  properly,  and  there- 
fore, we  let  them  have  them. 

Mr.  Lexow:  The  Common  Council  wants  this  room;  we  have 
overstepped  our  bounds,  and  unfortunately  have  been  unable  to 
secure  another  room  for  this  afternoon;  therefore,  we  will  take 
an  adjournment  until  10  o’clock  to-morrow  morning;  it  is  rather 
unfortunate  at  this  late  day  that  we  should  have  this  interruption 
but  it  is  impossible  to  avoid  it;  Mr.  Duke,  we  would  like  to  have 
those  figures  to-morrow  morning. 

THE  AMERICAN  TOBACCO  COMPANY, 

507  to  529  West  22d  street. 

P.  O.  Box  2591. 

New  York,  October  1,  1895. 

Dear  Sir. — We  will  be  glad  to  consign  to  you  for  sale,  on  com- 
mission, our  various  bi*ands  of  cigarettes,  such  cigarettes  to  be 
sent  by  us,  and  received,  sold  and  accounted  for  by  you,  upon 
terms  and  conditions  as  follows,  namely: 

First.  All  cigarettes  which  we  may  send  to  you,  you  are  to  sell 
to  the  retail  trade  only  for  retail  purposes;  you  are  to  sell  none 
to  other  than  retail  dealers  except  by  our  written  permission. 


No.  40.] 


879 


Second.  You  shall,  at  all  times,  sell  our  cigarettes  at  such 
prices  only  as  we  may  fix  in  selling  lists  sent  to  you.  You  shall 
not  sell,  or  dispose  of,  any  cigarettes  at  lower  prices  than  those 

so  fixed. 

Third.  You  are  to  guarantee  all  sales  made  by  you.  An  extra 
compensation  of  2 per  cent,  will  be  allowed,  and  can  be  deducted 
by  you,  on  all  advances  made  upon  consignments  which  are  re- 
mitted to  us  within  ten  days  after  the  date  of  shipment  to  you. 

Fourth.  All  cigarettes  consigned  to  you  are  to  remain  our  prop- 
erty until  sold  by  you,  subject  only  to  your  lien  thereon  for  all 
advances  which  you  have  made  under  the  terms  of  this  agree- 
ment. 

Fifth.  The  cost  of  freight  from  our  factories  is  to  be  paid  by 
us,  or,  if  paid  by  you,  to  be  allowed  to  you  by  us  on  account. 

Sixth.  You  are  to  guarantee  us  against  loss  by  fire  or  other- 
wise of  any  cigarettes  consigned  to  you,  and  you  are  to  either  re- 
turn to  us  the  cigarettes  in  good  condition  or  the  price  of  the  same 
as  fixed  on  our  selling  lists  as  above  mentioned.  You  are  also  to 
pay  all  charges  and  other  expenses  of  every  nature  connected 
with  the  storing,  keeping  and  selling  of  cigarettes  which  we  may 
consign  to  you,  or  for  your  account,  after  the  delivery  thereof  by 
us  to  the  common  carrier,  including  all  State,  county  and  munici- 
pal taxes  and  license  fees. 

Seventh.  If  you  do  not  discriminate  against  our  cigarettes  in 
favor  of  those  of  other  manufacture,  and  if  you  do  not  sell,  or 
dispose  of,  any  of  our  cigarettes  at  less  than  the  list  price,  and  if, 
in  all  respects,  you  comply  with  the  terms  of  this  agreement,  we 
will  pay  you  a commission  of  two  and  one-half  (2-|)  per  cent,  on 
the  amount  realized  by  you  from  the  sale  of  the  cigarettes  which 
we  may  consign  to  you. 


880  [Senate, 

Eighth.  If,  however,  you  handle  cigarettes  of  our  manufacture 
exclusively,  and  do  not  sell  or  distribute,  or  in  any  way  aid  in  the 
sale,  or  distribution  of,  cigarettes  of  other  manufacture,  and  if 
you,  in  all  respects,  fully  comply  with  the  terms  and  conditions 
of  this  agreement,  we  will  pay  you  an  additional  commission  of 
seven  and  one-half  (7-|)  per  cent,  on  the  amount  realized  by  you 
from  the  sale  of  the  cigarettes  which  we  may  consign  to  you. 

Ninth.  Settlements  and  payments  of  commissions  are  to  be 
made  as  follows: 

On  April  1,  1896,  or  as  soon  thereafter  as  practicable  on  all 
cigarettes  consigned  by  us  to  you  from  the  date  of  your  signing 
this  contract  to  January  1,  1896,  which  have  been  sold  by  you 
and  settled  for  prior  to  April  1, 1896. 

On  July  1,  1896,  or  as  soon  thereafter  as  practicable,  on  all 
cigarettes  consigned  by  us  to  you  during  the  three  months  ending 
April  1,  1896,  which  have  been  sold  by  you  and  settled  for  prior 
to  July  1,  1896,  and  so  on,  from  quarter  to  quarter  thereafter,  in 
the  same  manner,  for  the  subsequent  consignments,  sales  and 
payments. 

Tenth.  All  obligation  upon  our  part  to  pay  you  any  commission 
for  the  sale  of  the  cigarettes  which  we  may  consign  to  you  is,  and 
shall  be,  dependent  upon  your  strict  compliance  with  the  agree- 
ment hereinbefore  contained  that  you  will  not  sell  any  of  our 
cigarettes  for  a less  price  than  that  fixed  in  our  selling  lists 
sent  to  you.  If  you  should  sell,  or  dispose  of  any  of  our 
cigarettes  at  less  than  such  price,  you  shall  forfeit  all  right  to  the 
payment  of  any  commissions  on  cigarettes  which  you  may  have 
previously  sold,  and  on  which  commissions  have  not  been  paid 
you,  and  you  shall  at  once,  on  demand,  pay  to  us  the  list  price 
for  all  cigarettes  which  you  have  sold,  and  deliver  to  us  all  of  our 


No.  40.] 


881 


cigarettes  then  in  jour  possession  which  may  have  been  previous- 
ly consigned  by  us  to  you. 

Eleventh.  Upon  your  acceptance  in  writing  of  the  terms  and 
conditions  of  this  agreement,  you  understand  and  agree  that  you 
will  handle  our  cigarettes  exclusively,  on  the  terms  and  condi- 
tions herein  specified,  and,  in  the  event  that  you  hereafter  deter- 
mine to  sell  cigarettes  of  other  manufacture,  you  are  to  notify  us, 
in  writing,  of  such  determination;  and  thereafter,  if  you  have 
fully  complied  with  all  other  terms  of  this  agreement,  the  com- 
missions to  be  paid  to  you  for  sale  of  our  cigarettes  shall  be  at 
the  rate  of  two  and  one-half  (2^)  per  cent. 

Twelfth.  If  you  shall  sell  or  distribute,  or  in  any  way,  directly 
or  indirectly,  aid  in  the  sale  or  distribution  of  any  other  cigarettes 
than  those  of  our  manufacture,  without  having  first  given  us 
written  notice  of  your  intention  so  to  do,  as  required  by  paragraph 
eleventh,  you  shall  not  be  entitled  to  claim  or  receive  any  commis- 
sions not  previously  paid  to  you  in  excess  of  two  and  one-half 
(2|)  per  cent,  on  any  past  or  future  sales  under  this  agreement; 
and  the  right  and  option  is  hereby  distinctly  reserved  to  us  to  de- 
termine and  declare  that  you  have  surrendered  all  right  to  be 
paid  any  commission  over  said  rate  of  two  and  one-half  per  cent., 
if  we  shall  be  satisfied  that  you  have  in  any  way  aided  in  the  sale 
or  distribution  of  cigarettes  other  than  those  manufactured  by 
us. 

Thirteenth.  We  reserve  the  right  of  determining,  at  all  times, 
as  to  thA  number  of  cigarettes  and  the  brands  which  we  will  con- 
sign to  you  under  this  agreement,  we  to  determine  the  matter  be- 
fore or  after  receiving  requests  or  reports  from  you ; and  you  ex- 
M 


8&2  [Senate, 

pressly  agree  that  you  will  promptly  make  reports,  or  account  of 
all  sales,  to  us,  whenever,  and  as  often  as,  we  may  call  for  the 
same. 

I 

Fourteenth.  The  right  is  reserved  to  us  at  any  time,  to  decline 
to  sell  you  any  more  cigarettes,  and  to  withdraw  the  cigarettes  al- 
ready consigned  to  you,  upon  repaying  to  you  all  your  legitimate 
advances  thereon,  and  the  right  is  reserved  to  you,  at  any  time, 
to  decline  to  act  further  for  us,  after  having  delivered  to  us  all 
cigarettes  then  in  your  hands,  and  paying  over  to  us  the  proceeds 
of  all  sales  of  our  cigarettes  at  list  price. 

Fifteenth.  Requests  for  consignments,  as  well  as  all  advances 
and  reports  of  sales  with  New  York  exchange,  must  be  paid  to  our 
office  in  New  York.  Commissions  will  also  be  settled  and  paid 
from  there. 

Sixteenth.  No  employe  of  this  company  has  any  authority  what- 
ever to  change  or  modify  this  agreement,  or  any  circular,  letter, 
or  price  list  of  this  company. 

Your  agreement  in  writing  hereon  to  receive  our  cigarettes  on 
consignment  and  to  sell  and  account  for  the  same,  under  the 
above  conditions  when  executed  by  you,  will  constitute  a binding 
contract  between  you  and  our  company. 

Very  truly,  yours, 

THE  AMERICAN  TOBACCO  COMPANY. 

<i  By 

agree  to  receive  cigarettes  on  consignment 

from  the  American  Tobacco  Company,  and  to  sell  the  same,  and  to 
account  to  said  company  therefor,  upon  the  terms  and  conditions 
set  forth  in  the  foregoing  written  proposition  to  us.  To  the  faith- 


No.  40.] 


883 


fnl  performance  of  all  such  terms  and  conditions  we  hereby  agree 
and  bind  ourselves. 

Dated, , 1895. 

(Sign  here) 

In  the  presence  of 

(Witness  sign  here) 


City  or  town 
State. . 


TWELFTH  PL'BLIC  HEARING.  MORNING  SESSION,  WED- 
NESDAY, FEBRUARY  24,  1897. 

Mr.  Lexow:  A quorum  being  present,  the  committee  will  please 
come  to  order. 

It  is  the  intention  of  the  committee — and  the  stenographer  will 
take  this  down — to  investigate  the  so-called  Coal  Trust  to-mor- 
row. Charges  have  been  made  that  the  coal  combination  is  in 
the  nature  of  the  most  vicious  Trust  that  exists,  and  certain  news- 
papers in  the  city  of  New  York  have  made  specific  charges  of  the 
existence  of  a combination  or  Trust  for  the  purpose  of  raising 
the  price  of  coal  and  curtailing  production.  The  committee  in 
this  formal  manner  places  at  the  disposal  of  the  newspapers 
making  those  charges  all  the  authority  and  power  of  its  subpoena 
and  publicly  requests  where  they  have  information,  as  has  been 
charged,  that  they  will  place  that  within  the  knowledge  of  the 
committee. 

We  make  this  declaration  in  the  broadest  sense,  so  that  no 
claim  may  be  made  hereafter  that  the  committee  has  failed  to 
probe  that  question  to  the  bottom.  And  the  offer  of  the  use  of 
its  subpoena  is  made  in  the  broadest  sense,  and  is  placed  at  the 
disposal  of  those  who  make  those  charges  absolutely  and  without 
reservation^ 


884  [Senate, 

The  committee  itself  will  subpoena  all  those  who  it  believes 
may  throw  light  upon  the  question.  If  then  the  charges  are  not 
maintained,  and  those  who  have  made  the  charges  do  not  produce 
the  proof  or  aid  the  committee  in  seeking  the  information,  it  will 
be  their  fault  and  not  the  committee’s. 

James  B.  Duke  recalled. 

Examined  by  Mr.  Lexow: 

Q.  Mr.  Duke,  the  constituent  concerns  or  companies  that  were 
first  consolidated  into  the  American  Tobacco  Company  represent- 
ed, so  far  as  organization  or  incorporation  incurred,  how  much 
in  stock?  A.  The  American  Tobacco  Company  paid  $25,000,000 
stock,  common  and  preferred,  to  the  five  original  concerns  which 
it  bought. 

Q.  Twenty -five  million  dollars,  common  and  preferred,  for  the 
five  original  concerns?  A.  That  is  about  it;  yes,  sir. 

Q.  That  was  sub-divided,  was  it  not;  I mean  there  were  sub- 
divisions made  of  the  $25,000,000  and  each  concern  got  its  appro- 
priate share?  A.  Well,  each  concern  was  bought  on  its  own 
merits. 

Q.  Yes,  and  received  for  the  value  that  had  been  ascertained  so 
much  capital  stock,  common  and  preferred?  A.  Yes,  sir. 

Q.  Or  general,  I believe  they  call  it,  in  New  Jersey,  general  and 
preferred?  A.  We  always  call  it  common;  I would  like  to  state 
that  there  was  two  concerns  bought  out  that  I didn’t  think  of  yes- 
terday, when — 

Q.  What  are  those?  A.  The  James  G.  Butler  Tobacco  Works, 
of  St.  Louis,  Mo.,  manufacturers  of  plug  tobacco,  and  H.  W. 
Myers,  of  Brooklyn,  Long  Island,  manufacturers  of  smoking  and 
chewing. 


No.  40.] 


889 


Q.  I forgot  to  ask  you  what  was  the  amount  of  the  capital  stock 
of  the  concern  in  New  Jersey;  the  old  American  Tobacco  Com- 
pany was  at  first  organized;  what  was  the  authorized  issue?  A. 
Ten  thousand  dollars;  it  was  afterwards  increased  to  $25,000,000. 

Q.  The  $10,000  was  the  formal  contribution  required  by  the 
State  of  New  Jersey;  is  that  it?  A.  That  was  the  subscription  of 
the  incorporators. 

Q.  And  was  that  $25,000,000  increased  afterwards  to  a larger 
amount?  A.  Yes;  it  was  authorized  to  be  increased  to  $35,000,- 
000,  and  something  over  $29,000,000  has  been  already  issued;  the 
other  still  remains  unissued. 

Q.  Twenty-nine?  A.  I don’t  remember  the  exact  figures — 
$29,000,000. 

Q.  Twenty-nine  million  eight  hundred  and  thirty-five  thousand? 
A.  That  is  probably  the  correct  amount. 

Q.  Has  been  issued?  A.  Yes,  sir. 

Q.  These  five  original  concerns,  you  say,  received  $25,000,000? 
A.  Yes,  sir. 

Q.  So  that  since  the  organization  originally  made — A.  (In- 
terrupting). No;  they  didn’t  receive  $25,000,000;  it  was  $24,990,- 
000. 

Q.  How  much  of  that  did  the  concerns  in  which  you  were  inter- 
ested, receive?  A.  They  received  $7,497,000 — well,  they  didn’t 
receive  it,  the  stockholders  of  the  concerns  received  it. 

Q.  I understand;  the  individual  stockholders  surrendered  their 
shares?  A.  No;  the  individual  stockholders  signed  a bill  of  sale 
with  the  company,  I think — and  the  American  Tobacco  Company 
divided  the  stock  that  was  paid  for  that  business  between  the 
stockholders  and  the  old  Duke  Sons  & Company. 


886  [Senate, 

Q.  Seven  million  and  bow  much  did  you  say?  A.  Seven  mil- 
lion four  hundred  and  ninety-seven  thousand. 

Q.  Of  which,  how  much  was  for  what  are  known  as  “live  as- 
sets’’? A.  We  sold  the  business,  Duke  Sons  & Company — sold 
the  business,  and  they  were  to  receive  $3,000,000  in  preferred  and 
ft, 497, 000  in  common,  and  we  guaranteed  that  there  would  be 
a million  and  a half  of  live  assets  or  active  assets. 

Q.  One  and  a half  million?  A.  Yes,  sir. 

Q.  So  that  in  round  figures  six  millions  of  capital  stock  of  the 
company  was  issued  for  what  is  know  as  good  will,  trade  marks, 
processes,  patents.  A.  Yes;  and  the  machinery  went  with  trade 
marks,  good  will  and  the  business. 

Q.  What?  A.  The  machinery  also  went  with  the  trade  marks, 
good  will  and  business,  patent  and  patent  rights — 

Q.  What  was  paid  separately  for  the  four  other  concerns  taken 
into  the  original  organization?  A.  The  Allen  & Ginter  stock- 
holders received  the  same  amount  as  W.  Duke  Sons  & Co.,  I think. 

Q.  And  on  the  same  basis  of  compensation,  six  millions  for 
good  will,  trade  marks,  etc.,  and  the  rest  for  what  is  known  as 
live  assets?  A.  Yes,  sir;  the  Kinney  Tobacco  Company  received 
$4,998,000  is  my  recollection. 

Q.  How  divided?  A.  There  was — he  guaranteed  that  there 
would  be  a million  dollars  of  cash  or  live  assets;  the  balance  was 
the  trade  marks,  good  will,  business,  machinery,  patents,  con- 
tracts. 

Q.  And  that  there — you  have  given  now  three,  haven’t  you? 
A.  Yes,  sir;  W.  S.  Kimball  & Co.  received  $2,499,000;  they  guar- 
anteed that  there  would  be  $500,000  of  cash — live  assets,  not 
cash — and  they  received  then  $1,999,000 — I want  to  look  at  the 


No.  40.] 


887 


paper  that  I have  got  (examines  document) — $1,000,000  for  the 
good  will,  trade  marks,  patents,  contracts  and  machinery. 

Q.  And  now  the  last — A.  Goodwin  & Co.  received  the  same 

amount — 

Q.  As  the  last  named?  A.  Yes,  sir. 

Q.  Will  you  now  tell  us  howT  much  that  was  for  live  assets  and 
how  much  for  good  will?  A.  $5,000,000  live  assets;  $19,990,000 
for  the  trade  marks,  good  will,  patents,  patent  rights,  machinery 
and  fixtures  and  contracts  which  the  different  concerns  had. 

By  Mr.  Mazet: 

Q.  $20,000,000  in  round  numbers?  A.  $19,990,000  actual 
amount. 

By  Mr.  Lexow: 

Q.  That  was  for  the  original  organization?  A.  Yes,  sir;  twen- 
ty-four millions  and  something. 

Q.  Was  any  form  of  calculation  adopted  that  was  applicable  to 
each  of  these  five  in  reaching  the  figures  at  which  the  stock  was 
issued  for  inactive  assets?  A.  The  business  of  the  different  con- 
cerns was  considered — 

Q.  Yes?  A.  Not  only  as  to  what  they  were  doing,  but  as  to 
what  the  prospects  of  the  concerns  were. 

Q.  Do  you  mean  that  you  capitalized  the  earning  capacity  of 
the  various  concerns?  A.  No;  we  placed  that  at  what  we  consid- 
ered the  proper  value  to  place  upon  the  trade  marks,  etc. 

Q.  How  did  you  get  those  values — by  computation  of  the  earn- 
ing capacity  and  capitalizing  that?  A.  Well,  that  was  consid- 
ered. 

Q.  Or  by  an  appraisement  of  the  trade  marks,  good  will  and 
that  sort  of  thing  separately?  A.  Well,  all  these  things  were 
considered  in  placing  the  volume  upon  them. 


888  [Senate, 

Q.  Did  you  reacli  the  figures  showing  the  net  profits  of  the  con- 
cern and  multiply  them  by  any  sum  for  the  purpose  of  capitaliz- 
ing the  profits?  A.  No,  sir;  we  didn’t  do  it  in  that  way. 

Q.  Will  you  please  explain  to  the  committee  how  you  reached 
these  figures?  A.  We  first  considered  the  relative  value  of  the 
businesses;  after  that  was  determined  we  considered  the  value 
of  the  whole  and  we  placed  it  at  the  figure  which  I have  stated 
that  the  company  paid  for  it. 

Q.  Who  made  the  appraisement?  A.  Mr.  Ginter;  Mr.— I for- 
get whether  Mr.  Hart  or  Mr.  Kimball. 

Q.  For  their  concerns  or  for  all?  A.  Well,  we  appraised  it  as 
a whole;  Mr.  Kinney  is  one  of  the  parties  who  passed  upon  the 
values,  Mr.  Emory  and  myself;  there  were  five  of  us. 

Q.  How  many  stockholders  or  interested  parties  were  there  rep- 
resenting the  original  five  companies  or  concerns?  A.  How 
many  was  the  total  stockholders  of  the  different  concerns? 

Q.  How  many  were  the  number  of  stockholders  interested, 
whether  they  were  corporations,  or  partners,  whether  they  were 
firms  organized  as  incorporations,  in  the  issue  of  this  twenty-five 
millions  of  stock?  A.  In  the  case  of  Kimball  & Co.  I think  Mr. 
Hart  or  Mr.  Kimball  were;  in  the  case  of  Allen  & Ginter  corpora- 
tion Mr.  Pope,  Mr.  Arenta,  Mr.  Augustine,  and  I think  that  prob- 
ably some  other  small  stockholders;  the  Kinney  Tobacco  Com- 
pany, Mr.  Kinney,  Mr.  Butler  and  I think  I heard  that  Mr.  Kin- 
ney’s brother  was  also  a stockholder;  there  may  be  some  smaller 
ones  that  I don’t  remember. 

Q.  Did  the  number  exceed  15  in  the  aggregate  representing  all 
the  concerns  that  were  incorporated  first?  A.  Yes;  I think  it 
exceeded  that  amount. 


N o.  40.] 


889 


tate:  zpzpps* 

Q.  To  any  extent?  A.  Well,  there  may  have  been  fifteen  to 
twenty-five,  somewhere  about  that. 

Q.  Fifteen  to  twenty-five  stockholders  and  partners,  you  say, 
represented  all  the  interests  that  were  capitalized  for  about 
$25,000,000?  A.  Yes. 

Q.  And  how  many  were  interested  in  the  companies  that  were 
acquired  afterward,  and  for  which,  as  I understand  you,  about 
$4,000,000  of  stock  were  issued?  A.  Well,  $4,000,000  of  stock  and 
a large  amount  of  cash  paid  also. 

Q.  Indeed?  A.  Well,  I couldn’t  state  how  many,  but  I should 
judge,  it  would  be  a guess — anywhere  from  25  to  40  people,  prob- 
ably. 

Q.  Were  the  concerns  subsequently  all  corporations,  or  were 
they  partly  firms  and  partly  corporations?  A.  Some  were  firms; 
some  were  corporations. 

Q.  Did  you  buy  their  stock,  or  did  you  buy  their  property  out- 
right? A.  Bought  their  property  outright  in  every  case. 

Q.  In  no  case  did  you  purchase  the  capital  stock  and  hold  it  in 
the  treasury  of  the  American  Tobacco  Company?  A.  In  no  case; 
no,  sir. 

Q.  How  many  stockholders  has  the  American  Tobacco  Com- 
pany now?  A.  I don’t  know  exactly;  all  the  way  from  2,000  to 
3,000. 

Q.  Not  to  exceed  2,000  to  3,000?  A.  Well,  there  may  be  more; 
I don’t  remember  having  heard  in  the  last  year. 

Q.  Who  knows  the  facts  as  to  the  number  of  stockholders?  A. 
I suppose  the  secretary  could  find  out  if  he  would  count  it  up  on 
the  stock  ledger. 

Q.  Is  the  secretary  here?  A.  Yes,  sir. 


890  [Senate, 

Q.  Do  you  know  without  looking  how  many  stockholders  there 
are? 

Secretary:  Something  over  2,000;  between  2,000  and  8,000. 

Q.  Are  they  divided  between  preferred  and  common?  A.  Yes, 
sir. 

Q.  Equally?  A.  No;  I should  not  say  that;  I don’t  know 
whether  there  is  more  preferred  holders  or  more  common  holders. 

Q.  The  register  of  transfers  is  in  the  city  of  New  York  is  it  not? 
A.  The  Farmers’  Loan  and  Trust  Company  is  the  registers. 

Q.  Mr.  Mazet  calls  attention  to  the  fact  that  while  you  have 
answered  as  to  the  general  proportion  of  stock  you  have  not 
stated,  nor  have  I asked  you,  with  reference  to  its  division  be- 
tween preferred  and  common ; was  there  any  proportion  between 
preferred  and  common?  A.  It  is  two-fifths  preferred  and  three- 
fifths  common. 

Q.  Two-fifths  preferred  and  three-fifths  common,  and  issued  in 
that  proportion  in  each  case?  A.  Yes;  I think  we  have;  the  issue 
has  been  made;  it  has  been  made  in  that  proportion. 

Q.  So  that  where  you  considered  the  good  will  of  a concern  to 
be  worth  $5,000,000  you  issued  $3,000,000  of  common  and  $2,000 
of  preferred?  A.  Yes,  sir;  that  is  where  we  bought  them  out  for 
stock,  where  we  bought  the  concerns  for  stock. 

Q.  In  any  other  case  you  must  have  disposed  of  your  stock  and 
purchased  it  for  cash?  A.  No;  we  utilized  the  surplus  of  the 
company;  the  surplus  case  that  we  had. 

Q.  Surplus  earnings?  A.  Yes,  sir. 

Q.  I would  like  to  get  more  definitely  on  the  record,  Mr.  Duke, 
just  what  part,  if  anything,  of  the  business  of  the  American  To- 
bacco Company,  you  transact  in  New  Jersey?  A.  The  general 


No.  40.] 


891 


offices  of  the  company  is  there;  we  have  some  leaf  tobacco  stored 
there;  that  is  about  all  the  business  that  is  transacted  there. 

Q.  As  a matter  of  fact,  you  don’t  transact  any  business  there 
of  any  kind,  do  you?  A.  This  office  is  kept  up  there,  and  the 
general  books  of  the  company  are  all  kept  there. 

Q.  Do  you  keep  more  than  the  stock  transfer  book  there?  A. 
Yes,  sir;  the  general  ledger  of  the  company  is  kept  there;  general 
hooks. 

Q.  How  many  clerks  have  you  employed  over  there?  A.  I 
don’t  really  know;  it  is  under  the  charge  of  the  auditor. 

Q.  Does  the  secretary  have  charge  of  that  part  of  the  business? 
A.  Not  the  book  department,  bookkeeping  department. 

Q.  Doesn't  he  have  general  control  over  the  books  of  the  com- 
pany? A.  I don’t  think  he  exercises  any  control  over  any  of  the 
books  except  minute  books  and  the  transfer  book. 

Q.  Well,  he  is  the  custodian  under  the  by-laws  of  the  company, 
of  its  books,  is  he  not?  A.  Well,  I — I don’t  really  know  whether 
he  is  or  not;  the  auditor  has  charge  of  the  books  of  the  company. 

Q.  Where  does  the  auditor  stay  while  engaged  in  the  business 
of  the  company?  A.  He  goes  wherever  he  has — it  is  necessary 
for  him  to  go,  but  stays  a large  part  of  his  time  at  the  22d  Street 
office;  sometimes  in  New  Jersey,  sometimes  travels  around  to  the 
different  factories,  and  goes  through  the  different  offices  there. 

Q.  When  you  speak  of  the  22d  Street  office,  you  mean  the  office 
here  in  the  city  of  New  York?  A.  Yes,  sir. 

Q.  What  does  he  ever  do  in  New  Jersey?  A.  I don’t  really 
know  what  he  does;  he  goes  there  and  directs  the  bookkeepers 
and  looks  after  them  and  sees  that  the  books  are  properly  kept; 
he,  in  other  words,  fills  his  position  as  auditor  of  the  company. 

Q.  Do  you  know,  as  a matter  of  fact,  that  any  bookkeeping  of 
the  company  is  done  in  the  State  of  New  Jersey?  A.  Yes,  sir. 


892  [Senate, 

Q.  Or  was  done  as  a practice  of  the  company?  A.  Yes;  I know 
that  the  general  ledgers  are  there;  the  auditor  tells  me  so,  and  I 
have  always  understood  that  that  was  the  case. 

Q.  Ain’t  the  bookkeeping  department  known  to  you  to  be  the 
department  that  keeps  the  general  accounts  and  books  of  the  com- 
pany, or  isn’t  it  in  the  city  of  New  York,  the  New  York  office 
here?  A.  Well,  there  is  a large  office  in  22d  street,  with  a large 
amount  of  clerical  help  and  the  work  is  done  and  the  sales  are 
all  made  direct  from  the  New  York  office;  but  the  general  ledgers, 
the  general  books  of  the  company,  where  everything  is  consoli- 
dated from  all  the  different  factories  and  depots  of  the  company 
goes  through  the  Jersey  books,  which  are  kept  in  New  Jersey. 

Q.  Did  you,  a month  ago,  have  a regular  bookkeeping  force  in 
the  State  of  New  Jersey?  A.  That  is  my  understanding. 

Q.  You,  as  President  of  the  company,  must  know?  A.  I can’t 
know  everything  any  more  than  you  can  know  everything  that 
the  people  of  the  Legislature  does ; we  have  got  a great  business, 
and  there  is  no  one  man  that  can  know  every  detail  in  the  busi- 
ness. 

Q.  I understand  that;  but  I would  like  to  get  on  the  record  the 
system  on  which  these  corporations  that  have  no  factories  in  the 
State  of  New  Jersey  operate;  now,  I would  like  to  get  the  infor- 
mation candidly  upon  the  record?  A.  Well,  I have  given  it  to 
you  candidly. 

Q.  It  is  right  that  we  should  know  it;  is  there  anybody  in  your 
emjdov  here  in  the  city  of  New  York  that  can  answer  that  ques- 
tion, as  to  what  the  practice  of  the  company  has  been  with  refer- 
ence to  the  maintenance  of  any  force  in  the  State  of  New  Jersey 
and  the  bookkeeping?  A.  Well,  Mr.  Harris,  the  auditor  of  the 
company  knows  exactly  what  books  he  has  kept  in  New  Jersey 
and  all  about  it. 


No.  40.] 


893 


Q.  Is  lie  in  New  York  now?  A.  He  was  at  the  office  yesterday 
and  I imagine  he  is  there  to-day. 

Q.  What  is  Mr.  Harris’s  first  name?  A.  W.  R.  Harris. 

Q.  When  you  speak  of  the  issuance  of  this  stock  for  good  will, 
etc.,  do  you  include  in  that  real  estate?  A.  No,  sir. 

Q.  The  real  estate. was  considered  part  of  the  live  assets?  A. 
Yes,  sir. 

Q.  When  you  speak  of  machinery  being  included  in  that,  do  you 
mean  the  cigarette  and  other  manufacturing  machinery  that  was 
in  use  in  your  various  establishments?  A.  All  machinery  except 
that  which  we  have  held  on  lease,  of  course,  some  of  the  ma- 
chinery we  lease — pay  royalty  for  the  use  of  it. 

Q.  What  portion  of  the  stock  issued  for  good  will 
was  issued  for  machinery  in  the  aggregate,  as  nearly 
as  you  can  give  it,  I mean  approximately,  wThat  proportion 
did  it  bear  to  the  whole?  A.  Originally,  I think  it  was  some- 
thing like  $3,000  or  $4,000,  the  value  of  the  machinery  that  went 
with  the  good  will,  trade  mark,  etc. 

Q.  That  is  to  say,  the  value  of  the  machinery  separately  from 
the  good  will  and  trade  marks?  A.  Yes,  isir 

Q.  Was  about  $300,000?  A.  Between  $300,000  and  $400,000  is 
my  recollection. 

Q.  Do  you  mean  in  the  entire  combination?  A.  I mean  the  en- 
tire amount  that  the  company  bought  from  the  five — 

Q.  (Interrupting).  From  the  five  concerns?  A.  Yes,  sir. 

Q.  So  that  $300,000  to  $400,000  must  be  deducted  from  the  $19,- 
000,000  to  reach  the  amount  that  the  good  will,  trade  marks,  etc., 
outside  of  machinery,  was  capitalized  at,  is  that  right,  Mr.  Duke? 
A.  Yes,  sir. 

Q.  The  100  concerns  that  you  say  were  active  competitors  in 


894  [Senate, 

the  market  with  you  at  the  time  of  the  forming  of  this  combina- 
tion, were  they  what  is  known  as  manufacturers  of  machine-made 
cigarettes?  A.  Some  manufactured  machine-made;  some  manu- 
factured hand-made. 

Q.  Is  it  not  true  that  they  were  small  manufacturers  of  hand- 
made cigarettes?  A.  Some  of  them  were  and  some  of  them  were 

not. 

Q.  Backstairs  manufacturers?  A.  I never  went  into  their  fac- 
tories, so  I can’t  say  whether  they  were  backstair  manufacturers 
oil  ;not. 

Q.  I mean  the  competition  that  you  had?  A.  Some  of  them 
did  quite  considerable  business. 

Q.  By  machine?  A.  At  the  time,  yes;  I think  some  of  them 
were  doing  some  business,  considerable  business. 

Q.  Is  it  not  a fact  that  in  making  this  combination  of  interests 
practically  secured  control  of  all  the  cigarette  making  machines? 
A.  No;  there  was  two  concerns,  I think,  had  the  same  machines 
that  we  had. 

Q.  On  lease?  A.  Yes,  sir. 

Q.  But  you  did  have  machines,  did  you  not,  that  you  acquired, 
which  enabled  you  to  do  the  same  work  with  one  machine  that 
fifty  hands  theretofore  had  been  used  or  occupied  in  doing?  A. 
Yes;  the  machine  that  we  had — 

Q.  You  acquired  that  machine,  did  you  not?  A.  Well,  we  had 
— we  didn’t  have  the  exclusive  use  of  it  at  the  time  the  company 
was  originally  formed. 

Q.  Did  you  acquire  it  subsequently?  A.  Yes,  sir;  afterwards, 
they  gave  it  to  us  as  soon  as  the  other  people  gave  up  business. 

Q.  And  the  acquisition  of  that  machine  is  part  of  the  issuance 
of  this  between  $4,000,000  and  $5,000,000  of  stock  that  was  issued 

afterwards?  A.  No. 


No.  40.] 


895 


Q.  So  that — A.  We  didn’t  give  any  stock;  we  paid  so  much 
a year  royalty  for  the  use  of  the  machine. 

Q.  After  that  there  was  nothing  in  the  market  that  could  com- 
pete with  you  in  the  machinery  line,  was  there?  A.  There  was 
quite  a number  of  machines,  but  I don’t  know  how  efficient  they 
were. 

Q.  None  as  efficient  as  yours,  were  there?  A.  Yes;  the  Allison 
machine  was  a pretty  good  machine,  but  it  was  not  satisfactory 
to  me;  some  of  the  other  manufacturers  thought  it  was  better 
than  the  Bonsack ; I didn’t  think  so. 

Q.  Did  you  acquire  the  Allison  machine?  A.  I think  that  we 
had  the  foreign  rights  of  the  Allison  machine. 

Q.  Did  you  acquire  it  here?  A.  Well,  I don’t  really  remember 
just  how  that  was,  and  I don’t  know  whether  we  have  the  control 
of  it  in  this  country  or  not. 

Q.  Didn’t  you  organize  the  Allison  Machine  Company?  A. 
Yes;  that  is  I was  one  of  the  incorporators  and  one  of  the  stock- 
holders of  the  Allison  Machine  Company. 

Q.  And  that  was  organized  as  friendly  or  in  connection  with 
the  American  Tobacco  Company,  was  it  not?  A.  It  was  not  or- 
ganized in  connection  with  the  American  Tobacco  Company,  but 
people  holding  stock  in  the  Allison  were  also  holding  stock  in  the 
American  Tobacco  Company. 

Q.  And  you  being  president  of  the  American  Tobacco  Company 
and  a director  of  the  Allison  Company — you  were  president  of 
the  Allison,  too,  were  you  not?  A.  No,  sir. 

Q.  What  office  did  you  occupy  there?  A.  I was  a director. 

Q.  And  a director  therefore  in  the  Allison  Company — the  one 
company  was  friendly  to  the  other,  was  it  not?  A.  Well,  I 
haven’t  heard  of  any  antagonism,  although  I paid  no  attention 
to  the  affairs  of  the  Allison  Machine  Company. 


896  [Senate, 

Q.  Have  you  been  able  to  secure  the  figures  with  reference  to 
the  discharge  or  employment  of  labor  since  the  combination  went 
into  effect.  Q.  Yes,  sir;  so  far  as — the  five  original  concerns  had 
employed  during  the  year  1889,  3,181  people;  the  same  factories  as 
operated  by  the  American  Tobacco  Company  in  February,  1897, 
3,379;  the  other  factories  that  has  been  bought  since  the  company 
was  organized,  the  employes  that  they  had  at  the  time  of  our  pur- 
chasing them  was  2,714;  we  now  have  employed  in  the  same  fac- 
tories, making  the  same  brands  and  goods,  5,815,  making  a total 
employed  at  the  time  we  bought  the  different  factories  out  5,895; 
now  employed  9,194,  the  increase  3,299,  56  per  cent. 

Q.  What  has  been  the  increase  in  the  product  in  the  mean- 
while? A.  Well,  I haven’t  got  the  figures  of  the  product  as  com- 
pared to  that. 

Q.  Where  did  you  get  these  figures,  Mr.  Duke?  A.  They  were 
furnished  me  by  Mr.  Harris,  the  auditor  of  the  company. 

Q.  Where  did  he  procure  or  collate  them?  A.  I suppose  he 
got  ours  from  our  books,  and  the  other  he  must  have  gotten  them 
from  some  member  of  the  old  concerns. 

Q.  Is  this  statistical  information  that  you  have  brought  here 
contained  in  any  books  of  the  companies  when  independently 
working  compared  with  your  present  books,  or  is  it  a statement 
put  upon  paper  of  reports  made  to  the  auditor  by  those  inter- 
ested? A.  I can’t  tell  you  how  he  gathered  the  figures. 

Q.  Mr.  Harris  can  be  here,  can  he  not?  A.  I imagine  so,  if  he 
is  subpoenaed;  I don’t  know  whether  he  is  in  town  to-day  or  not; 
I want  to  make  a statement  about  the  old  tobacco  business;  you 
yesterday  was  asking  about  the  discharge  of  people;  in  the  Hall 
factory  they  had  300  hands  and  they  operated  four  machines ; the 
consolidated  factory — they  gave  the  figures  as  435  hands  (but  the 


No.  40.] 


897 


party  that  gave  these  figures  told  me  afterward  that  at  the  time 
it  was  done  that  they  had  more  hands  than  they  usually  kept) — 
that  probably  350  would  be  a good  average  amount  of  the  number 
of  hands;  they  operated  thirty  machines;  H.  L.  Ellis  of  Baltimore, 
162  hands — making  a total  of  897 — (that  is  counting  the  consoli- 
dated at  435,  which  is  an  excessive  amount) ; they  operated  thirty- 
four  machines;  the  company  now  employs  in  three  factories— one 
in  New  York  in  Twenty-second  street — 133  hands,  and  they  oper- 
ate fifty  machines;  in  Baltimore  we  employ  500  and  we  operate  48 
machines;  in  Richmond  we  employ  172  hands  and  we  operate  nine 
steming  machines,  making  a total  of  805  hands  employed  in  the 
all  tobacco  cigarette  business;  notwithstanding  we  operate  over 
double  as  many  machines  as  the  old  concern;  and  if  the  figures 
are  correct,  to  take  the  average  of  the  hands  that  they  really  em- 
ploy, I believe  that  the  company  now  employs  more  hands  in  the 
manufacture  of  all  tobacco  cigarettes  than  the  concerns  did  be- 
fore they  bought  them  out;  of  course  we  have  transferred,  as  I 
said  yesterday,  the  business  into  our  own  factories;  these  other 
factories  that  we  bought  the  brands  and  trade  marks  and  good 
will  of  with  leased  factories — we  had  enough  capacity  in  our  own 
factories  to  put  them  in  there,  and  so  we  transferred  them;  we 
have  got  capacity  enough  in  Baltimore  to  manufacture  four  times 
as  many  all  tobacco  cigarettes  as  are  sold  in  this  country.  I ex- 
pect. 

Q.  During  the  period  of  time  covered  by  these  figures  how 
much  has  the  consumption  increased?  A.  What,  of  all  tobacco 
cigarettes,  you  mean? 

Q.  No,  or  all  cigarettes?  A.  What,  since  the  company  was 

formed? 


57 


898  [Senate, 

Q.  Yes;  your  production?  A.  I expect  that  it  has  nearly 
doubled. 

Q.  That  would  represent  how  many  millions  of  cigarettes  an- 
nually? A.  Well,  about — nearly  four  thousand  millions. 

Q.  The  consumption  has  increased  from  two  thousand  millions 
to  four  thousand  millions?  A.  Well,  I don’t  remember  just  the 
exact  figures. 

Q.  I mean  approximately?  A.  Somewhere  about  two  thou- 
sand millions  that  was  made  by  the  original  five  concerns  that 
was  bought. 

By  Mr.  Bedell : 

Q.  Then  you  don’t  mean  the  consumption,  you  mean  as  pro- 
duced by  the  five  concerns  that  you  bought  and  that  you  produce 
now;  you  don’t  mean  the  consumption  of  the  whole  country?  A. 
I don’t  know  anything  about  what  anybody  else  makes. 

Q.  You  say  you  make  about  four  thousand  million?  A.  Well, 
nearly  four  thousand  million;  I don’t  know  whether  that  includes 
the  all  tobacco  or  just  paper;  I think  it  includes  both  classes. 

By  Mr.  Mazet: 

Q.  How  much  of  this  capital  stock  of  the  American  Tobacco 
Company  is  owned  by  the  original  five  concerns  as  near  as  you 
can  estimate?  A.  Owned  by  the  five  concerns? 

Q.  You  own  some,  don’t  you?  A.  Yes. 

Q.  The  stockholders  who  received  it  originally  when  the  com- 
pany was  first  organized?  A.  I don’t  really  know. 

Q.  Have  you  no  idea  approximately  what  proportion?  A. 
Well.  I can  make  a guess;  I know  what  I have  got. 

Q.  Fifty  per  cent.?  A.  I should  judge  they  owned  a great  deal 
more  than  that — it  is  a guess — they  may — I don’t  know — 


No.  40.] 


899 


Q.  They  have  a controlling  interest,  haven’t  they?  A.  Well,  it 
•would  be  a guess,  because  I don't  pay  any  attention  to  anybody 
else's  investments. 

Q.  Are  the  officers  and  board  of  directors  elected  annually;  has 
that  been  the  custom?  A.  Well,  there  is  a certain  number  of  the 
directors  elected. 

Q.  They  rotate,  do  they?  A.  Yes;  they  rotate;  the  officers  are 

all  elected  yearly. 

Q.  And  the  officers  and  directors  are  composed  of  the  original 
stockholders,  are  they  not,  of  those  five  concerns  that  went  in? 
A.  No,  sir. 

Q.  And  the  others  that  have  been  taken  in  since?  Have  you 
anybody  among  your  board  of  directors  who  is  not  in  the  tobacco 
business  one  way  or  another?  A.  I don’t  think  we  have;  we 
don’t  want  people  who  don’t  know  anything  about  the  business. 

Q.  What  was  this  stock  put  on  the  market  originally  for;  do 
you  remember  what  it  was  first  sold  for  -when  it  was  first  listed? 
A.  I don’t  know  what  it  was  sold  for  when  it  was  first  listed;  I 
know’  the  first  that  I noticed  that  was  sold  was  sold  at,  started  at 
par,  and  run  up  above  that  figure. 

Q.  The  preferred  stock  received  a dividend  of  8 per  cent,  an- 
nually, did  it  not.  since  the  organization?  A.  Yes,  sir. 

Q.  And  can  you  give  us  now  the  figures  of  the  dividends  on  the 
common  stock  from  the  time  of  organization  up  to  the  present 
time?  A.  The  first  year  the  common  stock  paid  10  per  cent;  that 
was  in  1890 ; for  the  years  1890,  1891, 1892,  1893, 1894  the  common 
stock  paid  12;  in  1895,  paid  9;  in  1896  it  paid  9 per  cent,  in  cash, 
and  it  paid,  divided  with  the  stockholders,  20  per  cent,  in  scrip. 

Q.  And  in  addition  to  that  there  was  a surplus,  was  there  not, 
in  addition  to  the  percentage?  A.  In  addition  to  the  cash  divi- 
dends there  was  a surplus — every  year ; yes,  sir. 


900  [Senate,. 

Q.  Do  you  know  how  muck  that  surplus  aggregated  up  to  the 
close  of  1896?  A.  No;  I do  not;  because  we  don’t  know  what 
the  surplus  for  1896  was;  our  annual  statement  will  show. 

Q.  Has  that  been  made  yet?  A.  No,  sir. 

Q.  You  know  what  it  was  in  1895?  A.  Know  what  the  sur- 
plus was? 

Q.  Yes,  for  that  year?  A.  I think  it  was  something  like  $1,- 
400,000;  our  annual  statement  will  show  that. 

Q.  One  million  four  hundred  thousand  dollars,  and  a dividend 
of  9 per  cent,  was  declared  on  the  common  stock,  in  addition  to 
that?  A.  Yes,  sir. 

Q.  1 presume  you  are  aware  of  the  fact  that  notwith- 
standing that  statement,  the  stock  fluctuated;  do  you  know  what 
it  was  in  May,  1895?  A.  No;  I don’t;  we  don’t  have  anything  to 
do  with  the  fluctuation  of  the  stock  market;  that  is  run  by  Wall 
Street. 

Q.  1 am  asking  you;  you  know  that  it  was  about  117 ; that  the 
records  show  that  that  was  the  rate,  wasn’t  it?  A.  1 guess  it 
wais. 

Q.  And  in  December,  1895,  it  was  down  to  63,  which  in  seven 
months  would  make  a deterioration  of  54  points?  A.  I have 
seen  that  in  quite  a number  of  stocks;  I really  pay  but  very  little 
attention  to  the  fluctuation. 

Q.  And  that  fluctuation,  notwithstanding  the  fact  that  a divi- 
dend of  9 per  cent,  had  been  declared,  and  a surplus  of  $1,400,000 
in  addition  thereto;  what  is  your  explanation  of  that  variation, 
of  the  fluctuation  in  that  stock,  the  majority  of  the  stock,  as  you 
say,  being  in  control  of  the  original  stockholders?  A.  I have  no 
explanation  to  make,  because  I have  nothing  to  do  with  the  stock 
market. 


No.  40.] 


901 


Q.  You  have  no  explanation  as  to  how  that  fluctuation  was 
brought  about?  A.  I -suppose  people  wanted  to  sell  their  stock, 

, I 

and  sold  it,  and  the  price  went  down. 

Q.  Was  it  not  to  some  extent  influenced  by  the  fact  that  the 
Board  of  Directors  passed  a resolution  declaring  that  they  would 
not  pay  the  February  dividend  of  1896?  A.  The  stock — 

Q.  Didn't  that  effect  the  market,  and  the  stock  dropped  after 
that  was  done;  that  was  it,  wasn’  it?  A.  It  was;  and  we  did  it— 
for  the  purpose  of  giving— we  published  it — it  was  done  after 
3 o’clock,  after  the  Stock  Exchange  closed,  and  we  didn’t  publish 
it,  so  as  to  give  to  the  whole  of  the  stockholders  the  same  chance 
to  know  the  thing  before  it  went. 

Q.  Didn’t  the  Board  of  Directors  act  on  that  price — they  acted 
on  it,  and  the  point  was  made  that  it  was  not  done  legally  or  for- 
mally, and  then  subsequent  action  was  taken;  isn’t  that  right? 
A.  No;  we  called  the  directors  together  in  formal  meeting  for 
the  purpose  of  seeing  whether  we  would  borrow  money  to  conduct 
the  going  business,  or  whether  we  would  stop  paying  the  divi- 
dends and  let  the  dividends  remain  in  the  concern  to  furnish  the 
needed  capital:  it  was  decided  that  we  would  not  borrow  any 
money  to  put  into  the  business  for  the  purpose  of  conducting  the 
business;  we  decided:  it  was  decided  that  they  would  leave  the 
earnings  of  the  company  there  for  the  purpose  of  taking  care  of 
the  large  increase  that  we  had  in  our  business,  and  we  so  decided 
that  so  as  to  give  the  stockholders  notice,  we  decided  that  we 
would  publish  in  the  newspapers  that  we  would  not  pay  any  divi- 
dend, and  give  the  reason;  that  was  done. 

Q.  You  had  a surplus,  you  say,  of  .$1,400,000  for  that  year?  A. 
Yes;  but  we  had  it  all  invested  in  the  business. 

Q.  And  in  addition  to  that?  A.  We  had  $5,000,000  to  $6,000,- 
000  all  invested. 


902  [Senate, 

Q.  It  was  $8,000,000,  wasn’t  it?  A.  Probably  it  was;  I don’t 
remember  the  figures. 

Q.  And  you  have  no  explanation  of  that  fluctuation  in  the 
stock  from  117  down  to  63  in  seven  months?  A.  There  is  no  ex- 
planation except  it  shows  on  the  face;  the  people  wanted  to  sell 
the  stock  and  did  sell  it. 

Q.  Do  you  know  what  proportion  of  the  stock  of  the  company 
was  operated  in  in  Wall  Street?  A.  Well,  I don't  know  any 
more  about  it  than  you  do,  because  you  can  see  the  newspapers, 
what  they  say,  and  I don’t  really  know  what  the  amount  of  actual 
transactions  there  is. 

Q.  You  know  that  you  were  not  buying  and  selling  American 
Tobacco  Company’s  stock?  A.  Well,  now,  that  is  a private  mat- 
ter that  I don’t  think  is  proper  to  go  into — 

Q.  You  don’t  care  to  answer?  A.  (Continuing).  Whether  I 
bought  it  or  sold  it,  or  not;  I will  state  that  I have  got  a heap 
more  of  the  stock  than  I ever  had  before. 

Q.  In  other  words,  you  sold  out  at  117,  and  bought  it  in  at  53? 
A.  No,  sir;  I don’t  say  that. 

Q.  Do  you  know  the  firm  of  Park  & Tilford?  A.  Yes;  know 
them  by  reputation ; I have  met  Mr.  Park. 

Q.  Did  von  hear  his  testimony  in  regard  to  this  action  pending 
in  New  Jersey  to  the  effect  that  his  firm  was  obliged  to  sell  vour 
goods  exclusively  and  refrain  from  selling  other  goods,  as  other- 
wise you  declined  to  sell  them  any  goods  whatever?  A.  I heard 
that  testimony. 

Q.  Is  that  true?  A.  No;  that  is  not  true;  he  didn’t  have  to 
sell  our  goods;  he  could  exercise  his  own  judgment. 

Q.  That  is  not  an  answer  to  my  question;  he  made  the  state- 
ment that  you  refused  to  sell  him  goods  unless  he  would  sell  your 


No.  40.] 


903 


goods  exclusively.  We  never  refused  to  sell  him  any  goods  be- 
cause the  question  never  came  up  as  to  whether  we  should  sell 
him  or  not ; we  always  did. 

Q.  Then  it  was  a mistake?  A.  We  always  did  consign  him  the 
goods  that  he  asked  for. 

Q.  Wasn't  it  because  you  insisted  on  his  making  a stipulation 
that  he  would  not  sell  any  goods  other  than  those  of  the  Ameri- 
can Tobacco  Company?  A.  We  made  no  stipulation  with  him; 
he  had  an  agreement  such  as  all  people  had  at  that  time. 

Q.  His  testimony  was  erroneous  then,  was  it?  A.  Well,  as  I 
remember  his  testimony  he  claimed  that  somebody  from  the  com- 
pany went  there  to  him  about  his  handling  our  goods,  or  some- 
thing of  that  kind;  he  said  the  secretary  of  the  company,  but  the 
secretary  of  the  company  never  went  to  see  him;  and  I don’t  re- 
member anybody  ever  having  gone  there;  he  said  so,  that  is  all  I 
know  about  it. 

Q.  You  are  not  prepared  to  swear  that  that  is  untrue?  A.  I 
am  not  prepared  to  swear  that  that  is  either  true  or  untrue. 

Q.  When  did  you  go  into  the  plug  tobacco  business?  A.  I 
think  we  bought  the  National  Tobacco  Works  in  1891. 

Q.  Do  you  know  what  the  monthly  output  of  plug  tobacco  was 
before  you  went  into  that  business?  A.  The  total  plug  manu- 
facture? 

Q.  Yes;  the  average  monthly  output?  A.  There  is  about  250,- 
000,000  pounds  of  tobacco  of  all  kinds  outside  of  cigars,  cigar- 
ettes and  snuff  manufactured,  and  the  revenue  returns  gives  the 
amount  of  smoking  at  about — 

Q.  I am  speaking  of  only  plug  tobacco.  A.  Well,  I am  getting 
at  it — 70,000,000  or  80,000,000  pounds  fine  cut  and  we  figure  that 
it  would  leave  about  140,000,000  pounds  of  plug;  of  course  you 
can  get  at  it  exactly — 


904  [Senate, 

Q.  For  the  year?  A.  That  is  a year,  yes;  we  estimate  it  at 
about  150,000,000  pounds  of  plug  made  a year;  that  is  of  all  styles 
and  kinds. 

Q.  Do  you  know  how  much  the  output  was  increased  after  you 
had  gone  into  the  business?  A.  Well,  there  has  been  a gradual 
increase  in  the  tobacco  business  before  we  went  into  it  and  since 
we  went  into  it,  except  one  or  *two  hard  years  that  we  have  had, 
and  then  it  fell  off. 

Q.  Is  it  not  true  that  you  gave  away  a great  deal  of  plug  to- 
bacco in  order  to  drive  out  competition  in  that  line  of  business 
after  you  started  in?  A.  No;  we  gave  samples  of  plug  tobacco, 
the  same  as  other  manufacturers  did  before  we  ever  thought  of 
going  into  the  business;  just  the  same  as  they  are  doing  to-day, 
and  just  the  same  as  everybody  who  is  trying  to  introduce  pro- 
prietary brands  have  to  do  for  the  purpose  of  getting  it  intro- 
duced. 

Q.  Do  you  know  to  what  extent  you  gave  away  samples  of  plug 
tobacco?  A.  We  have  given  away  very  little,  except  we  made  a 
test  of  it  at  one  time  in  Philadelphia  to  see  whether  we  could 
gain  business  by  giving  samples,  but  we  didn’t  have  very  good 
success  with  it,  so  we  didn’t  pursue  it  any  further. 

Q.  You  have  testified  that  the  proportion  of  capital  stock 
was  issued — what  was -the  form  of  the  firm,  James  B.  Duke?  A. 
W.  B.  Duke  Sons  & Company. 

Q.  (Continuing)  That  the  capital  issued  to  them  was  $7,500,000? 
A.  Seven  million  four  hundred  and  ninety-seven  thousand. 

Q.  What  proportion  of  that  was  for  the  actual  plant  and  ma- 
chinery, $4,000,000?  A.  No;  $1,500,000  was  for  live  assets  which 
the  company  guaranteed  to  have;  the  balance  was  for  good  will, 
trade  marks,  brands,  patents,  patent  rights. 


No.  40.] 


905 


Q.  Is  that  issue  based  on  the  valuation  which  was  then  made 
by  you  and  the  other  appraisers  who  were  appointed — I under- 
stood you  were  one  of  them?  A.  Yes. 

Q.  That  was  based  on  the  valuation  of  the  property,  was  it? 

A.  Yes,  sir;  no,  we  did  not  appraise  live  assets  at  that  time;  it 
was  some  time  after  the  company  was  formed,  along  in  January 
or  February  when  the  inventories  were  all  made  up  that  the  ap- 
praisal of  the  live  assets  was  made. 

Q.  What  was  that  appraisal  fixed  at  of  that  particular  concern? 

A.  What,  the  appraisal  of  the  live  assets? 

Q.  Yes?  A.  One  million  dollars;  we  had  tO'  make  good  $500,- 
000  to  make  up  the  amount  that  we  had  guaranteed,  and  make  it 
$1,500,000. 

By  Mr.  Bedell: 

Q.  You  had  to  pay  that  in  cash?  A.  We  paid  that  in  notes; 
notes  of  different  stockholders  which  were  made  payable  within 
a short  time  after  that. 

Q.  That  was  done  with  several  of  the  other  companies,  was  it 
not,  to  the  extent  of  several  thonsand  dollars?  A.  Yes;  it 
amounted  in  all  to  $1,825,000. 

Q.  What  was  Mr.  Wright’s  interest  in  that  concern  before  he 
retired;  what  proportion;  it  was  a fifth,  wasn’t  it?  A.  Yes,  sir. 

Q.  And  he  was  paid  $40,000;  $40,000  for  his  one-fifth  interest, 
was  he  not?  A.  I think  he  was;  something  like  that. 

Q.  According  to  those  figures  the  actual  value  would  be  $200,- 
000?  A.  Yes;  but  there  is  a big  difference  between  the  time  he 
was  in  it  and  the  time  we  sold  it  to  the  company;  we  practically 
made  the  business  then.  ' 

Q.  How  long  a period  elapsed  between  his  retirement  and  your 


906  [Senate, 

going  into  the  American  Tobacco. Company?  A.  Four  or  five 
years,  I think. 

Q.  Then,  in  that  time  do  you  mean  to  say  that  the  business  in- 
creased in  value  of  the  plant  from  $ 200, 000  to  $1,500,000?  A. 
Yes;  more,  counting  the  value  of  the  good  will  and  trade-marks 
that  we  had  established;  we  had  established  our  trade-marks  all 
over  the  civilized  world,  wherever  cigarettes  and  tobacco  could  be 
gotten  in,  where  the  duty  did  not  discriminate. 

Q.  And  that  was  all  done  after  Mr.  Wright  retired  from  the 
business?  A.  Well,  the  goods  had  been  placed  in  some  of  the 
foreign  markets  and  in  some  of  these  markets. 

Q.  How  long  had  that  firm  been  in  business  at  the  time  that  he 
retired,  prior  to  that  time?  A.  Well,  my  father  started  the  busi- 
ness in  1866. 

Q.  When  did  Mr.  Wright  retire  from  the  firm?  A.  He  retired 
in  1885. 

Q.  Didn't  the  firm  have  a pretty  well  established  reputation  at 
that  time  in  the  good  will?  A.  A very  small  business;  in  1883 
the  business  of  the  firm  amounted  to  about  $200,000, 1 think,  total 
sales;  in  1889,  we  sold  $4,500,000  worth. 

Q.  Was  that  an  average  of  its  sales,  the  $200,000?  A.  Well, 
that  was  larger  than  it  was  years  before  that;  if  your  idea  is  to 
question  the  value  of  the  good  will  and  trade-marks — the  good 
will  and  trade-marks  are  worth  more  than  we  got  for  them;  in 
every  concern  that  we  bought — 

Q.  How  do  you  estimate  the  value;  how  do  you  reach  the  basis 
of  valuation  on  good  will  and  trade-marks?  A.  Well,  we  reach 
it — if  you  would  go  to  the  expense  of  trying  to  make  one  at  some 
time  you  would  find  out  the  cost  — and  then,  of  course,  the 
value  and  earning  capacity  of  the  business. 


No.  40.] 


907 


Q.  Well,  on  an  earning  capacity  of  $400,000,  and  you  place  the 
good  w ill  at  $5,500,000?  A.  Well, I don’t  say  that  we  take  only 
the  earning— what  it  had  earned — we — 

Q.  It  was  largely  speculative,  wasn’t  it,  this  prospective  earn- 
ing? A.  No;  not  speculative,  because  we  had  spent  in  the  devel- 
opment of  the  business  in  the  year  1889 — we  spent  $800,000  in  de- 
velopment of  our  trade. 

Q.  Well,  that  was  not  what  it  was  actually  earning,  but  what 
it  might  earn  in  the  future,  wasn’t  it?  A.  We  knew  it  would 
earn  a great  deal  more  than  it  was;  and  whether  we  sold  it  to 
the  American  Tobacco  Company  or  whether  we  had  kept  it  as  a 
private — it  would  have  earned  a good  deal  more  money  than  it 
had  earned. 

Q.  The  actual  value  of  the  plant — that  is  the  property  in  sight, 
outside  of  the  good  will,  patents,  etc.,  of  the  combined  concerns 
of  the  American  Tobacco  Company,  was  estimated  by  you  at 
about  $5,000,000,  wasn’t  it?  A.  Yes,  sir;  that  is  what  it  was  val- 
ued at. 

Q.  And  a total  capitalization  of  $25,000,000?  A.  Yes,  sir. 

And  your  estimates  for  the  good  will,  etc.?  A.  Yes;  there  is 
one  other  thing  that  you  asked  me  for,  Mr.  Chairman,  that  I 
would  like  to  put  in  now;  you  asked  me  about  the  increase  of  the 
Twenty-second  street  factory. 

By  Mr.  Lexow: 

Q.  Yes?  A.  That  factory  that  was  burned  down,  including  a 
building  that  was  leased  there  had  a full  capacity  of  97,000 
square  feet;  the  new  factory  including  the  buildings  that  we  have 
leased — right  around  there  we  have  storage  and  for  manufac- 
turing purposes — amounts  to  200,000  square  feet,  and  we  pro- 
duce— • 


908  [Senate, 

Q.  More  than  double?  A.  Yes,  sir;  and  we  produced  iu  that 
factory  last  year  more  goods  than  was  made  in  all  the  other  con- 
cerns before  we  bought  them. 

By  Mr.  Mazet: 

Q.  You  have  a system  of  numbering  every  package  of  cigar- 
ettes that  goes  out  of  the  American  Tobacco  Company,  have  you 
not?  A.  Yes,  sir. 

Q.  So  that  yon  can  trace  to  any  dealer  who  sells  cigarettes  by 
the  package?  A.  So  we  can  trace  where  the  goods  come  from  of 
the  consignee  having  originally  got  the  goods  from  us. 

Q.  In  other  words,  every  package  of  cigarettes  that  is  sold  in 
the  United  States  of  yours  you  can  trace  originally  where  they 
came  from  and  to  whom  they  were  sold?  A.  I don’t  know 
whether  we  could  on  all  brands;  on  some  of  the  principal  brands 
we  put  a number,  the  number  of  the  consignee,  on  each  package 
of  cigarettes,  so  that  if  we  find  them  in  any  part  of  the  country 
we  know  whom  we  consigned  the  goods  to  and  if  there  is  any- 
thing wrong  with  them — if  they  have  been  improperly  used  or 
anything  of  that  kind;  we  know  who  it  was  that  got  them  and 
who  is  responsible. 

Q.  You  have  a system  of  numbering  your  consignees,  have  you 
not,  as  to  who  the  cigarettes  are  sent  to?  A.  We  number  the 
package;  we  give  the  consignee  a number  and  we  number  the 
package  of  goods. 

Q.  So  that  each  package,  you  know  where  each  package  goes 
from  the  time  it  leaves  the  factory  until  it  gets  to  the  consumer, 
you  can  trace  it?  A.  No;  we  only  trace  it  so  far  as  the  consignee 
is  concerned,  and  the  consignee  then  resells  the  cigarette  to  the 
retailer,  and  the  retailer  sells  them  to  the  consumer,  or  gives 
them  away,  or  does  whatever  he  likes  with  them. 


No.  40.] 


900 


Q.  But  you  can  trace  the  cigarettes  to  the  consignee  by  the 
number  on  the  package;  if  I showed  you  a package  of  cigarettes 
to-day  by  looking  at  the  number  of  it  you  can  find  out  through 
whom  those  cigarettes  were  sold?  A.  We  can  find  out  to  whom 
we  consigned  the  goods. 

Josiah  Browne,  having  been  duly  sworn  as  a witness,  testified 
as  follows: 

Examined  by  Mr.  Lexow: 

Q.  What  is  your  residence?  A.  Plainfield,  New  Jersey. 

Q.  What  is  your  occupation?  A.  Secretary  of  the  American 
Tobacco  Company. 

Q.  How  long?  A.  Since  April,  1895. 

Q.  Where  do  you  make  your  headquarters  as  secretary  of  that 
company?  A.  Twenty-second  street,  New  York. 

Q.  How  often  have  you  since  you  have  been  secretary  of  the 
company  gone  to  Newark,  in  the  State  of  New  Jersey,  to  the  gen- 
eral office,  or  so-called  main  office,  of  the  corporation?  A.  Well, 
not  very  frequently,  but  several  times  in  each  year. 

Q.  Can  you  state  the  number  of  times?  A.  During  the  whole 
course  of  my  connection  with  the  company,  you  mean? 

Q.  Yes.  A.  Or  since  I was  secretary  only. 

Q.  Since  you  were  secretary  and  occupied  that  position  with 
the  company?  A.  Well,  since  April,  1895,  I suppose  I have  been 
there  thirty  times. 

Q.  What  have  you  got  in  the  Newark  office — or  what  did  you 
have  thirty  days  ago  in  the  Newark  office?  A.  We  have  the  gen- 
eral books.. 

Q.  How  many?  A.  Well,  I can’t  tell  you  how  many  there 
are;  they  are  the  ledgers  and  other  general  books. 


910 


[Senate, 


Q.  General  account  ledgers?  A.  Yes,  sir. 

Q.  Do  you  post  the  transactions  of  the  company  from  the  jour- 
nals kept  in  New  York,  in  the  ledger  kept  in  New  Jersey?  A. 
I don’t  know  exactly  what  method  is  employed  to  make  transfers 
of  any  transactions  outside  of  Newark  to  Newark. 

Q.  How  do  you  keep  the  books,  the  ledgers,  the  different  stock 
ledgers?  A.  There;  we  also  keep  the  stock  ledgers  there. 

Q.  Do  you  keep,  also,  the  general  ledger  of  the  company  show- 
ing the  accounts,  as  posted  from  the  journal?  A.  I do  not  know 
exactly;  I do  not  think  the — that  all  the  books  are  there. 

Q.  Don’t  you  know,  Mr.  Brown,  that  the  books  are  not  there? 
A.  No;  I do  not;  the  general  books  and  head  books  are  there,  Mr. 
Chairman. 

Q.  Well,  as  the  secretary  of  the  company,  you  ought  to  know 
what  these  head  books  are;  I would  like  to  get  what  books  are 
kept  now  in  the  State  of  New  York?  A.  I couldn’t  tell  you  ex- 
actly. 

Q.  Can  you  specify  any  book  that  is  kept  there  outside  of  the 
stock  ledger  or  the  stock  transfer  book,  required  by  the  statute  of 
the  State  of  New  Jersey  to  be  kept  there—  the  minute  book?  A. 
I know  there  are  the  head  books  of  the  company. 

Q.  The  what?  A.  The  general  books  of  the  company — the 
prominent— the  head  ledgers  are  kept  there,  and  sufficient  of 
other  account  books  to  employ  several  people. 

Q.  When  did  you  see  them  there?  A.  Well,  the  last  I saw  them 
there  was  in  May,  189G. 

Q.  May,  1896?  A.  Yes,  sir. 

Q.  And  since  May,  1896,  you  have  not  seen  any  books  of  the 
company  there?  A.  No;  I have  not  been  there  since  May.  1896. 

Q.  Is  that  the  annual  meeting?  A.  No. 


No.  40.] 


911 


Q.  When  is  the  annual  meeting  of  the  stockholders?  A.  The 
annual  meeting  this  year  is  in  May,  1897. 

Q.  Don’t  you  hold  the  annual  meeting  of  the  stockholders 
yearly  at  periods  stated  in  the  by-laws?  A.  Yes,  sir. 

Q.  The  same  time  each  year?  A.  Yes,  sir. 

Q.  Wasn’t  the  stockholders  meeting  of  last  year  in  May,  1897? 
A.  No,  sir;  February. 

Q.  What  other  officer  of  the  company,  outside  of  yourself,  has 
general  charge  and  control  over  the  books  of  the  company?  A. 
Mr.  Harris. 

Q.  The  auditor?  A.  Yes. 

Q.  And  what  you  don’t  know,  he  must  know?  A.  Yes;  sir: 
ought  to  fnow. 

Q.  Is  there  anything  else  that  you  can  state  with  reference  to 
the  books  of  the  company  in  the  State  of  New  Jersey  than  you 
hare  now  stated?  A.  No,  sir. 

Q.  Ho  you  know  whether  the  books  that  were  in  New  Jersey 
then,  that  is  to  say,  May,  189G,  are  in  New  Jersey  now?  A.  I 
do  not,  but  I have  no  doubt  that  they  are;  they  are  adding  to  the 
number  of  books  and  force  there  all  the  time. 

Q.  Your  occupation  has  been  largely  that  of  keeping  track  of 
the  consignment  contracts,  has  it  not,  instead  of  keeping  track 
of  the  books  of  the  company?  A.  I have  more  direct  charge  of 
the  cigarette  business  of  the  company  than  anyone  else;  yes,  sir. 

Q.  That  is  to  say  the  consignment  branch  of  it?  A.  Yes,  sir. 

Q.  And  you  are  more  particularly  charged  with  the  duty  of 
looking  after  violations  of  consignment  agreements?  A.  More 
than  anyone  else;  yes,  sir. 

Q.  You  make  a specialty,  do  you  not,  of  that?  A.  Yes. 

Q.  (Showing  witness  pamphlet).  Would  you  look  at  this,  which 


912  [Senate, 

purports  to  be  an  abstract  prepared  by  your  counsel  in  the  State 
of  New  Jersey,  at  page  103  (indicated),  and  state  whether  or  not 
from  page  102  to  page  113  of  this  abstract  there  is  an  accurate 
statement  of  the  consignees  whose  consignment  agreements  were 
revoked,  for  handling,  in  the  words  of  your  counsel,  “opposition 
goods  as  indicated  by  testimony  taken  in  the  State  of  New  Jersey” 
and  by  testimony  given  by  you?  A.  Your  statement  applied 
only  to  handling  opposition  goods,  I think. 

Q.  Yes?  A.  You  asked  me  to  look  from  page  102  to  page  113 
— that  comprises  printed  matter. 

Q.  Y"es;  well,  state  then,  what  other  matter  in  addition  to  the 
handling  of  opposition  goods  that  contains?  A.  Cutting  of 
prices. 

Q.  Those  two  items?  A.  Yes. 

Q.  Handling  opposition  goods  and  cutting  of  prices?  A.  That 
is  what  this  embraces;  (indicating);  yes,  sir. 

Q.  Now,  I want  to  put  another  general  question  to  cover  it. 
Do  I understand  you,  then,  to  say  that  from  printed  page  102  to 
113,  inclusive,  is  to  be  found  an  accurate  compilation  of  persons 
whose  consignment  agreements  have  been  revoked,  either  because 
they  sold  goods  in  opposition  to  those  manufactured  by  the  Amer- 
ican Tobacco  Company  or  because  they  cut  prices,  and  that  it 
further  contains  under  those  two  specific  heads  an  accurate  list 
of  the  specific  violators?  A.  I have  no  doubt  that  the  list  given 
here  (indicating  in  pamphlet)  is  correct  as  to  names,  but  each 
case,  as  I testified  in  New  Jersey,  stood  by  itself. 

Q.  I understand  that.  A.  Some  of  those,  many  of  those,  and 
the  majority,  I think,  were  for  cutting  prices;  and  of  the  others 
each  had  its  own  circumstances;  some  of  Which — 

Q.  Look  at  these  two  appendices  (indicating)  and  state  whether 


No.  40.] 


913 


or  not  they  contain  a fair  statement  of  the  causes  for  dismissal 
specifically  given?  A.  Yes,  sir;  I think  they  do. 

Q.  And  you  would  say  that  that  prepared  by  your  counsel  is  a 
fair  synopsis  on  those  two  heads?  A.  Yes,  sir. 

The  following  form  was  marked  “February  24,  Exhibit  A.” 

LIST  OF  CONSIGNEES  WHOSE  AGREEMENTS  WERE  RE- 
YOKED FOR  HANDLING  OPPOSITION  GOODS,  AS 
SHOWN  BY  THEIR  OWN  TESTIMONY  AND  THAT  OF 
MR.  BROWN. 

Revoked  before  March  1,  1S93. 

Sussman  Brothers,  New  York  city,  December  21,  1893,  cause, 
pushing  Admiral  cigarettes. — “A  general  inimical  feeling  to  the 
company  and  abuse  of  me.” — Browne,  p.  1370. 

John  R.  Miller  & Son,  Newark,  N.  J.  February  4,  1893.  Un- 
derstood to  have  been  given  the  sole  agency  for  the  National 
Cigarette  and  Tobacco  Company’s  goods  in  Newark  and  vicinity. 
Browne,  p.  1351;  Dunstatter,  pp.  1125-1126;  total  2. 

FOR  HANDLING  ADMIRAL  CIGARETTES  AFTER  MARCH 

1,  1895. 

Monroe  Cigar  Co.,  Rochester,  N.  Y.,  May  3,  1893.  They  were 
pushing  the  Admirals  and  seemed  to  be  closely  in  touch  with  the 
National  Company.  Their  account  was  also  in  a very  unsatis- 
factory condition.  Browne,  p.  1352.  They  had  the  sole  agency 
for  the  Admiral  Cigarettes  in  Rochester  and  thirty  miles  around. 
Tuke,  274. 

John  McLaughlin,  Lancaster,  Pa.,  May  23,  1893.  Was  cut  off 
for  “active  pushing  of  the  Admiral  Cigarette  and  the  accompany- 
ing advertisement  discriminating  against  our  goods.”  “Was 
giving  them  the  preference  over  ours.”  Browne,  p.  1354. 


58 


014 


[Senate, 


Alexander  Wilson  & Co.,  Pittsburg,  Pa.,  May  26,  1893.  They 
“were  the  most  active  distributors  of  Admirals  that  they  (Na- 
tional) had  in  Pittsburg.”  The  agreement  would  have  been  re- 
voked even  if  they  had  not  accepted  the  agency  for  the  Admirals. 
Browne,  p.  1377-8.  See  also  report  of  Charles  E.  Brown,  p.  1647. 

Love,  Sunshine  Co.,  Johnstown,  Pa.,  May  26, 1893.  They  were 
the  agents  of  the  National  Company  and  put  their  whole  force 
into  selling  the  National  Company’s  goods.  Browne,  p.  1343. 

Martin  & Co.,  Pittsburg,  Pa.,  May  26,  1893.  They  were  “extra- 
ordinarily active”  in  pushing  Admirals.  They  were  trying  to  dis- 
place the  A.  T.  Oo.’s  goods  and  boasted  what  they  would  do  with 
them.  Browne,  p.  1349.  See  also  report  of  Charles  E.  Brown, 
p.  1643. 

M.  F.  H.  Woerner,  Manayunk,  Pa.,  May  26,  1893.  Was  “trying 
to  push  and  urge  the  sale  of  Admirals.”  Brown,  pp.  1334,  1381 

John  Schwartz,  Hazleton,  Pa.,  May  26,  1893.  Took  in  Admiral 
Cigarettes.  “All  orders  for  or  taken  by  the  National  Cigarette 
and  Tobacco  Company  men  and  by  his  own  men,  with  his  own 
wagon,  were  filled  by  him.”  Brown,  p.  L 638. 

John  Bauch,  Indianapolis,  Ind.,  June  14,  1893.  Was  cut  off 
“for  the  interest  he  took  in  the  Admiral  Cigarette,  the  activity  in 
their  distribution  and  so  on.”  He  was  also  very  friendly  with  the 
officers  of  the  National  Company,  who  were  then  making  a “great 
big  display”  with  their  “No  Trust”  advertisements  in  Indianapolis. 
Brown,  p.  1363. 

August  Rickebush  Tobacco  Company,  Milwaukee,  Wis.,  July  6, 
1893.  They  were  agents  for  the  National  Cigarette  and  Tobacco 
Co.,  and  are  regarded  as  part  of  that  companyAhemselves.  They 
also  cut  prices  on  tobacco  and  advertised  their  own  goods  as  “not 
made  by  a Trust.”  Brown,  p.  1351. 


No.  40.] 


915 


0.  IV.  i'ratt,  Springfield,  Mass.,  July  13, 1893.  Was  cut  off  ‘‘for 
discriminating  against  our  goods  in  favor  of  the  Admirals.”  Took 
part  iu  a campaign  of  parades  and  advertisements  of  goods  not 
made  by  a Trust.  He  urged  the  sale  of  Admirals  as  against  the 
A.  T.  Co.'s  goods.  Brown,  p.  1359. 

S.  Woodside  & Co.,  Cincinnati,  Ohio,  July  21, 1893.  “They  had 
taken  the  agency  of  the  Admiral  cigarette — they  were  actively 
engaged  in  introducing  them  and  pushing  them,  with  the  usual 
advertising  and  so  on.”  Brown,  p.  L 381. 

Pyle  & Tomlinson,  Bridgeport,  Conn.,  July  25,  1893.  They  were 
cut  off  “pushing,  introducing  and  urging  the  sale  in  preference  of 
the  Admiral  cigarettes  by  wagon  and  so  on,  going  all  over  the 
town  in  a way  unusual  for  them  to  even  urge  our  goods.” 
Brown,  p.  1360. 

R.  L.  Siedenberg,  Buffalo,  N.  Y.,  July  29,  1893.  Was  a brother 
or  cousin  of  the  treasurer  of  the  National  Co.,  and  pushed  their 
goods.  The  A.  T.  Co.  felt  that  under  the  circumstances  they  did 
not  care  to  continue  sending  their  cigarettes  to  him.  Brown,  p. 

1367.  ■ 

C.  R.  Maltby,  Corning,  N.  Y.,  August  24,  1893.  They  were 
pushing  the  Admiral  cigarettes  in  the  market,  “endeavoring  to 
introduce  them  and  so  on,  and  giving  them  a great  deal  more  at- 
tention than  they  did  ours.”  Brown,  p.  1347. 

Peter  Hauptman  & Co.,  St.  Louis,  Mo.,  October  12,  1893.  They 
were  cut  off  because  it  was  understood  that  they  had  accepted  a 
large  sum  of  money  to  become  the  agents  of  the  National  Com- 
pany. “We  considered  them  just  the  same  as  the  National  Cigar- 
ette and  Tobacco  Company  itself.”  Brown,  pp.  1401-1405.  Peter 
Hauptman  admits  that  it  was  rumored  in  St.  Louis  that  his  firm 
had  received  a large  consideration  from  the  National  Cigarette 


916  [Senate, 

and  Tobacco  Co.  for  taking  the  agency  for  the  Admiral  cigarettes. 
Hauptman,  p.  533. 

Adam  Eoth  Grocery  Co.,  St.  Louis,  Mo.,  October  18,  1893.  They 
were  cut  off  “for  active  discrimination  against  our  goods;  they 
were  advertising  the  Admirals  in  their  price  list,  in  which  they 
quoted  with  our  goods,  alleging,  as  usual,  that  the  Admirals  were 
‘not  made  by  a Trust,’  and  then,  on  the  back  cover  of  this  weekly 
price  list  they7  were  advertising  the  Admirals  as  not  being  made 
‘by  a Trust,’  although  they  were  at  that  time  selling  the  A.  T. 
Co.’s  goods  on  consignment.”  Brown,  p 1421.  See,  also,  testi- 
mony of  Adam  Roth,  pp,  551,  552,  560. 

Esberg,  Bachman  & Co.,  San  Francisco,  Cal.,  October  18,  1893. 
Were  active  competitors  of  the  American  Tobacco  Company  in 
smoking  tobaccos;  had  never  been  friendly,  and  when  they  took 
up  the  Admiral  cigarettes,  with  its  accompanying  newspaper  talk 
about  the  Trust,  etc.,  and  the  extensive  advertising  of  it  in  San 
Francisco  as  “not  made  by  a Trust,”  the  A.  T.  Co-,  “did  not  feel 
called  upon  to  consign  them  any  goods  or  to  aid  them  in  their  en- 
deavors to  abuse  ours  and  increase  their  sales.”  Brown,  pp.  1384 
and  3385. 

M.  A.  Gunts  & Co.,  San  Francisco,  Cal.,  October,  1893.  “They 
were  the  agents  of  the  National  Cigarette  and  Tobacco  Company, 
and  -were  pushing  their  goods  as  the  representatives  of  that  con- 
cern, and  were  looking  after  the  advertising  and  things  of  that 
kind.”  Brown,  p.  1478. 

Wingerter  & Betker,  Indianapolis,  Indiana,  October  24,  1893. 
Actively  pushing  Admirals — filling  orders  and  so  on.  Brown,  p. 
1421. 

Barrett  Brothers,  Auburn,  N.  Y.,  June  20,  1894.  “They  were 
the  distributors  of  the  National  Cigarette  and  Tobacco  Company’s 


7o.  40.] 


917 


Admiral  cigarettes,  which  were  ‘not  made  by  a Trust.’  ” Brown, 
).  1440. 

Fritz  & Brinkerhoff,  St.  Louis,  Mo.,  August  3, 1894.  They  were 
bushing  the  Admiral  cigarettes  with  their  accompanying  adver- 
iseinent  “not  made  by  a Trust.”  Brown,  pp.  1480  and  1481. 

Tillman  & Bendell,  San  Francisco,  Cal.,  August  18, 1894.  “They 
>ecame  agents  of  the  National  Cigarette  and  Tobacco  Company 
md  instituted  a very  active  campaign — put  out  advertisements 
n their  own  name  ‘not  made  by  a Trust.’  ” Brown,  p.  1539. 

Craig,  Stewart  & Co.,  Los  Angeles,  Cal.,  September  1,  1894. 
■They  took  the  agency  for  the  Admiral  cigarettes  in  Los  Angeles, 
were  the  headquarters  for  them  and  had  a very  lively  campaign 
vith  them  there;  and  they  amused  themselves  by  cutting  the 
trices  on  everything  that  we  made,  and  we  declined  to  deal  with 
Lem  in  anything  that  we  made.” 

Morris  Hirsch  & Co.,  Brooklyn,  N.  Y.,  about  November  1,  1894. 
ilr.  Brown  does  not  refer  to  this  case.  Mr.  Hirsch  “guesses”  that 
re  was  cut  off  for  selling  Admiral  cigarettes.  He  had  the  win- 
low  of  his  store  full  of  them  (p.  295).  The  National  Company 
’urnished  him  with  the  horse  and  paid  for  the  keep  of  the  horse 
pp.  307  and  308).  Told  Rosenbaum  he  was  agent  for  N.  C.  & T. 
3o.  and  thought  he  had  a good  thing.  Rosenbaum,  1072-3. 

A.  B.  Haskin  & Co.,  Holyoke,  Mass.,  date  not  given.  “Very 
ictive  distributors  of  the  Admiral  cigarettes  and  in  this  adver- 
tsing.'’ We  also  considered  them  as  imitating  our  goods  (che- 
’oots)  and  unfriendly.  Brown,  p.  1463. 

Rogers  & Co.,  Salt  Lake  City,  Utah,  date  not  given.  TVere  the 
igents  of  the  National  Cigarette  and  Tobaccoi  Company.  “Had 
:heir  men  actively  at  work  putting  in  their  goods  against  ours, 
md  there  was  a great  deal  of  money  spent  there  in  advertising. 


918 


[Senate 


and  they  assisted  in  it.”  They  were  the  potent  people  for  their 
concern  all  over  the  State.  Total,  26. 

FOR  HANDLING  “ROYAL  SWEETS,”  A BRAND  OF  CIGAR- 
ETTES CLAIMED  TO  BE  AN  IMITATION  OF  “SWEET 
CAPORALS.” 

C.  A.  Whelan  & Co.,  Syracuse,  N.  Y.,  May  2,  1892.  George 
Whelan,  the  company  of  that  concern,  became  an  employee  of  the 
National  Cigarette  and  Tobacco  Company  at  a salary  of  four  thou- 
sand dollars  a year,  and  they  immediately  began  pushing  the 
“Royal  Sweet  Cigarettes,”  which  we  considered  an  imitation  of 
ours.  Brown,  p.  1542. 

Boston  Cigar  and  Tobacco  Co.,  Boston.,  Mass.,  May  4,  1895. 
“A.  R.  Mitchell  & Co.  had  the  agency  for  the  Royal  Sweet  Cigar- 
ettes, and  the  Boston  Cigar  and  Tobacco  Co.  were  actively,  as  the 
sub-agents  of  these,  pushing  them.”  Brown,  p.  1313.  See  also 
report  of  R.  R.  Lawrence,  p.  1540. 

Brewster,  Crittenden  & Co.,  Rochester,  N.  Y.,  May  9,  1895. 
Were  cut  off  for  handling  “Royal  Sweets  Imitation  Cigarettes.” 

S.  S.  Sleeper  & Co.,  Boston,  Mass.,  July  12,  1895.  A member  of 
this  firm  became  president  of  the  Executive  Association  of  the 
Wholesale  Grocers  of  New  England,  who  were  fighting  the  A.  T. 
Co.,  and  pushing  the  Royal  Sweet  cigarettes.  The  agency  had 
entered  into  an  agreement  with  the  National  Cigarette  and  To- 
bacco Company  to  give  its  goods  the  preference,  for  which  it  was 
to  receive  the  sum  of  about  $35,000.  S.  S.  Sleeper  & Co.  had  car- 
ried out  the  agreement  of  the  association  and  had  their  windows 
full  of  the  imitation  cigarettes.  Brown,  pp.  1544,  1546. 

J.  A.  Andrews  & Co.,  Boston,  Mass.,  July  12,  1895.  This  con- 
cern was  cut  off  for  the  same  reason  as  S.  S.  Sleeper  & Co.  It  had 


No.  40.] 


919 


joined  the  Wholesale  Grocers’  Association,  and  was  handling  the 
“Royal  Sweets.”  Brown,  p.  1430. 

Thomas  L.  Benham,  Utica,  N.  Y.,  August  16,  1895.  “Cut  off 
for  handling  Royal  Sweets  Imitation  Cigarettes.”  Brown,  p. 

1446. 

Total  6. 

FOR  HANDLING  OTHER  CIGARETTES  THAN  THOSE 
MADE  BY  THE  NATIONAL  CIGARETTE  AND  TOBACCO 
COMPANY. 

Boston  Cigar  and  Tobacco  Co..  Boston,  Mass.,  June  15,  1893. 
West.  Stone  & Co.,  Springfield,  Mass.,  July  15, 1893. 

The  Boston  Cigar  and  Tobacco  Co.  was  an  offshoot  of  A.  R. 
Mitchell  & Co.,  who  had  taken  the  agency  for  New  England  for 
the  sale  of  the  “Beauty  Bright”  cigarettes,  and  A.  R.  Mitchell  & 
Co.,  and  the  Boston  Cigar  and  Tobacco  Co.  were  actively  pushing 
and  urging  the  sale  of  “Beauty  Brights”  in  preference  to  the  A.  T. 
Co.’s  goods.  Brown,  pp.  1321, 1322  and  1376. 

West.  Stone  & Co.,  A.  R.  Mitchell  & Co.  and  the  Boston  Cigar 
and  Tobacco  Co.  were  just  the  same  as  one  concern  with  branches. 
All  of  them  were  distributing  “Beauty  Brights”  to  the  detriment 
of  the  A.  T.  Co.’s  brands.  Brown,  p.  1376. 

Charles  McArthur,  buying  agent  for  West,  Stone  & Co..  1893, 
says  that  “West,  Stone  & Co.  made  an  agreement  with  Mr.  Rich- 
ards of  A.  R.  Mitchell  & Co.,  under  which  they,  West,  Stone  & 
Co.,  were  to  have  the  sole  and  exclusive  agency  of  the  goods 
(Beauty  Brights)  for  the  city  of  Springfield,  and  in  consideration 
they  were  to  push  the  goods  to  the  exclusion  of  all  others  and 
receive  an  extra  bonus  of  5 per  cent.”  He  further  says  that  he 
was  one  of  the  salesmen  and  knows  that  they  did  push  Beauty 


920  [Senate, 

Bright  goods  to  the  exclusion  of  all  other  paper  cigarettes  for  a 
time.  That  he  did  it  himself  (pp.  1777-1779). 

Total,  2. 

Total  revocations  for  handling  other  goods,  36. 

LIST  OF  CONSIGNEES  OR  DEALERS  WHO  TESTIFIED 
THAT  THEY  WERE  NOT  ALLOWED  TO  SELL  OPPOSI- 
TION GOODS  UNDER  THE  CONSIGNMENT  AGREE- 
MENT, BUT  WERE  NOT  CUT  OFF. 

Hobart  J.  Park,  of  Park  and  Tilford,  says  that  this  firm  at  one 
time  received  upon  consignment  25,000  cigarettes  from  the  Na- 
tional Cigarette  and  Tobacco  Company.  That  after  they  began 
to  sell  the  same  Mr.  Butler,  secretary  of  the  A.  T.  Co-,  called  his 
attention  to  the  sixth  clause  of  the  consignment  agreement,  and 
said  that  “if  we  continue  to  sell  the  National  cigarettes  it  would 
allow  them  to  give  us  the  discount  or  not  as  they  saw  fit  on  the 
American  Tobacco  Company  cigarettes;  it  was  a violation  of  the 
contract,  and  we  looked  at  the  contract  and  we  sent  the  goods 
back'7  (p.  45).  He  further  said  that  Mr.  Butler  did  not  say  any- 
thing about  refusing  to  sell  or  consign  any  other  goods  if  Park 
& Tilford  kept  the  National  Company’s  goods  (p.  46). 

Joseph  Park  says  that  Mr.  Butler  gave  him  to  understand  that 
he  was  violating  the  contract  and  that  the  A.  T.  Go.  could  not 
continue  their  discount  if  he  handled  other  than  the  A.  T.  Co.’s 
cigarettes  or  any  in  competition  with  them.  That  he  violated 
their  agreement  (p.  196). 

Note. — It  does  not  appear  that  Mr.  Butler  had  any  authority 
from  the  A.  T.  Co.  to  make  these  representations  to  the  Messrs. 
Park.  He  was  secretary  and  director,  it  is  true  ip.  1499),  but  it 
had  been  left  entirely  to  the  cigarette  department  to  say  whether 


No.  40.] 


921 


or  not  the  company's  consignees  should  be  allowed  to  handle 
other  cigarettes.  (Arent’s,  pp.  728,  736).  Mr.  Butler  had  nothing 
whatever  to  do  with  this  department,  his  own  department  being 
principally  machinery. 

James  M.  Kenny,  Newark,  N.  J.,  was  threatened  with  revoca- 
tion because  he  handled  Admiral  cigarettes.  Upon  explanation 
to  the  company,  however,  he  was  permitted  to  continue  as  a con- 
signee, and  also  to  sell  Admiral  cigarettes,  pp.  1241,  1243. 

J.  Frank  (Crawford,  Newark,  N.  J.,  says  that  Dunstatter,  an 
agent  of  the  American  Tobacco  Co.,  once  complained  because  he, 
witness,  had  a cartoon  of  Admiral  cigarettes  on  the  retail  counter. 
Witness,  however,  did  not  take  them  off  the  counter  and  nothing 
came  of  the  conversation,  except  that  witness  did  not  take  in  any 
new  orders  for  Admirals,  and  may  have  been  influenced  not  to  do 
so  by  the  conversation,  p.  1249. 

Jacob  L.  Kahn,  New  York  city,  says  that  Mr.  Rosenbaum  said 
“that  if  I signed  the  contract  I would  get  a rebate,  2 per  cent., 
for  cash,  and  every  three  months  35  cents  on  a thousand,  provided 
I sell  no  other  goods;  provided  I sell  no  other  cigarettes  but  the 
A.  T.  Co.’s  cigarettes."  He  said  that  I could  sell  the  cigarettes 
which  I had  on  hand  and  then  I would  have  to  stop  selling  other 
brands.  Mr.  Rosenbaum  wouldn't  leave  the  contract  for  me  to 
read  over  and  that  is  the  last  I ever  saw  of  it.  Case,  pp.  229, 
232-235. 

APPENDIX  C. 

LIST  OF  THOSE  CONSIGNEES  WHOSE  AGREEMENTS 
WERE  REVOLTED  FOR  CUTTING  PRICES,  AS  SHOWN 
BY  THEIR  TESTIMONY  AND  THAT  OF  MR.  BROWN. 

Revoked  before  March  1,  1893. 

Gilderhouse.  Wilting  & Co.,  St.  Louis,  Mo.,  June  6,  1892. 
Brown,  p.  1336. 


922  [Senate, 

Sussmau  Brothers,  New  York  city,  June  11,  1892.  Brown,  p. 
1369. 

A.  F.  Cunningham  & Go.,  Philadelphia,  Pa.,  November  21, 1892. 
Brown,  p.  1329;  p.  882. 

Americus  Grocery  Co.,  Americus,  Ga.,  December  3,  1892. 
Brown,  p.  297. 

Total,  4. 

Revoked  after  March  1, 1893. 

Henry  Berbert,  Brooklyn,  N.  Y.,  May  26,  1893  and  June  19, 

1893.  Brown,  p.  1315;  Burbert,  pp.  358-359. 

S.  Benjamin,  Brooklyn,  N.  Y.,  June  16,  1893.  Brown,  p.  1316. 

A.  & \V.  Diamond,  New  York  city,  June  19,  1893  and  June  18, 

1894.  Brown,  p.  1334;  Arnold  Diamond,  pp.  435,  436,  438,  439. 

M.  H.  Rieders,  New  York  city,  June  19, 1893  and  June  18,  1894. 

Brown,  p.  1364;  Rieders,  pp.  383-385,  387,  388. 

B.  Berschatsky,  Brooklyn,  N.  Y.,  June  19,  1893  and  June  18, 
1894.  Brown,  p.  1312;  Berschatsky,  pp.  444,  445,  448. 

I.  Jackson,  New  York  city,  June  20,  1893  and  July  20,  1893. 
Brown,  p.  1339. 

A.  Bernstein,  New  York  city,  June  29,  1893,  December  9,  1893 
and  June  29,  1894.  Brown,  p.  1326. 

Charles  Bernstein,  Brooklyn,  N.  Y.,  July  14,  1893.  Brown,  p. 
1305. 

John  Hornandez,  Portland,  Me.,  July  14,  1893.  Brown,  p.  1337. 
Holtzman  Brothers,  New  York  city,  July  14  1893.  Brown,  p. 
1338. 

Joseph  Resnick,  New  York  city,  July  17,  1893.  Brown,  p.  1364; 
Resnick,  413,  414. 

Samuel  Samuelson,  New  York  city,  July  17,  1893.  Brown,  p. 


1365. 


No.  40.] 


923 


J.  F.  L.  Armfield  & Co.,  Mt.  Airy,  N.  C.,  July  19,  1893.  Brown, 
p.  1301. 

L.  Bernstein,  New  York  city,  July  25,  1893,  October  IS,  1893 
and  June  24,  1894.  Brown,  p.  1308. 

A.  H.  Mandelbaum,  New  York  city,  August  14,  1893.  Brown, 
p.  1346. 

"The  Fair,”  Chicago,  111.,  August  15,  1S93.  Brown,  p.  1335. 
Philip  Schuster,  Rondout,  N.  Y.,  October,  19,  1893.  Brown,  p. 
1365. 

Smeeringer  & Co.,  Baltimore,  Md.,  October  28, 1893.  Brown,  p. 
1367. 

E.  S.  Goulston  & Co.,  Boston,  Mass.,  November  9,  1893.  Brown, 

p.  1396. 

Joseph  Cohen,  Boston,  Mass.,  March  6,  1894.  Brown,  1468. 

M.  L.  Blitzstein,  Philadelphia,  Pa.,  March  16*  1894.  Brown,  p. 

1320. 

Armstrong  Brothers,  New  York  city,  May  9,  1894.  Brown,  p. 

1437. 

Nathan  Michaels.  New  York  city,  May  9,  1S94.  Brown,  p.  1491. 
Barking  & Co.,  Wilson,  N.  C.,  July  6,  1894.  Brown,  p.  1459. 
Marum  & Hoslich,  New  York  city,  July  14,  1894.  Brown,  p. 
1490;  Marum,  pp.  75-78. 

Brooks  & Co.,  Philadelphia,  Pa.,  September  10,  1894.  Brown, 

p.  1463. 

S.  Mundy,  Brooklyn,  N.  Y.,  October  17,  1894.  Brown,  p.  1492. 
E.  R.  Betterton  & Co.,  Chattanooga,  Tenn.,  March  7,  1895. 
Brown,  p.  1447. 

Isaac-  Boss,  New  York  city,  date  not  given;  pp.  429-431. 

Joseph  Rafalawitz,  New  York  city,  (sub-jobber),  date  not  given; 
pp.  799-801. 

Total,  34. 


924 


[Senate, 


By  Mr.  Mazet: 

Q.  As  secretary,  do  you  have  charge  of  the  transfer  of  stock? 
A.  Yes,  sir. 

Q.  I understood  you  to  say  there  were  a little  over  two  thousand 
stockholders,  original  stockholders?  A.  Yes,  sir. 

Q.  Do  you  know  what  number  of  stockholders  hold  preferred 
and  what  number  common  stock?  A.  I do*  not,  just  now;  it  fluc- 
tuates with  the  transfers;  of  course,  varies  with  the  transfers. 

Q.  In  which  stock  is  there  the  most  variation  and  the  largest 
number  of  transfers,  in  the  common  or  preferred  stock?  A.  In 
the  common. 

Q.  The  common  is  much  more  largely  dealt  in  than  the  pre- 
ferred. is  it  not?  A.  Yes,  sir. 

Q.  Do  you  know  the  number  of  stockholders,  approximately, 
who  own  common  stock?  A.  Not  now;  I do  not;  no. 

Q.  Can’t  you  tell  of  the  two  thousand  or  more,  what  proportion 
hold  common  stock?  A.  I would  not  like  to  state,  because  they 
may  have  changed  last  week. 

Q.  Can  you  tell  us  what  it  was  last  week?  A.  Well,  I don’t 
know;  I am  only  giving  that  as  a presumption. 

Q.  Have  you  informed  yourself  at  all  on  that  point?  A.  Not 
certainly;  no*,  sir. 

Q.  You  have  not  personal  supervision  of  the  transfer?  A.  I 
am  supposed  to  be  under  the  direction  of  the  board,  the  custodian 
of  the  transfer  books. 

Q.  Don’t  you  sign  these  transfer  certificates?  A.  No,  sir;  they 
are  signed  by  the  Treasurer  and  the  President. 

Q.  What  explanation  do  you  make  of  this  wide  fluctuation  in 
the  American  stock,  from  117  in  May,  1895,  to  <53,  in  December  of 
the  same  year?  A.  I do  not  make  any. 


No.  40.] 


925 


Q.  You  have  no  explanation  to  make?  A.  None;  except  that 
the  most  marked  fluctuations  have  been  following  the  attacks 
upon  us,  of  which,  of  course,  the  attackers  have  knowledge — by 
rival  concerns — in  the  form  of  lawsuits  established — initiated — 
instituted,  rather,  in  New  Jersey,  Illinois;  appeals  to  the  Attor- 
ney-General in  the  State  of  New  York,  indictments  in  New  York, 
legislative  investigations,  and  things  of  that  kind. 

Q.  And  wasn’t  it  also  enforced  by  the  action  of  the  directors  in 
passing  the  question  of  dividend?  A.  That  was  one;  you  refer  to 
the  instance  of  December,  1895? 

Q.  Yes;  well,  that  was  when  the  stock  was  at  the  lowest  point, 
wasn’t  it?  A.  No. 

Q.  In  that  year?  A.  Oh,  I don’t  know;  I am  not  sure  as  *to 
that;  I think  it  affected  it  several  points,  but  should  not  have  done 
so;  the  statement  that  was  made  in  the  newspapers,  of  the  action 
of  the  Board  of  Directors  was  truthful,  honest  and  genuine,  and 
should  have  had  an  opposite  effect. 

Q.  Do  you  know  wThat  proportion  of  the  stock  is  held  by  per- 
sons other  than  those  who  wrere  in  the  tobacco  business  and  w’ho 
went  into  this  company  as  tobacco  manufacturers?  A.  I do  not 
know  the  proportion,  but  so  far  as  I do  knowr — but  I do  know  that 
the  people  you  mention  are  large  holders  of  the  stock. 

Q.  They  have  control  of  a majority  of  the  stock?  A.  I couldn’t 
say  as  to  that. 

Q.  Haven’t  you  some  knowledge,  as  secretary  of  the  company, 
as  to  that  point?  A.  No;  it  is  not  a matter  that  interests  me  at 
all;  I — to  look  through  the  list  of  names  and  to  ascertain  the 
exact  owmers  from  time  to  time — of  the  people  connected  with  the 
company — w7ould  be  a labor  that  would  be  of  no  use  to  me;  and  I 
have  more  than  I can  attend  to  now. 


926  - [Senate, 

Q.  Wlio  would  know  about  that?  A.  No  one  would  know  un- 
less they  made  an  examination,  drew  up  a list. 

Q.  The  stock  ledger  would  show,  wouldn’t  it?  A.  Oh,  yes; 
show  everything. 

Q.  Is  that  in  your  custody?  A.  Under  the  direction  of  the 

board;  yes. 

Francis  B.  Thurber,  having  been  duly  sworn,  testified  as  fol- 
lows : 

Examined  by  Mr.  Lexow : 

Q.  I understand  that  you  have  desired  an  opportunity  to  make 
a statement  before  this  committee.  You  understand,  of  course, 
that  if  you  make  a statement  you  are  subject  to  cross-examina- 
tion  upon  it?  A.  Yes. 

Q.  And  with  that  understanding  the  committee  wall  give  you 
an  opportunity  to  make  any  statement  you  please?  A.  I have 
prepared  a statement,  Mr.  Chairman,  because  I thought  it  would 
afford  a basis  for  questioning;  I thought  it  would  show  the  facts 
that  had  come  under  my  attention  and  would  afford  a basis  for 
questions. 

Q.  Mr.  Thurber,  before  you  read  your  statement  will  you  in- 
form us  what  your  occupation  is?  A.  I am  now  president  of  the 
American  Grocer  Publishing  Company,  which  publishes  the 
American  Grocer  newspaper. 

Q.  Especially  representative  of  the  interests  of  the  wholesale 
grocers?  A.  No,  sir;  of  the  grocer  trade  in  general,  more  espe- 
cially of  the  retail  grocers. 

Q.  How  long  have  you  been  in  that  employment?  A.  Three 
years;  previous  to  that  I was  in  the  wholesale  grocery  business. 

Testimony  of  F.  B.  Thurber,  No.  143  Chambers  street,  New 
York  city. 


No.  40.] 


927. 


During  many  years  I have  carefully  studied  the  effect  of  the 
larger  aggregations  of  capital  now  generally  called  “trusts.”  I 
am  now  engaged  in  the  publishing  business  and  am  not  interested 
in  trusts  except  as  a student  of  their  politico-economic  features. 

While  there  have  always  been  aggregations  of  capital  to  a 
greater  or  less  extent  they  have  become  more  frequent  and  prom- 
inent since  the  age  of  steam,  electricity  and  machinery,  because 
these  forces  could  not  well  be  utilized  without  aggregations  of 
capital,  and  these  could  only  be  obtained  through  the  co-operation 
of  a large  number  of  persons,  hence  the  great  development  of 
corporate  life  during  the  last  half  century. 

The  first  prominent  development  of  the  trust  organization  in 
this  country  and  in  the  consolidation  of  numerous  links  of  rail- 
road into  trunk  lines,  and  there  was  a fear  in  the  public  mind  (in 
which  I shared)  that  these  combinations  and  consolidations  would 
result  in  exhorbitant  rates  for  transportation  and  to  the  detri- 
ment of  the  public  interest.  What  the  result  has  been  is  shown 
by  the  following  extract  from  a report  adopted  by  the  National 
Board- of  Trade  at  its  annual  convention  in  1896: 

The  average  charge  for  sending  a ton  of  freight  one  mile  on 
thirteen  of  the  most  important  railroads  in  the  United  States 
during  1865  was  3.08  cents;  in  1870. 1.80  cents;  in  1875,  1.36  cents; 
in  1880. 1.01  cents;  in  1885,  0.83  cents;  in  1890,  0.77  cents;  in  1893. 
0.75  cents;  in  1894,  0.746  cents,  and  in  1895,  0.720  cents;  these 
railroads  performed  one-third  of  the  entire  transportation  of  1893, 
and,  from  the  figures  given,  it  appears  that  0.72  cents  would  pay 
for  as  much  transportation  over  their  lines  in  1895  as  could  have 
been  obtained  for  3.08  cents  thirty  years  earlier;  this  reduction, 
amounting  to  three-quarters  of  the  average  rate  of  1865,  was  ex- 
ceeded by  that  in  price  of  but  few  even  of  these  articles  in  the 


928  [Senate, 

manufacture  of  which  new  inventions  have  worked  the  most 
radical  changes.  The  entire  transportation  performed  by  the  rail- 
roads of  the  United  States  during  the  twelve  years  ending  June 
30,  1894,  was  equivalent  to  moving  136,799,077,822  passengers, 
and  807,935,382,838  tons  of  freight  one  mile;  had  rates  averaged 
as  high  as  those  of  1862  been  collected  on  this  traffic,  the  rail- 
roads would  have  earned  $2, 829, 043, 459  more  than  they  actually 
received.” 

The  next  most  prominent  aggregation  of  capital  in  the  commer- 
cial world  is  known  as  the  Standard  Oil  Co.,  and  the  effect  upon 
the  price  of  oil  is  illustrated  by  the  following  statistics  compiled 
by  the  United  States  government,  showing  the  wholesale  export 
price  for  refined  petroleum  for  the  period  extending  from  1871  to 
1896. 

It  shows  that  the  price  in  1871  was  25  7-10  cents.  I will  not 
read  them  all,  but  it  progressively  declined  until  in  1896  the  price 
was  6 8-10  cents. 


PRICES  OF  REFINED  ILLUMINATING  OILS,  PER  GALLON, 
EXPORTED  FROM  THE  UNITED  STATES,  1871  TO  1896. 


The  prices  represent  the  market  value  at  the  time  of  exporta- 


tion: 


Cents. 


1871, 

1872, 

1873, 

1874, 

1875, 

1876, 

1877, 

1878, 


25.7 
24.9 
23.5 

17.3 

14.1 
14 

21.1 

14.4 

10.8 


No.  40.] 


929 


1880.  . 
1881. 
1882. 

1883. 

1884. 

1885. 
1886  . 

1887. 

1888. 

1889. 

1890. 

1891. 

1892. 

1893. 

1894. 

1895. 

1896. 


Cents. 

8.6 

10.3 

9.1 

8.8 

9.2 
8.7 

8.7 

7.8 

7.9 

7.8 
7.4 
7.0 

5.9 

* 

4.9 

4.2 
4.9 
6.8 


This  great  decline  in  the  price  of  oil  is  attributable  partly  to 
to  the  increase  in  production,  but  more  largely  to  improvements 
in  manufacture  and  transportation  which  were  only  attainable 
through  the  aggregations  of  capital  in  this  industry. 

Among  the  more  prominent  cf  the  recent  so-called  trusts  is 
that  of  the  American  Sugar  Refining  Co.,  which  is  a corporation 
formed  under  the  laws  of  the  state  of  New  Jersey  for  the  pur- 
pose of  consolidating  the  sugar  refining  interests  of  the  country 
and  it  row  does  about  75  per  cent,  of  the  sugar  refining  business  in 
the  United  States.  The  effect  of  this  is  shown  by  the  following 
table  giving  the  prices  of  both  raw  and  refined  sugar,  with  the 


59 


930  [Senate, 

differing  margins  during  the  nine  years  prior  to  the  consolidation 
and  nine  years  since: 

The  average  for  the  nine  years  prior  to  the  consolidation  was 
7 90-100  cents  per  pound.  The  average  for  the  nine  years  suc- 
ceeding the  consolidation  was  5 27-100  cents  per  pound. 


Average. 

price. 

1879  

Centrifugals 

(raw). 

Cents  per  lb. 

7.425 

Granulated 
(refined). 
Cents  per  lb. 
8.785 

Difference. 

1.362 

1880  

8.206 

9.602 

1.960 

1881 

8.251 

; 9.667 

■ i 1.416 

1882  

7.797 

9.234 

1.437 

1883  

7.423  ■ ' 

8.506 

1.083 

1884  

5.857 

6.780 

.923 

1885  

5.729 

6.441 

.712 

1886  

5.336  i 

: 6.117 

.781 

1887  

......  5.245 

6.013 

1 . 

.768 

Average  9 years.  6.807 

7.905 

1.098 

The  trust  was  formed  in  1887. 

[ 

1888  

5.749 

, 7.007 

1.258 

1889  

6.433 

7.640 

1.207 

1890  

5.451 

6.171 

.720 

1891 

3.863 

4.691 

.828 

1892  

3.311 

, ) 4.346 

1.035 

1893  ....... 

3.689  1 

; 4.842 

1.153 

1894  

3.235  1 

4.119 

.884 

1895  

3.258 

4.140 

.882 

1896  

3.631 

f 

4.539 

.908 

Average  9 years.  4.291 

1 , 1 5.272 

.981 

No.  40.]  ^3^ 

This  reduction  in  price  has  been  effected  partly  by  increased 
production  and  largely  through  buying  the  raw  material  cheaper 
than  when  a large  number  of  separate  refineries  were  competing 
for  the  product.  Large  economies  were  also  effected  by  closing 
inferior  plants  and  enlarging  and  extending  superior  ones.  The 
American  Sugar  Refining  Co.  has  bought  its  raw  material  cheap, 
but  it  has  given  the  public  the  benefit  of  such  purchases,  merely 
retaining  as  its  profit  about  one-third  of  a cent  per  pound,  which, 
considering  the  nature  of  the  business,  is  a reasonable  one. 

Q.  What  was  that  last  statement?  A.  “It  has  given  the  publio 
the  benefit  of  such  purchases,  merely  retaining  as  its  profit  about 
one- third  of  a cent  per  pound,  which,  considering  the  nature  of  the 
business,  is  a reasonable  one.”  Please,  Mr.  Chairman,  distin- 
guish between  the  margin  between  raw  and  refined,  and  profit; 
the  margin  between  raw  and  refined  during  the  first  nine  years 
the  nine  years!  prior  to  the  consolidation  was  1 98-100  of  a cent  per 
pound;  during  the  nine  years  succeeding  the  formation  of  the 
Trust  it  was  981-1000  of  a cent  per  pound. 

By  Mr.  Mazet: 

Q.  How  do  you  reach  the  estimate  of  the  profit,  Mr.  Thurber; 
do  you  take  the  figures  of  the  company  on  that?  A.  No,  sir;  from 
the  general  knowledge  that  I have  of  the  business;  I have  been 
a distributor  of  sugar  for  many  years  and  was  probably  the  lar- 
gest distributor  of  sugar  for  twenty  years,  and  in  the  course  of 
that  business  we  acquire  more  or  less  information ; it  is,  of  course, 
not  as  exact  as  it  would  be  if  taken  from  the  books  of  the  com- 
pany; but  it  is  the  general  knowledge  of  the  trade  as  to  about 
the  average  cost  and  profit  in  refining. 

Q.  In  your  judgment,  is  it  true,  that  even  with  a smaller  mar- 


[Sex  ate, 


gin  between  the  raw  and  the  refined,  that  with  increased  facili- 
ties and  more  modern  machinery  and  large  capacity  that  they  are 
yet  enabled  to  make  as  much  or  more  profit  than  they  were  be- 
fore? A.  Yes;  more,  undoubtedly.  (Continues  reading.) 

These  illustrations  are  but  types  of  many  in  the  evolution  of 
industries,  which  is  the  result  of  the  great  forces  before  men- 
tioned and  which  have  revolutionized  the  entire  economic  situa- 
tion. That  there  have  been  instances  of  hardship  and  injustice 
attending  this  revolution  cannot  be  doubted,  but  it  is  equally  cer- 
tain that  the  total  results  have  been  beneficial  to*  the  public  at 
large,  and  to  the  interests  of  the  laboring  classes  especially,  who 
constitute  the  majority.  At  some  stages  in  this  evolution,  this 
remark  was,  perhaps,  not  true.  The  action  of  these  forces  was 
so  rapid  that  men  were  thrown  out  of  employment  faster  than 
wants  were  created  and  industries  widened.  Labor,  however, 
soon  followed  the  example  which  capital  had  set  of  organization, 
and  during  the  last  decade  the  organization  of  labor  has  progress- 
ed faster  than  that  of  capital,  and  has  forced  a division  of  a lar- 
ger share  of  the  profits  of  industry  for  labor  than  at  any  previous 
period  of  history.  In  other  words  the  profits  of  capital  have  been 
steadily  decreasing,  while  those  of  labor,  and  especially  organ- 
ized labor,  have  steadily  increased.  At  no  previous  period  would 
a dollar  buy  so  much  of  the  necessaries  and  comforts  of  life  as  at 
present.  While  this  is  admitted  by  intelligent  laboring  men, 
many  of  them  contend  that  opportunities  for  earning  a dollar 
have  constantly  diminished  and  they  are  now  seeking  by  the  ad- 
vocacy of  shorter  hours  for  labor  to  make  employment  for  a lar- 
ger number  of  persons,  and  I believe  that  this  is  a worthy  and 
beneficent  aim.  It  is  better  to  have  a larger  number  of  persons 
employed  for  eight  hours  than  a smaller  number  of  persons  ten  or 


No.  40.] 


933 


twelve  hours.  Unrest  of  labor  in  a free  country  is  not  a danger- 
ous phenomenon,  but  rather  a safety-valve,  and  one  which  capital 
can  afford  to  encourage.  At  the  same  time  it  must  not  be  forgot- 
ten that  education  of  the  masses  has  created  new  wants  and  that 
these  wants  have  grown  faster  than  the  means  of  gratifying  them. 
The  problem  should  be  viewTed  from  both  sides,  and  only  what  is 
reasonable  should  obtain.  Wherever  unlimited  power  exists,  it 
is  usually  accompanied  by  tyranny,  whether  of  labor  or  capital. 
There  are  labor  trusts  as  w^ell  as  capital  trusts,  and  in  all  the 
annals  of  combination,  there  are  no'  greater  illustrations  of  tyr- 
anny than  the  attitude  of  some  of  the  labor  organizations  toward 
laborers.  This,  however,  was  the  inevitable  outcome  of  organiza- 
tion and  of  the  great  evolution  which  is  now  going  on  throughout 
the  world,  under  the  operation  of  the  great  forces  that  now  con- 
trol the  world,  steam,  electricity  and  machinery.  Under  the  op- 
eration of  these  forces,  the  world  has  been  growing  richer. 
All  the  resources  of  nature  are  being  developed. 
Capital  has  increased  faster  than  the  opportunities  for  its 
profitable  employment,  as  is  evidenced  by  the  steadily  de- 
creasing returns  of  capital,  or,  in  ether  words,  rate  of  interest. 
I used  to  think  that  combinations  of  capital  would  abrogate  com- 
petition, but  experience  has  shown  that  instead  of  abrogating 
competition  it  has  elevated  that  force  to  a higher  plane.  If  the 
combination  of  capital  in  any  line  temporarily  exacts  a liberal 
profit,  immediately  capital  flows  into  that  channel,  another  com- 
bination is  formed  and  competition  ensues  on  a scale  and  oper- 
ates with  an  intensity  far  beyond  anything  that  is  possible  on  a 
smaller  scale,  resulting  in  breaking  down  the  combination  and 
the  decline  of  profits  to  a minimum.  The  only  trusts  which  have 
succeeded  for  any  length  of  time  have  been  these  which  have  been 


934  [Senate, 

conducted  on  a far-sighted  basis  of  moderate  margins  of  profit,  re- 
lying upon  a large  turn  over,  and  the  economies  resulting  from  the 
command  of  large  capital  intelligently  administered.  The  truth 
of  this  is  illustrated  by  innumerable  failures  in  trust  orgaoia- 
tions,  recent  illustrations  of  which  are  the  Strawboard  Trust,  the 
Starch  Trust,  the  Wire  Nail  Trust  and  the  Steel  Trust.  There 
are  trusts  so-called  in  nearly  every  branch  of  business,  and 
there  is  good  and  bad  in  all,  but  the  good  so  far  predominates 
that  such  aggregations  of  capital  should  be  encouraged,  accom- 
panied by  safeguards  against  abuses.  The  only  additional  safe- 
guards needed  are  for  stockholders  and  investors,  whose  interests 
are  often  sacrificed  through  the  lack  of  publicity.  So  far  as  the 
interest  of  consumers  is  concerned  it  is  amply  protected  now; 
first,  by  competition,  as  I have  shown,  and,  second,  by  the  com- 
mon law,  which,  if  invoked,  will  nullify  any  contract  in  restraint 
of  trade  and  under  existing  statutes  any  unreasonable  combina- 
tion is  subject  to  indictment  for  conspiracy. 

The  popular  hostility  to  trusts  is  due  principally  to  lack  of 
knowledge  of  their  economic  effects,  and  these  are  gradually  be- 
coming better  known.  There  were  just  enough  abuses  attending 
them  to  give  an  excuse  for  sensational  journalistic  denunciation, 
and  this  has  caused  undue  predjudice.  A great  politico-economic 
question  like  this  should  be  considered  dispassionately  and  all 
sides  of  it  carefully  investigated  before  conclusions  are  reached. 
The  result  of  my  many  years’  study  of  it  has  been  to  materially 
modify  the  views  I entertained  in  the  beginning. 

While  within  the  limits  of  a hearing  like  this  it  is  impossible 
to  discuss  exhaustively  all  the  varying  phases  of  so  large  a sub- 
ject I have  endeavored  to  present  to  your  committee  the  thought® 
which  have  come  to  me  in  a somewhat  extended  observation  and 


No.  40.] 


935 


study  of  the  phenomena  attending  the  great  economic  revolution 
now  in  process  of  development,  with  the  hope  that  they  may  have 
suggested  some  points  which  are  worthy  of  further  consideration 
and  which  may  aid  your  committee  in  arriving  at  wise  conclu- 
sions. 

By  Mr.  Warner: 

Q.  What  is  your  object  in  wanting  to  have  this  communication 
spread  upon  the  minutes?  A.  My  object  was  this,  sir;  there  has 
been  during  the  last  few  years  a denunciation  of  capital  in  its 
larger  organizations,  which  it  seems  to  me  is  detrimental  to  the 
best  interests  of  the  people  of  the  State  of  New  York,  indeed  of 
the  whole  United  States — that  there  ought  to  be  a better  under- 
standing of  the  relations  of  capital  and  labor  and  of  the  effect  of 
these  great  organizations  upon  the  public  welfare;  I do  not  think 
that  at  the  present  time  they  are  well  understood ; and  I believe 
that  the  study  of  the  question  by  everybody  will  result  in  arriving 
at  similar  conclusions  to  those  which  I have  arrived  at  during 
many  years  of  study. 

By  Mr.  Lexow: 

Q.  What  is  your  definition  of  a trust,  Mr.  Thurber?  A.  A 
trust  is  any  combination  of  capital  in  the  popular  sense  of  the 

word. 

Q.  Is  that  all?  When  you  make  this  statement  before  the  com- 
mittee do  you  mean  simply  to  be  understood  as  applying  your 
theories  to  combinations  of  capital  as  a whole,  without  reference 
to  these  distinctive  features  attached  to  combinations  here?  A. 
I think  it  has  a general  as  well  as  specific  power,  Mr.  Chairman ; 
I have  endeavored — 


936  [Senate, 

Q.  Do  you  mean  that  this  argument  made  by  you  and  permitted 
by  the  committee  to  be  placed  on  our  record  as  representing  the 
views  of  a journal  which  we  suppose  championed  the  Wholesale 
Grocers’  Association,  which  stood  more  or  less  indicted  upon  this 
record — and  for  that  reason  we  admitted  it — applies  to  combina- 
tions of  capital  as  a whole,  or  refers  to  those  distinctive  charac- 
teristics that  are  supposed  to  inhere  in  what  is  popularly  called  a 
Trust?  A.  Well,  in  the  paper  I have  made  certain  specific — 
given  certain  specific  figures,  referring  to  certain  specific,  so- 
called  trusts;  you — 

Q.  You  have  referred  to  railroad  companies?  A.  To  the  com- 
binations of  railroad  companies. 

Q.  Is  there  not  that  characteristic  difference  between  combina- 
tions in  the  nature  of  trusts  and  railroad  companies  that  the 
State  by  reason  of  the  public  character  of  the  railroad  transporta- 
tion business  and  the  right  of  eminent  domain  that  is  conceded  to 
a railroad  company,  exercises  the  right  of  control  over  the  prices 
charged?  A.  They  are  all  included — 

Q.  Isn’t  that  true?  A.  I think  that  so  far  as  the  railroads  are 
concerned  they  are  at  the  present  time  under  better  supervision 
and  regulation  perhaps  than  other  forms  of  trust  organization;  I 
labored  for  many  years  and  I spent  a great  deal  of  money  to  get 
just  that  regulation;  I presume — 

Q.  For  railroad  companies?  A.  For  railroad  companies;  yes, 
sir;  and  had  perhaps  as  much  to  do  with  the  establishment  of  the 
Railroad  Commission  in  this  State  as  any  one  citizen. 

Q.  Then  do  you  mean  by  that  illustration  of  yours  and  the  ap- 
proval of  that  method  to  suggest  that  what  are  known  as  trusts, 
and  by  trusts  we  mean  either  monopolies  or  quasi-monopolies, 
should  be  placed  under  governmental  control  and  regulation  as 


No.  40.]  .937 

to  price?  A.  I think  that  there  may  be  varying  conditions  in 
different  parts  and  different  branches  of  commerce,  but  on  gen- 
eral principles  I believe  it  would  be  better  for  the  capital  invested 
in  these  great  organizations  of  all  kinds  to  have  a supervision 
and  regulation  in  the  interest  alike  of  the  capital  invested  and  of 
the  public;  I believe  it  would  lead  to  a better  understanding  of 
the  relative  rights,  and  to  prevent  perhaps  unwise  and  ill-con- 
sidered legislation,  which  was  unjust  in  many  cases. 

Q.  You  seem  to  overlook  the  essential  element,  Mr.  Thurber, 
that  one  of  the  questions  here  is  whether  the  State  should  permit 
the  combinations  of  capital  to  go  on  in  the  direction  of  trust  or- 
ganizations; that  is  to  say,  the  organization  of  such  a combina- 
tion of  competing  concerns  as  practically  to  create  a monopoly? 
A.  I think  it  is  the  natural  evolution  of  capital  and  production 
under  the  great  forces  that  now  control  the  world. 

Q.  How  about  capital  itself,  Mr.  Thurber ; do  you  consider  that 
the  interest  of  capital  is  fostered  or  advanced  by  permitting  ag- 
gregations of  capital  to  assume  such  large  proportions  that  small- 
er capital  that  desires  to  compete  has  no  chance  of  entering?  A. 
I think  that  there  may  be  abuses  which  ought  to  be  abated,  but  it 
must  be  borne — < 

Q.  That  is  not  the  point,  Mr.  Thurber — are  there  not  abuses, 
and  does  your  own  experience  with  regard  to  the  very  organiza- 
tions with  reference  to  which  you  have  spoken  in  this  argument 
of  yours,  not  demonstrate  to  you  that  there  are  abuses  which 
should  be  checked  and  quelled  if  possible?  A.  I think  that  those 
things  remedy  themselves,  as  illustrated  in  the  result  in  prices  to 
the  consumer. 

Q.  Take  the  example  of  the  Sugar  Trust,  Mr.  Thurber;  here  is 
an  organization  that  under  permission  of  the  laws  of  the  State 


938  [Senate, 

of  New  Jersey  has  been  permitted  to  increase  its  capital,  whereby 
80  per  cent,  of  all  the  sugar  producing  capacity  of  the  country 
has  been  centralized  under  one  general  management.  Do  you 
mean  to  say  that  even  regard  for  capital  is  served  by  permitting 
an  organization  of  that  kind  to  go  on  increasing — preventing 
capital  that  would  otherwise  be  disposed  to  enter  upon  the 
field  of  competition,  to  enter  upon  it?  A.  Mr.  Chairman,  there 
is  nothing  to  prevent  any  person  who  desires  to  go  into  sugar  re- 
fining business  from  doing  so,  and  the  result  is  shown — 

Q.  There  is  no  law,  Mr.  Thurber,  but  doesn’t  the  fact  that  one 
organization  has  a control  to  such  an  extent  that  it  controls  the 
price  of  the  raw  material,  that  it  fixes  and  controls  the  price  of 
the  manufactured  product,  that  it  regulates  and  adopts  and  re- 
vises a system  of  uniform  rules  and  regulations,  wherby  the  dis- 
tribution of  that  product  over  the  entire  United  States  is  had,  so 
that  competition  even  among  companies  ostensibly  competing,  is 
absolutely  destroyed,  according  to  the  phraseology  used  by  the 
President  of  theWholesale  Grocers’  Association  and  intentionally 
BO1 — do  you  imagine  that  capital  smaller  in  amount,  weaker  in 
strength,  can  compete  against  a corporation  once  organized,  of 
that  kind?  A.  It  can,  Mr.  Chairman;  ftnd  it  is  now  being  done; 
and  it  is  increasing  every  day;  the  competition  with  the  Ameri- 
can Sugar  Refining  Company  is  inevitable,  going  to  increase;  and 
I believe  that  the  best  answer  to  your  question  as  to  its  bearing 
on  the  public  interest  is  that  the  price  of  refined  sugar  has  de- 
clined about  50  per  cent.,  while  the  refining  max*gin  has  declined 
materially. 

Q.  Well,  now,  I see  that  you  use  certain  figures  here — while  not 
leaving  the  main  question;  let  us  come  down  to  that;  you  say  for 
the  years  prior  to  the  organization  of  the  Trust,  the  marginal  dif- 


No.  40.]  939 

ference  between  the  raw  sugar  and  manufactured  product  was 
1.98?  A.  Yes,  sir. 

Q.  Where  do  you  get  those  figures?  A.  1.09;  it  is  one  and 
ninety-eight  one  thousandths. 

Q.  Yes;  that  makes  a great  deal  of  difference?  A.  1 98-1,000. 

Q.  And  not  one  and  ninety-eight  one  hundredths?  A.  No,  sir; 
it  is  one  and  ninety-eight  one-thousandths,  while  the  margin  in  the 
nine  years  succeeding  was  nine  hundred  and  eighty-one-thou- 
sandths. 

Q.  Now,  have  you  taken  the  trouble,  instead  of  taking  the  fig- 
ures made  apparently  for  the  purpose  of  securing  that  result,  by 
the  firm  of  Willett  & Gray — have  you  taken  the  result  of  the  five 
years  preceding  the  formation  of  the  Trust  and  the  five  years 
subsequent?  A.  I have  them  here  in  detail  each  year  (referring 
to  typewritten  paper);  I would  state  that  these  are  Willett  & 
Gray’s  figures,  verified  by  the  records  of  the  American  Grocer. 

Q.  Now,  is  it  not  a fact  that  for  the  five  years  preceding  the 
Trust,  the  marginal  difference  between  the  refined  and  the  manu- 
factured product  was  853-1,000  of  a cent;  while  for  the  five  years 
subsequent  to  the  organization  of  the  Trust  the  marginal  difference 
was  981-1,000  of  a cent?  A.  I think  it  is,  sir,  and — 

Q.  That  is  right?  A.  I think  it  is;  those  figures  bear  that  out; 
but  it  should  be  taken  by  the  nine  years  rather  than  the  five 
years. 

Q.  Why?  A.  Because  the  last  five  years  since  the  formation 
of  the  Trust  are  materially  less  than  the  first  four  years — since 
the  first  four  years — and  the  contract  has  been  in  existence  about 
nine  years. 

Q.  Why  do  you  take  the  figures  that  are  most  favorable  to  the 
Trust  and  exclude  those  which  seem  to  be  the  figures  most  natu- 


940  [Senate, 

ral  to  be  taken  in  reaching  a result  upon  this  question?  A.  Mr. 
Chairman,  I think  I must  answer  that  question  by  asking  you  the 
same  question — because  I take  the  entire  nine  years  that  the 
Trust  has  been  in  existence  and  compare  it  with  nine  years  previ- 
ously. 

Q.  Why  do  you  take  those  nine  years?  A.  Because  it  has  been 
in  existence  nine  years. 

Q.  Why  do  you  take  the  nine  years  that  Willett  & Gray  use 
upon  their  printed  pamphlet,  which  wras  circulated  for  the  pur- 
pose of  showing  that  the  intention  of  the  Sugar  Trust  with  ref- 
erence to  the  association  should  be  considered  and  have  weight 
with  Congress?  A.  If  the  Trust  had  been  in  existence  ten  years 
I should  have  taken  ten  years  difference,  but  as  it  has  only  been 
in  existence  nine  years  I take  the  nine  years  it  has  been  in  exis- 
tence and  compare  it  with  the  nine  years  previously. 

Q.  Don’t  you  think  that  five  years  previously  to  the  organiza- 
tion of  the  Trust  is  a fairly  reasonable  standard  for  the  computa- 
tion of  results?  A.  I don’t  think  it  is,  as  compared  with  the  suc- 
ceeding five  years,  for  the  reason  that  the  full  effect  of  the  com- 
bination did  not  take  place  until, you  might  say,  the  last  five  years; 
I think  it  is  not  a correct  way  of  judging,  unless  you  take  the 
whole  nine  years,  because  for  the  first  five  years  the  economies 
effected  by  the  Trust  had  not  had  their  full  effect;  whereas,  in 
taking  nine  years  together,  it  has;  it  makes  a fairer  average  to 
take  the  whole  nine  years  than  it  does  to  take  the  previous — at 
least,  the  five. 

Q.  Isn’t  it  a fact  that  the  very  first  year  of  the  trust,  the  mar- 
ginal difference  between  refined  and  manufactured,  that  is  be- 
tween raw  and  refined  rose  from  about  70-100  of  one  cent  to  about 
1 21-100  of  one  cent.  A.  Yes,  sir. 


No.  40.] 


941 


Q.  Then  the  effect  of  the  trust  was  practically,  in  one  year,  to 
double  the  marginal  difference  between  refined  and  raw?  A. 
And  then  the  question  would  come — 

Q.  Isn’t  that  true?  A.  It  was,  sir. 

Q.  Notwithstanding  the  economies  resulting  from  centraliza- 
tion which  are  said  to  be  the  main  object  of  aggregation  and  con- 
solidation, notwithstanding  the  centralization  of  industries  and 
the  economies  derivable  therefrom,  in  one  year  50  per  cent,  was 
added  to  the  marginal  difference  between  the  refined  product  and 
the  raw  material;  isn’t  that  true?  A.  It  is;  and  the  question  is, 
was  that  reasonable? 

Q.  Now,  do  you  consider  that  so  far  as  consumers  are  concerned 
that  that  effect  of  a trust  is  a beneficial  one  to  be  fostered  and 
permitted?  A.  I say  that  the  total  results  show  that  it  is;  that 
it  has  reduced  the  price  of  sugar  50  per  cent. 

Q.  And  is  it  not  true  that  labor,  on  the  one  side  has  absolutely 
no  advantage  from  consolidation,  and  that  the  consumer  on  the 
other  side  has  not  had  even  the  advantage  of  the  fall  in  the  raw 
material;  while  the  producer  of  the  rawT  material  has  been  com- 
pelled to  bear  the  entire  burden — only  a fractional  part  of  which 
has  gone  to  the  consumer  and  the  major  part  of  which  has  been 
held  by  the  refiner?  A.  That  is  not  correct,  Mr.  Chairman. 

'Q.  Explain  where  the  error  lies?  A.  The  figures  show  for 
themselves  that  with  the  price  of  7.90  for  granulated  sugar  for 
the  nine  years  preceding  the  Trust  it  has  declined  to  5.27  hun- 
dredths for  the  nine  years  succeeding  the  Trust;  on  that  average. 

Q.  I am  speaking  now  of  the  five  years  preceding  the  Trust, 
compared  with  either  the  five  years  succeeding  the  Trust,  or  the 
whole  nine  years  succeeding  the  Trust?  A.  Well,  sir;  if  you  will 
take  the  five  years  succeeding  the  Trust  on  the  price  of  granu- 


942  [Senate, 

lated  sugar  it  is  lower  than  the  five  years  preceding  the  formation 
of  the  Trust;  I can  give  you  the  exact  figures  of  it  in  a moment; 
(makes  a calculation  on  paper) ; this  is  the  result,  Mr.  Chairman, 
for  the  five  years  preceding  the  formation  of  the  Trust  the  aver- 
age price  of  granulated  sugar  was  6.77. 

Q.  You  mean  the  refined  product?  A.  Yes,  sir;  and  for  the 
five  years  succeeding  the  formation  of  the  Trust  it  was  5.97 
cents — granulated  sugar. 

By  Mr.  Mazet  : 

pw 

Q.  Does  not  the  very  fact  that  as  is  shown  the  large  dividends 
earned  on  this  immense  capitalization  by  the  American  Sugar 
Refining  Company  demonstrate  conclusively  that  there  is  a larger 
profit  in  the  business  notwithstanding  the  fact  that  the  price  has 
been  reduced  to  the  consumer  — and  that  the  consumer  has  not 
got  the  entire  benefit  of  the  improved  machinery  and  centraliza- 
tion, etc.?  A.  Unquestionably. 

By  Mr.  Lexow: 

Q.  Will  yon  read  those  figures  again?  A.  Yes;  for  the  five 
years  preceding  the  formation  of  the  Trust  the  average  price  of 
granulated  sugar  was  6.77 ; for  the  five  years  since  the  formation 
of  the  Trust — the  first  five  years — it  was  5.97. 

Q.  What  conclusions  do  you  draw  from  that?  A.  I say  that 
notwithstanding  that  the  margins  between  raw  and  refined  dur- 
ing the  first  five  years  were  larger  than  they  were  during  the  five 
years  preceding  the  formation  of  the  Trust,  that  the  result — 
which  is  the  important  thing  to  the  consumer — was  a saving  of 
one  and  three-quarters  cents  a pound. 

Q.  No  question— nobody  disputes  that!  The  proposition  is 
this:  Whether  the  consumer  during  that  period  of  time,  not- 


No.  40.]  943^ 

withstanding  the  fact  of  increased  economies  from  concentration 
and  aggregation,  has  received  even  the  benefit  of  the  whole 
amount  of  the  reduction  in  the  price  of  the  raw  material;  and 
jour  answer  to  that  is  no?  A.  I don’t  think  so. 

Q.  Raw  material  has  diminished  more  than  has  the  price  to  the 
consumer  of  the  refined  product?  A.  Unquestionably;  the  profits 
of  refining  were  larger  after  the  formation  of  the  Trust  than  they 
were  prior  to  the  formation  of  the  Trust;  but  there  is  one  fact 
which,  perhaps,  ought  to  be  stated — in  the  few  years  precedingthe 
formation  of  the  Trust,  the  sugar  refining  business  was  a most 
disastrous  business,  and  numbers — I think  probably  a dozen 
sugar  refineries  were  forced  out  of  business;  and  I believe  that 
there  were  more  men  thrown  out  of  employment  by  those  failures 
than  there  were  by  the  consolidation. 

By  Mr.  Mazet: 

Q.  Don’t  you  think  that  would  have  righted  itself  that  the  de- 
mand for  sugar  would  necessarily  create  a supply — that  is,  the 
supply  regulate  the  demand?  A.  I do  not  think  so,  sir;  while,  of 
course,  demand  has  a great  influence  on  prices,  etc.,  the  cheaper 
goods  are  the  more  there  are  used;  at  the  same  time,  the  condi- 
tion of  the  sugar  refining  industry  was  such  that  there  was  ab- 
solutely a necessity  that  something  must  be  done — refinery  after 
refinery  failed,  and  new  methods  came  in,  and  it  was  a natural 
result  that  the  sugar  refining  industry  should  have  taken  just  the 
course  that  it  did  take. 

Q.  Do  you  consider  it  good  policy  for  any  combination  of  capi- 
tal to  make  an  agreement  compelling  purchasers  to  sign  an  agree- 
ment that  they  shall  not  purchase  from  any  competitor;  do  you 
think  that  is  good  policy,  and  don’t  you  think  that  would  retard 
competition?  A.  Well,  it  would  depend  on  how  it  was  done; 


944  [Senate, 

now,  in  point  of  fact,  all  of  these  aggregations  of  capital  known 
as  trusts,  that  make  this  limited  price  agreement,  offer  an  induce- 
ment to  the  distributor  to  handle  only  their  goods;  they  will  sell 
their  goods  to  anybody;  but  to  a man  who  will  promise  to  push 
their  goods,  to  handle  their  goods  exclusively,  they  offer  better 
terms  than  they  do  to  a person  who  won’t  promise  to  do  that. 

Q.  Isn’t  that  in  the  nature  of  a monopoly  in  the  business?  A. 
No,  sir;  I don’t  think  so;  any  other  concern — 

Q.  It  seems  to  operate  in  that  way?  A.  Any  other  concern  can 
do  the  same  thing. 

By  Mr.  Warner: 

Q.  Doesn’t  that  give  the  company  making  these  agreements  an 
immense  advantage  over  similar  concerns  that  come  in  to>  com- 
pete? A.  The  smaller  concerns  can  adopt  the  same  principle, 
you  know. 

Q.  Isn’t  it  a fact  that  the  sugar  refining  company  have  prac- 
tically taken  into  partnership  the  wholesale  grocers  of  this  coun- 
try in  order  to  shut  off  the  smaller  refiners?  A.  Not  at  all. 

Q.  From  doing  business?  A.  Not  at  all;  that  arrangement  was 
made  at  the  request  of  jobbers. 

Q.  Well,  at  whosoever’s  request  it  was  made,  doesn’t  it  have  the 
effect  to  give  them  an  unfair  advantage  over  smaller  concerns? 
A.  This  limited  price  system,  as  it  is  called,  is  a necessity,  I be- 
lieve in  modern  trade;  and  it  all  comes  down  to  the  question  of 
whether  anything  unreasonable  is  done  or  not;  if  an  unreasona- 
ble thing  is  done,  it  ought  to  be  stopped. 

Q.  Do  you  think  that  there  is  such  a competition  between  the 
jobbers  and  wholesalers  that  the  consumer  gets  all  the  benefit 
that  he  should  receive?  A.  I do,  sir;  at  the  present  time;  take 


No.  40.] 


945 


the  item  of  sugar,  for  instance;  I sold  more  sugar  for  twenty 
years — that  is,  my  concern  did — than  any  other  in  the  United 
States;  and  we  did  it,  I think,  constantly  at  a loss  of  3 to  4 per 
cent,  below  the  average  cost  to  us  of  doing  business;  that  is,  in 
other  words,  saying  that  our  average  cost  of  selling  goods  and 
handling  goods,  the  collecting  and  all  that,  was  between  5 and  6 
per  cent. ; we  did  not  make  more  than  perhaps  2 per  cent. — and  our 
actual  cost  of  doing  the  business  exceeded  the  gross  profit  that 
there  was  in  it. 

By  Mr.  Mazet: 

Q.  You  make  some  reference  in  your  statement  to  investiga- 
tions, and  the  public,  the  stockholders — they  ought  to  be  pro- 
tected? A.  It  seems  to  me  that  there  is  a lack  of  publicity  in  the 
affairs  of  these  great  corporations. 

Q.  Doesn’t  the  fact  of  their  capitalization  at  these  immense 
sums  and  the  putting  of  this  stock  in  the  market  enable  them  to 
control  a monopoly  of  stock,  considerably  at  their  pleasure?  A. 
I think  so,  to  a great  extent;  and  the  interest  of  thousands  of 
partners  in  these  great  industrial  concerns  have  certainly  not 
been  consulted  to  the  extent  that  they  are  entitled  to  be  con- 
sulted. 

Q.  That  you  consider  one  of  the  evils  growing  out  of  these 
combinations?  A.  Yes,  sir;  there  ought  to  be  greater  publicity 
and  regulation. 

Q.  What  is  your  idea  as  to  how  that  should  be  accomplished? 
A.  Well,  I had  not  thought  it  out  on  that  line. 

Q.  You  made  the  suggestion  that  some  supervision  ought  to 
be  exercised  over  these  organizations,  in  your  paper?  A.  Yes; 
I said  that  I believed  that  there  ought  to  be  greater  publicity; 


60 


946  [Senate,, 

and  how  that  can  best  be  obtained  is  something  that  has  to  be 
carefully  considered,  of  course. 

Q.  You,  I presume,  have  taken  into  consideration  the  fact  that 
the  different  States  of  this  country  offer  inducements,  one  per- 
haps inferior  to  that  of  the  other,  or  considered  so  by  these  cor- 
porations? A.  Yes,  sir. 

Q.  Your  organization,  I believe,  is  incorporated  under  the  laws 
of  New  Jersey?  A.  Yes,  sir. 

Q.  Were  they  more  liberal  there?  A.  Yes,  at  that  time  they 
were;  there  is  one  thing  about  the  New  Jersey  laws;  they  are 
not  inquisitorial,  in  so  far  as  the  ordinary  business  of  a corpora- 
tion is  concerned;  it  does  not  reveal  their  methods  of  business 
to  competitors,  and  there  is  a great  deal  in  that;  a man  wants 
to  conduct  his  business  in  his  own  way;  he  has  his — that  is,  when 
I say  a man,  I mean  a corporation ; it  has  ways  of  doing  business 
that  it  don’t  want  to  give  competitors  the  benefit  of;  there  ought 
not  to  be  anything  which  is  inquisitorial — unnecessarily  so. 

By  Mi’.  Warner: 

Q.  What  is  there,  Mr.  Thurber,  in  the  laws  of  the  State  of  New 
York  that  is  inquisitorial,  in  regard  to  these  trusts,  at  the  present 
time?  A.  Well,  I think  that  the  laws  of  the  State  of  New  York 
now  are  not  so  bad;  the — some  of  the  reports  are  perhaps  un- 
necessarily in  detail,  that  do  give  competitors  information  which 
they  should  not  have. 

By  Mr.  Lexow: 

Q.  Reports  for  taxation  purposes?  A.  Yes,  sir;  the  annual 
reports. 

Q.  But  that  is  not  open  to  the  public;  the  report  made  to  the 


No.  40.] 


947 


Comptroller  is  a secret  document;  that  is  not  open  to  the  public, 
so  that  cannot  possibly  give  a competitor  any  knowledge  of  the 
business?  A.  Well,  I can  only  speak  from  my  own  impressions 
that  I had;  I am  not  aware  of  what  you  stated — the  correctness 
of  that. 

Q.  What  is  there  in  the  provision  requiring  an  annual  report — 
and  the  looseness  with  which  that  report  can  be  drawn — that  is 
inquisitorial,  that  would  prevent  any  honest  corporation  from 
operating  in  this  State?  A.  Well,  I don’t  know  that  I am  famil- 
iar enough  with  that  to  judge. 

Q.  Have  you  investigated  that  subject  of  taxation  at  all,  Mr. 
Thurber?  A.  I have  somewhat,  sir;  I found  this — 

Q.  Do  you  consider  that  the  laws  of  the  State  of  New  York 
are  any  more  oppressive  than  those  of  the  State  of  New  Jersey, 
or  that  the  methods  for  the  collection  of  an  honest  tax  are  in 
better  shape  in  this  State  than  they  are  in  the  State  of  New 
Jersey?  A.  I think  the  laws  of  New  York  are  more  liberal  now 
than  they  were;  but  I will  say  this  as  regards  the  difference  be- 
tween taxation  of  corporations  and  taxation  of  private  persons — • 
that  when  our  firm  was  formed  into  a corporation,  we  had  to  pay 
about  nine  thousand  dollars  taxes  more  than  what  we  had  paid 
previously;  and  we  were  in  competition  with  houses  in  our  same 
line  of  business  that  did  not  pay  a cent  on  their  personal  prop- 
erty, their  stocks,  goods,  and  all  that  sort  of  thing,  which  we 
as  a corporation  had  to  pay. 

Q.  You  mean  that  a corporation  has  to  pay  a larger  percent- 
age of  the  tax  proportionately  than  the  individual?  A.  Yes,  sir. 

Q.  And  that  upon  certain  lines  of  business  a corporation  only 
pays  a tax  where  the  individual  escapes  entirely?  A.  Yes,  sir. 

Q.  Do  you  hot  consider  that  the  limitation  of  liability  that  a 


948 


[Senate 


corporation  possesses  is  an  adequate  consideration  for  the  pay 
ment  of  a tax  such  as  is  levied?  A.  Well,  in  some  kinds  of  busi 
ness  it  may  be;  but  I should  say  that  in  my  line  of  business,  that 
I never  in  the  world  would  incorporate  a business  again,  as  long 
as  it  could  be  continued  under  individual  management. 

Q.  Now,  have  you  in  making  this  defense  of  the  combination  of 
capital,  in  a general  sense,  taken  into  consideration  the  apparent 
accessory  of  each  one  of  these  combinations,  namely,  that  im- 
mediately upon  centralization  the  stock  is  increased  to  a prodig- 
ious quantity,  the  stock  certificates  are  listed  upon  the  New  York 
Stock  Exchange,  and  what  were  before  non-speculative  industrial 
pursuits  are  changed  into  speculative  securities?  A.  Yes,  sir; 
I have  thought  of  that. 

Q.  Have  you  thought  of  that  with  reference  to  the  conduct 
of  the  business  of  industrials  of  that  character,  where  the  induce- 
ment to  raise  or  depress  the  stock  in  the  market  is  a prominent 
feature?  A.  The  question  of  what  a business  should  be  capi- 
talized at  is  a very  difficult  and  intricate  one  to  solve;  the  ques- 
tion of  the  earning  power  of  that  business  is,  of  course,  the 
prominent  feature  of  it;  and  the  earning  power  may  depend  on 
a great  many  different  things. 

Q.  Has  the  earning  power  not  become  a more  prominent  and 
necessary  feature  because  of  the  fact  of  change  from  an  ordinary 
industrial  pursuit  to  a matter  of  speculation?  A.  It  is  not  neces- 
sarily changed  by  incorporation,  but  where  a business  is — where 
the  stock  of  a corporation  is  listed  on  the  stock  exchange  and  it 
is  made  the  subject  of  speculation,  as  you  say,  undoubtedly,  there 
is  a great  opportunity  for  elevating  and  depressing  those  stocks 
by  the  men  who  know  the  inside  of  that  business. 

Q.  By  restricting  and  increasing  production  in  the  industrial 


Jo.  40.] 


949 


tself,  or  ridding  themselves  of  competition  on  the  one  side,  or 
■aising  an  ostensible  competition  on  the  other;  are  not  all  those 
nducements  severally  injected  into  what  otherwise  would  be  an 
ordinary  industrial  pursuit?  A.  All  those  things  are  possible 
mder  the  system. 

Q.  Aren’t  they  the  natural  consequences,  Mr.  Thurber,  of  in- 
creased capitalization  and  of  a change  of  the  holding  from  a few 

0 many  for  speculative  purposes?  A.  Well,  you  know  there  are 
speculative  stocks  and  there  are  non-speculative  stocks;  it  is  not 
lecessary  that  a corporation  should  list  its  stock  and  become  a 
speculative  stock;  there  are  thousands  of  corporations  that  do 
lot  list  their  stocks  and  do  not  make  them  speculative  stocks. 

Q.  Do  you  know  of  any  so-called  trust,  and  by  that  I mean  a 
combination  which  controls  a percentage  greater  than  one-half 
if  the  entire  business  of  the  country  in  that  specific  line,  the 
stock  of  which  after  capitalization  has  not  become  a speculative 
commodity?  A.  Yes;  the  Standard  Oil  Company  is  a conspicuous 
example  of  that. 

Q.  Do' you  mean  to  say  that  the  Standard  Oil  Company  is  not 

1 security  which  is  dealt  in  speculatively  in  the  city  of  New 
Fork?  A.  I do  not  think  it  can  be  called  a speculative  stock. 

Q.  Are  its  quotations  not  to  be  had  readily?  A.  Yes,  sir;  but 
pou  do  not  say — that  is,  in  the  popular  mind,  I do  not  think  it 
s considered  speculative  stock;  that  is,  a number  which  — 

By  Mr.  Mazet : 

Q.  Not  speculated  in  as  much  as  some?  A.  No. 

By  Mr.  McCarren : 

Q.  The  holder  don’t  sell  it?  A.  Yes;  it  is  steady;  it  is  an  invest- 
nent  stock. 


950 


[ Senate, 


By  Mr.  Lexow: 

Q.  Now,  isn’t  it  the  fact,  that  when  you  come  to  consider  a 
combination  like  the  Sugar  Refining  Company,  that  it  is  only  in 
the  case  of  a rupture  such  as  is  produced  between  the  Arbuckles 
controlling  about  as  many  millions  as  the  Sugar  Refining  Com- 
pany on  the  one  side,  and  the  Sugar  Refining  Company  on  the 
other,  that  there  is  any  hope  or  expectancy  of  any  competition  in 
sugar?  A.  Not  at  all;  we  see  it  in  the  Mollenhauer;  we  see  it 
in  the  McGahan;  we  have  seen  it  in  the  Revere  Refinery,  in  Bos- 
ton— Yes,  there  is  competition  in  the  refining  of  sugar  to-day. 

Q.  Do  you  consider  it  competition,  Mr.  Thurber,  when  the  wit- 
nesses on  the  stand  here  have  testified  that  these  various  refiner- 
ies follow  the  prices  made  by  the  American  Sugar  Refining  Com- 
pany? A.  Well,  they  are  at  perfect  liberty  to  make  different 
prices  if  they  choose;  you  can’t — 

Q.  Don’t  you  know  that  the  American  Sugar  Refining  Company 
has  it  in  its  power  to  buy  up  every  one  of  these  concerns  if  it 
desires,  to-morrow?  A.  No,  sir;  I don’t  know  that. 

Q.  Don’t  you  know  that  their  output  is  so  small,  while  the  force 
of  capital  controlled  on  the  other  side  is  so  great  that  they  could 
get  rid  of  competition  and  buy  absolutely  all  competitors  of  this 
kind  ultimately,  if  they  desire?  A.  No,  sir;  I don’t  think  that 
is  correct. 

Q.  Why,  then,  do  not  the  Mollenhauers,  instead  of  working 
their  factories  only  to  the  extent  of  50  or  60  per  cent,  of  their 
productive  capacity — why  don’t  they  work  them  to  the  full  ex- 
tent of  their  power  of  production  and  compete  openly  in  the 
market?  A.  Because  they  do  not  have  the  demand  for  their 
sugar;  they  sell  all  they  can. 

Q.  If  the  American  Sugar  Refining  Company  can  sell  at  prices 


No.  40.] 


951 


fixed  by  that  company,  one  thousand  two  hundred  millions  of 
tons  of  sugar  a year,  do  you  mean  to  say  that  the  small  pro- 
ductive capacity  of  the  Mollenhauer  Company  could  not  be  sold, 
in  competition  with  the  American  Sugar  Refining  Company?  A. 
It  is  a question  for  them  whether  they  wmuld  make  more  money 
with  two  thousand  barrels  of  sugar  a day,  selling  at  one  price,  or 
whether  they  would  make  more — on  three — selling  at  another 
price. 

Q.  Selling  at  prices  fixed  by  the  American  Sugar  Refining 
Company?  A.  Well,  they  don’t — 

Q.  Isn’t  that  true?  A.  I don’t  think  that  they  sell  at  the  prices 
fixed  by  the  American  Sugar  Refining  Company;  but  they  fix 
their  own  prices  as  close  to  theirs  as  they  can. 

Q.  Fixed  under  the  factors’  agreement,  according  to  the  price 
of  the  American  Sugar  Refining  Company?  A.  That  has  nothing 
to  do  with  their  fixing  their  price;  they  can  fix  their  price  at  any 
amount  they  choose;  and  they  pursue  with  the  distributors  the 
same  factor’s  system  that  the  American  Sugar  Refining  Company 
does. 

Q.  Mr.  Thurber,  the  testimony  is  upon  the  record  here,  given 
by  the  representative  of  the  Mollenhauers,  that  the  expense  of 
producing  refined  sugar  lessens  in  proportion  as  the  capacity 
of  the  factory  is  worked;  and  that  the  smallest  expense  is  reached 
when  the  factory  is  worked  to  its  full  limit;  now  be  kind  enough 
to  explain  to  us  how  a concern  manufacturing  only  two  thou- 
sand barrels  of  sugar  a day  cannot  sell  its  entire  output,  where 
the  American  Sugar  Refining  Company,  acting  through  the  same 
factors,  is  able  to  dispose  of  its  output,  amounting  to  80  per  cent, 
of  the  total  manufactured  product  of  the  United  States?  A. 
Each  concern — 


952  [Senate, 

Q.  If  there  was  competition?  A.  Each  concern  has  its  cus- 
tomers, and  they  are  constantly  trying  to  get  the  trade  of  this 
house  and  that  house  and  the  other  house;  and  I think  that  the 
Mollenhauer  people  sell  all  that  they  can  sell. 

Q.  All  that  they  are  permitted  to  sell  by  the  American  Sugar 
Refining  Company;  is  that  not  true?  A.  No,  sir;  I don’t  think  so. 

Q.  How  do  you  account  for  it,  then,  that  just  in  proportion  as 
the  American  Sugar  Refining  Company  limits  its  percentage  of 
product,  the  Mollenhauer  and  the  other  so-called  competing  con- 
cerns limit  the  percentage  of  their  product?  A.  I am  not  aware 
that  that  is  so. 

Q.  Mr.  Post  conceded  on  the  stand  here  that  they  followed 
the  American  Sugar  Refining  Company  in  limitation  of  product? 
A.  By  limiting  the  product — well,  that  is  news  to  me! — 

Q.  (Continuing)  And  explained  on  the  ground  that  the  same 
causes  that  operated  to  make  the  American  Sugar  Refining  Com- 
pany limit  its  product  at  a given  time,  would  necessarily  operate 
with  the  Mollenhauer,  by — A.  Well,  not  bind  them — 

Q.  Now,  if  there  was  free  competition,  and  one  concern  sold 
nearly  twelve  hundred  thousand  tons  annually,  and  the  other 
concern  only  manufactured  two  thousand  barrels  a day,  explain 
to  me  how,  if  there  was  true  competition,  that  small  concern 
could  not  sell  the  entire  capacity  of  its  plant?  A.  I think  it  was 
the  trade  conditions  that  Mr.  Post  alluded  to  and  that  the  same 
trade  conditions  that  affected  the  American  Sugar  Refining  Com- 
pany affected  them ; and  that  when  the  demand  fell  off  for  sugar 
in  the  one  case  it  fell  off  in  the  other. 

Q.  Operating  through  the  same  factors?  A.  No,  sir;  operating 
through  different  factors;  they  each  have  their  classes  of  custom- 


No.  40.] 


953 


ers,  you  know — they  have  their  houses  that  deal  with  them; 
some  houses  deal  with  both. 

Q.  Do  you  mean  to  say  that  it  is  not  in  the  power  of  the  Ameri- 
can Sugar  Refining  Company  to  stamp  out  the  competition  of 
any  concern  controlling  substantially  less  capital  than  it  does, 
by  reducing  price?  A.  I do;  unless  a concern  had  insufficient 
capital,  when  they  might  run  them  out;  but  you  take  any — 

Q.  Isn't  the  hope  of  competition  now,  with  reference  to  the 
American  Sugar  Refining  Company  based  entirely  upon  the  prop- 
osition that  the  Arbuckles — controlling  almost  as  many  millions 
as  the  Sugar  Refining  Company — proposes  to  enter  into  compe- 
tition with  them;  and  isn’t  that  the  only  hope1  of  competition  in 
this  country  to-day?  A.  No,  sir;  you  take  a small  concern;  you 
take  a two-thousand-barrel  refinery  with  sufficient  capital  to 
operate  that  refinery  on  a cash  basis — if  it  was  doing  business 
to  ruin  instead  of  to  make  money — they  could  ruin  the  whole 
sugar  refining  industry — it  is  the  most  vulnerable  thing  that  you 
can  find — a big  concern  is  at  the  mercy  of  any  little  solvent  con- 
cern, that  wants  to  go  to  work  to  ruin  them. 

Q.  Well,  how  long  can  that  little  concern  remain  solvent?  A. 
Ah!  As  long  as  they  can  pay  cash. 

Q.  As  long  as  it  could  pay  cash;  therefore,  is  it  not  an  irresist- 
able  conclusion  from  that,  that  in  order  to  make  any  effective 
competition  against  a combination  controlling  80  per  cent,  of 
the  market  of  this  country,  with  a capital  of  $75,000,000,  almost 
an  equivalent  capital  must  be  competing  against  it?  A.  Not 
at  all,  sir;  that  is  an  entire  fallacy;  and  I think  that  these  large 
aggregations  of  capital  are  the  most  vulnerable  things — if  any- 
body wants  to  attack  them  and  wants  to  do  business  and  not 
make  money;  they  can  break  down  any  combination  of  capital — 


954  [Senati, 

Q.  Will  you  then  account,  Mr.  Thurber,  for  the  purchase  by  the 
American  Sugar  Refining  Company  of  the  Camden  factory,  not- 
withstanding the  fact  that  it  had  not  been  operating  a number 
of  its  own  factories  for  years  previously  and  notwithstanding 
the  fact  that  it  had  not  been  utilizing  the  productive  capacity  of 
its  factories  in  operation  to  the  extent  of  from  60  to  70  per  cent 
since  the  organization  of  the  trust?  A.  Well,  I have  no  doubt — 

Q.  Does  that  mean  that  small  capital  can  compete  against  the 
American  Sugar  Refining  Company,  or  will  be  swallowed  by  it? 
A.  I have  no  doubt  that  any  refinery  which  may  be  built  to  sell 
out,  as  the  saying  goes,  could  be  bought,  at  any  time;  but  there 
are  businesses  that  are  not  built  to  sell  out. 

Q.  The  Franklin  factory  was  not  built  to  sell  out,  but  it  had 
been  operating  for  20  or  30  years,  had  it  not,  in  Philadelphia? 
A.  It  had. 

Q.  The  Delaware  factory  was  in  the  same  situation,  was  it  not? 
A.  Yes,  sir;  I think  so. 

Q.  The  Spreckels  factory  was  organized  with  a capital  of 
$10,000,000,  in  Philadelphia,  also,  was  it  not?  A.  Yes,  sir— J 
think  it  was  built  to  sell. 

Q.  Now,  explain  to  me,  if  small  capital  can  compete — and,  cer- 
tainly $10,000,000  is  not  small  capital,  how  it  was  that  although 
the  American  Sugar  Refining  Company  was  not  then  operating 
four  or  five  of  the  plants  that  it  had  acquired  and  was  not  then 
utilizing  more  than  60  per  cent,  of  its  productive  capacity,  never- 
theless bought  these  competing  plants?  A.  There  is  no  doubt 
that  a person — 

Q.  Can  you  account  for  it?  A.  Yes;  I can  account  for  it  in  thif 

« 

way — that  there  may  be  inducements  enough  offered  to  make  a 
person  sell  out,  if  it — 


No.  40.] 


955 


Q.  One  moment — just  stay  there  one  minute — and  is  not  that 
concern  which  controls  75  to  80  per  cent,  of  the  total  market  and 
has  a capital  of  $75,000,000  the  ability  to  offer  any  inducement 
that  will  prevent  competition?  A.  No,  sir;  that  is  shown  by 
Nash,  Spalding  Refinery  of  Boston;  it  is  shown  by  the  Mollen- 
hauer  Company  of  New  York;  and  it  is  shown  by  the  McGahan 
of  Philadelphia. 

Q.  But,  Mr.  Thurber,  is  it  not  known  to  you  as  a student  of 
this  question,  that  some  concerns  might  more  properly  be  kept 
in  operation,  in  order  to  avoid  the  question  of  the  creation  of 
monopoly,  and  that  if  those  concerns  follow  prices,  the  monopoly 
is  as  nearly  established  as  though  they  had  been  swallowed?  A. 
No,  sir;  not  necessarily;  there  are  people  who  go  into  business 
to  make  a manufacturing  profit  and  not  to  sell  out;  and  there 
are  others  who  go  into  business  to  sell  out;  the  Spreckels  refin- 
ery was  undoubtedly  built  with  that  view  and  with  that  result. 

Q.  Is  that  the  only  answer  you  care  to  make  to  that  proposi- 
tion? A.  I don’t  think  of  any  other,  sir. 

By  Mr.  Mazet: 

Q.  You  made  a statement  a moment  ago;  that  unless  a man 
wanted  to  go  into  business  to  make  money,  he  could  make  these 
combinations — A.  (Interrupting)  Yes;  if  he  wanted  to  do  busi- 
ness without  profit;  because  he  could  reduce — 

Q.  (Interrupting) — That  practically  prevents  competition — 
a man  wouldn’t  go  into  business  unless  he  could  make  some 
money  by  doing  so?  A.  That  is  it. 

Q.  Well,  isn’t  the  natural  result,  then,  to  prevent  competition? 
A.  It  all  comes  down  to  the  question  of  what  is  reasonable;  if 
you  make  the  margin  so  large  that  it  tempts  additional  capital 


\ 


956  [Senate, 

to  an  undue  extent  into  any  business,  it  will  naturally  tend  to 
reduce  the  profits  to  nothing  in  that  business;  now,  if  I were  going 
into  the  sugar  refining  business  to-day,  I should  endeavor  to 
do  so  to  make  money;  I would  endeavor  to  keep  my  prices  as 
high  as  I could  keep  them,  and  if,  on  the  other  hand,  I wanted 
to  go  into  the  sugar  refining  business  to  ruin  the  American  Sugar 
Refining  Company,  I would  sell  my  goods  just  as  low  as  I could 
sell  them.  . \ 

By  Mr.  Bedell: 

Q.  If  you  were  going  into  the  business  to-day  of  refining  sugar, 
you  would  put  your  sugar  out  on  the  market  at  the  same  price 
the  American  Sugar  Refining  Company  did,  would  you  not.  A. 
As  nearly  as  I could. 

Q.  If  you  w7anted  to  make  money?  A.  If  I wanted  to  make 
money. 

Q.  You  would  not  attempt  to  charge  a higher  price?  A.  Why, 
of  course;  I couldn’t  sell  my  sugar. 

Q.  You  would  not  attempt  to  charge  a lower  price,  because 
they  would  meet  you  on  it?  A.  Yes;  that  is  so. 

Q.  Then,  by  reason  of  their  being  in  a position  to  control  so 
large  a portion  of  the  trade,  you,  if  you  expected  to  make  money 
out  of  your  enterprise,  would  find  it  necessary  to  follow  the 
prices  established  by  the  American  Sugar  Refining  Company, 
would  you  not,  as  a matter  of  fact?  A.  Well,  I would,  after  I 
got  the  trade;  but  you  know  you  have  got  to  get  your  trade,  and 
in  order  to  get  the  trade  you  might  at  first  have  to  cut  under  their 
prices. 

Q.  Don’t  you  think  they  would  meet  you  on  the  cut?  A.  They 
would  if 


No.  40.] 


957 


Q.  Then,  how  would  you  get  the  trade?  A.  They  would  if  you 
were  of  sufficient  importance,  but  you  could  go  in  and  for  a while 
you  wouldn’t  be  of  sufficient  importance. 

Q.  After  you  got  the  trade,  then  you  would  follow  the  prices 
established  by  the  American  Sugar  Refining  Company?  A.  I 
would,  unquestionably. 

By  Mr.  Lexow: 

Q.  That  is  it.  In  other  words,  in  order  that  a person  or  com- 
bination of  persons  shall  be  of  sufficient  importance  to  compete 
against  the  Sugar  Refining  Company,  they  must  be  of  sufficient 
importance  to  put  before  the  public  an  output  somewhat  similar 
in  size  to  that  produced  by  the  American  Sugar  Refining  Com- 
pany? A.  Oh,  no  ; not  at  all. 

Q.  They  must  be  able  to  supply  the  market,  must  they  not? 
A.  No;  they  must  be  able  to  supply  the  market  up  to  their  ca- 
pacity, whatever  that  may  be.  And  a 2, 000-barrel  capacity  — 
after  it  has  got  the  customers  to  take  that  amount,  why  they,  of 
course,  don’t  want  to  sell  their  product  any  cheaper  than  the 
trust  would  sell  it;  they  want  to  sell  it  at  a profit;  at  first  they 
may  sell  it  for  less  in  order  to  get  the  trade. 

Q.  But  if  the  Trust  then  followed,  they  could  not  get  the  trade, 
could  they?  A.  Well,  it  would  be  a question  of  how  fast  they 
followed. 

Q.  You  do  not  dispute,  do  you,  that  there  is  nothing  short  of 
a combination  of  capital  involving  many  millions  that  would 
make  any  competition  against  the  American  Sugar  Refining 
Company,  and  capital  that  desired  to  invest  in  that  field  would 
know  that  it  faced  the  risk  of  absolute  ruin  by  the  American 
Sugar  Refining  Company  underselling  it  in  the  market?  A.  Not 


958  [Senate, 

at  all,  sir;  you  take  a 2,000-barrel  refinery  that  is  a solvent  refinery, 
with  sufficient  capital  to  do  its  business  with,  and  it  could  ruin 
the  American  Sugar  Refinery  Company  to-day. 

Q.  How  much  capital  would  you  say  would  be  necessary?  A. 
Enough  to  pay  cash  for  what  it  bought. 

Q.  And  how  long A.  Not  a large  capital  by  any  means. 

Q.  How  large?  A.  Well,  I should  say  that  a capital  of  two 
millions  of  dollars  would  be  ample  to  be  proof  against  any  as- 
saults which  the  American  Sugar  Refining  Company  could  make, 
because  it  wrould  be  practically  independent;  they  could  buy  and 
sell  for  cash;  and  the  American  Sugar  Refining  Company  could 
not  ruin  them  if  they  tried. 

By  Mr.  Bedell: 

Q.  But  you  say  they  could  ruin  the  American  Sugar  Refining 
Company?  A.  I do — because,  don’t  you  see  — there  is  the  large 
capital,  and  that  large  plant  that  has  got  to  work  on  the  same 
margin  that  the  small  capital  and  the  small  plant  does. 

Q.  Let  me  ask  you  — is  this  American  Sugar  Refining  Com- 
pany producing,  as  it  does,  and  controlling  50  per  cent,  of  the 
total  here  in  the  United  States,  of  refined  sugar,  to  simply  remain 
passive  while  you  were  putting  out  on  the  market  the  entire 
product  of  your  two  million  dollar  concern  — now,  after  you  had 
disposed  of  all  the  product  of  that  concern,  in  what  position 
would  the  American  Sugar  Refining  Company  be  placed;  would 
they  not  then  charge  any  price  that  they  saw  fit  for  their  sugar? 
A.  Oh,  no;  because  it  is  a continuous  thing;  and  it  would  be  a 
question  simply  of  the  volume  of  the  business;  it  might  be  to 
their  interest  to 

Q.  But  you  could  only  control  a certain  — only  2,000  barrels, 


No.  40.]  95$ 

because  you  only  have  an  output  of  2,000  barrels  — A.  I under- 
stand — it  might  not  be  large  enough  to  make  it  an  object  for 
them  to  reduce  their  price  on  their  entire  output. 

Q.  But  you  are  asserting  that  you  can  ruin  the  American  Sugar 
Refining  Company  — I fail  to  see  just  how?  A.  Well,  you  have 
got  to  have  a sufficient  amount,  perhaps,  to  bring  down  the  price. 
What  I mean  to  say  is — ■ 

Q.  Then  you  would  have  to  have  an  output  equal  to  the  Ameri- 
can Sugar  Refining  Company?  A.  No  — quite  a long  while  — 
you  might  have  to  increase  your  output. 

Q.  Then  you  would  have  to  increase  your  capital?  A.  Yes. 

Q.  Then,  the  two  million  dollars  would  not  be  sufficient,  would 
it?  A.  Yes;  I think  it  would  have  that  effect;  I think  it  would 
have  the  demoralizing  effect.  What  I mean  to  say  is,  if  a com- 
pany was  formed,  to  go  into  business  for  the  purpose  of  seeing 
how  cheap  they  could  sell  goods,  instead  of  making  profit,  then 
it  would  have  the  effect  to  stimulate  the  American  Sugar  Refin- 
ing Company  into  reducing  their  prices  until  prices  would  go 
down  until  where  there  was  absolutely  no  profit  perhaps  on  the 
sale. 

Q.  How  long  would  it  take  to  wipe  out  that  entire  two  million 
dollars,  if  you  could  reduce  the  price  of  sugar  one-half  or  three- 
quarters  of  a cent  a pound?  A.  If  you  did  not  do  business  below 
the  cost  of  doing  it,  it  would  not  be  wiped  out;  it  would  remain 
there  as  a factor;  and  you  could  stop,  shut  down  your  factory,  if 
you  chose,  when  you  got  to  the  point  where  there  was  no  money 
in  it. 

i 

By  Mr.  Lexow: 

Q.  Why,  you  have  stated  that  the  American  Sugar  Refining 
Company,  with  all  its  concentration,  is  compelled  to  pay  one-third 


960  [Senate, 

of  a cent  per  pound  for  refining?  A.  No;  I said  that  was  their 
profit.  ( 

Q.  Now,  if  the  refinery  undercuts  the  American  by  one-half 
cent,  he  must  lose  just  the  difference  between  one-third  and  one- 
half  cent  in  the  manufacture  of  his  output?  A.  Yes. 

Q.  How  long  would  his  two  millions  last?  A.  He  is  not 
obliged  to  cut  it  below  the  third;  when  he  gets  to  the  point 
where  there  is  no  profit  he  can  stop. 

Q.  Then,  where  would  the  competition  come  in?  A.  The 
American  Refinery  would  be  doing  business  without  profit;  and 
there  is  their  immense  capital  and  plant  — and  that  has  been 
brought  down  to  that  point  by  a little  one. 

Q.  How  much  would  it  cost,  Mr.  Thurber,  to  put  up  a factory 
that  would  produce  enough  sugar  to  compete  with  the  American 
Sugar  Refining  Company,  in  the  city  of  New  York?  A.  Well, 
I don’t  know  just  what  the — , 

Q.  Don't  you  know  it  would  cost  over  two  millions  of  dollars? 
A.  Well,  I say  that  two  millions  of  dollars  would  operate  a fac- 
tory of  moderate  capacity,  and  which,  if  the  American  Sugar 
Refining  Company  tried  to  run  them  out,  could  not  be  run  out. 

Q.  Supposing  the  American  Sugar  Refining  Company,  this  be- 
ing the  district  in  which  your  two  million  dollar  adventure  was 
started,  put  down  the  price  of  sugar  to  one  cent  below  the  cost 
of  manufacture,  and  compelled  through  its  factor  agreements 
which  -we  have  in  evidence  here,  every  factor  to  sell  at  that  price; 
how  long  would  that  investment  of  two  million  dollars  last  A. 
You  are  not  compelled  to  operate  your  factory  at  a loss;  you  can 
shut  it  down  when  it  gets  at  a point  where  it  is  nonremunera- 
tive. 


No.  40.] 


961 


Q.  And  that  would  be  the  situation  exactly  with  this  invest- 
ment of  two  millions  of  dollars,  after  a very  few  days,  wouldn’t 
it?  A.  But  where  would  be  the  situation  of  the  seventy-five 
millions  of  dollars? 

Q.  They  would  then  be  able  to  continue  without  competition? 
A.  Ah!  But  you  can  start  your  refinery  up  again  the  moment 
they  get  to  a profitable  basis. 

By  Mr.  Mazet: 

Q.  You  do  not  mean  to  say  that  you  could  compete  with  a con- 
cern that  has  plants  all  over  this  country  and  could  sell  sugar  so 
much  cheaper,  and  at  the  same  time  realize  the  same  profit — for 
instance,  this  concern  could  sell  in  Cincinnati  and  in  Philadel- 
phia at  a much  lower  figure,  considering  the  freight  rates,  than 
you  manufacturing  here,  and  yet  make  more  profit  than  when 
you  were  profiting  on  sugar — A.  They  might  in  Philadelphia 
because  they  have  their  local  refineries  there;  but  they  could 
not  in  Cincinnati. 

Q.  You  do  not  wish  to  be  understood  as  saying,  do  you,  that 
a man,  under  these  circumstances,  could  be  a successful  practi- 
cal competitor  against  a concern  of  that  kind?  A.  I say — 

Q.  Might  be  temporary,  in  a certain  locality?  A.  I say  that 
any  refinery  that  goes  into  business  to  make  money  can  compete 
with  the  American  Sugar  Refining  Company  and  make  money, 
at  the  present  margin  of  profit;  if  it  should  go  down  a third  of 
a cent;  that  is,  if  the  margin  of  profit  should  be  reduced  a third 
of  a cent,  they  could  not  do  it,  because  that  is  about  the  average 
net  profit  that  the  refiners  make. 


61 


963 


[Senate, 


By  Mr.  Bedell: 

Q.  You  are  coming  right  to  our  proposition,  if  that  is  where 
you  stand? 

By  Mr.  Mazet: 

Q.  That  is,  adopt  their  prices?  A.  Naturally  a man  goes  into 
business  to  make  money,  he  sells  his  product  as  high  as  he  can 
in  the  market. 

By  Mr.  Barry: 

Q.  Isn’t  it  a fact  that  the  refined  sugar  in  this  country  is  regu- 
lated by  the  price  of  foreign  sugar,  foreign  refined  sugar?  A. 
Well,  it  is  more  regulated  by  the  price  of  the  raw  sugar;  and 
to  some  extent  is,  to  a certain  extent,  by  the — 

Q.  If  the  duty  was  taken  off  refined  sugar,  would  not  that  have 
more  effect  on  the  sugar  combination  than  any  other  combination 
of  capital  in  this  country  would  have?  A.  Yes;  I have  no  doubt 
it  would  break  down  the  refining  industry  in  this  country;  it 
would  simply  transfer  the  refining  industry  from  this  country 
to  the  other  side. 

By  Mr.  Lexow : 

Q.  You  mean  that  that  would  break  down  the  refining  indus- 
try? A.  Yes,  sir. 

Q.  Would  it  have  any  effect  on  competition  with  the  American 
Refining  Company?  A.  Well,  no,  sir;  I think  they  would  all  be 
in  the  same  boat. 

By  Mr.  McCarren: 

Q.  In  your  statement,  if  my  memory  serves  me  right,  you 
stated — or  read — that  at  one  time  you  were  under  the  impression 


No.  40.] 


963. 


that  combinations  of  capital  tended  to  abrogate  competition? 
A.  Yes,  sir. 

Q.  And  I infer  that  you  have  changed  your  mind?  A.  I have, 
sir;  I believe  that  it  enhances  competition  ultimately;  it  may  tem- 
porarily prevent  competition;  but  in  the  long  run  it  lifts  compe- 
tition to  a higher  plane;  and  these  large  organizations,  when 
they  do  compete,  compete  much  more  strongly  and  virulently 
than  the  small  ones  do;  we  see  that  in  railroad  wars. 

Q.  I do  not  wish  to  be  personal,  but  at  one  time  you  were  very 
prominently  identified  with  the  organization  known  as  the  Anti- 
Monopoly  League?  A.  Yes,  sir;  I had  the  honor  of  forming  that 
organization. 

Q.  Well,  at  that  time,  as  I understand,  the  principles  of  the 
organization  were  inimical  to  the  concentration  or  consolidation 
of  capital?  A.  The  real  object  of  the  Anti-Monopoly  League  was 
to  get  a Railroad  Commission  in  this  State;  and  that  was  opposed 
by  the  railroads;  and  it  took  a seven  years’  fight  to  get  it,  and 
we  finally  succeeded  in  getting  it— and  afterward  had  the  satis- 
faction of  having  the  railroads  say  that  it  was  a good  thing  for 
them  as  well  as  for  the  public. 

Q.  During  this  investigation,  a great  deal  of  stress  has  been 
laid  on  the  fact  that  many  of  these  industrials,  so-called,  have 
been  over-capitalized  and  as  a result  the  stock  has  been  placed 
upon  the  market  and  unloaded  on  an  unsuspecting  public;  there- 
by causing  loss  on  the  one  side  and  gain  on  the  other;  do  you 
view  that  in  any  other  light  than  a transaction  in  which  one 
gambler  wins  and  the  other  loses?  A.  Well,  no  man  is  obliged 
to  buy  stock  unless  he  believes  it  is  a good  investment;  and  I 
think  that  the  widening  of  the  ownership  of  these  great  organ- 
izations is  a good  thing;  but  I think  that  oftentimes  the  interests 


964 


[Senate, 


of  stockholders  are  sacrificed  through  lack  of  knowledge,  that 
they  ought  to  have;  as  I have  stated  in  this  statement  that  I 
have  submitted  to  you,  1 do  believe  that  there  is  a necessity  for 
publicity  and  supervision  in  the  interest  of  the  owners. 

Q.  Taking  that  view  of  it,  regarding  the  operation  in  stock  as 
merely  a gambling  transaction,  would  you  for  that  reason  advo- 
cate the  abolition  of  the  stock  exchange?  A.  No,  sir;  I would 
not;  I think  the  stock  exchange  is  as  legitimate  an  institution 
and  as  necessary  an  institution  to  the  modern  development  of 
commerce  as  any  institution  we  have. 

By  Mr.  Mazet: 

Q.  You  don’t  necessarily  regard  a man  who  buys  stock  as  being 
a gambler — don’t  many  people  buy  stock  when  they  have  a small 
amount  on  which  they  seek  to  have  a fair  return  for  investment? 
A.  Certainly. 

Q.  And  you  think  these  people  are  entitled  to  some  consid- 
eration? A.  I do;  they  are  the  real  partners  in  these  enterprises. 

By  Mr.  McCarren: 

Q.  I am  speaking  now,  Mr.  Thurber,  not  of  where  a man  buys 
the  stock  outright,  but  where  it  is  speculated  in  on  a margin, 
•where  there  is  no  delivery  of  stock  at  all?  A.  Well,  the  stock 
exchange  is  operated  on  the  basis  of  actual  delivery  of  stocks; 
and  if  you  wall  investigate  that  I think  you  will  find  that  they 
are;  the  bucket  shops  don’t  have  any  actual  delivery. 

Q.  Well,  they  are  exchanges;  now,  Mr.  Thurber,  another  ques- 
tion; there  has  been  a good  deal  of  testimony  brought  out  to 
show  that  the  large  aggregation  of  capital  prevents  competition; 
in  other  words,  that  the  large  aggregation  of  capital,  the  con- 


No.  40.]  965, 

solidation  of  manufacturing  interests,  prevents  the  existence 
of  small  organizations  or  corporations;  do  you  see  any  other 
way  to  prevent  that  than  by  limiting  the  capitalization  of  a 
company  by  the  State;  in  other  words,  providing  that  no  manu- 
facturing industry  shall  employ  more  than  a certain  amount  of 
capital  in  this  concern?  A.  Well,  it  is  a question  wThether  that 
would  remove  that  evil;  concerns  can  be  bought  up  by  profit — 
by  the  profits  which  have  been  earned  they  can  buy  up  the  earn- 
ings, whether  the  capital  is  large  or  small;  now7,  there  are  indus- 
trial corporations  that  are  entirely  private,  that  their  profits  are 
far  greater  than,  in  proportion,  than  any  corporation;  you  take 
the  Royal  Baking  Powder  Company,  it  is  said  in  the  trade,  that 
it  makes  a million  dollars  a year  on  a million  dollars  capital; 
and  there  are  plenty  of  private  businesses  and  corporations  that 
are  not  speculative  corporations,  that  are  business  corporations, 
where  the  profits  are  far  beyond  anything  that  wre  see  in  such 
concerns  as  the  Standard  Oil  Company,  the  American  Sugar  Re- 
fining Company,  or  the  Rubber  Trust,  or  any  of  those,  in  pro- 
portion to  their  capital. 

By  Mr.  Mazet: 

Q.  What  conclusion  do  you  draw  from  that,  as  to  the  placing 
of  the  capital  stock  of  some  of  these  companies  on  the  market 
of  the  public;  if  the  stock  continues  to  remain  remunerative  to 
the  holders  there  would  not  be  any  inducement  to  place  it  on 
the  market,  would  there,  as  in  this  case- you  speak  of?  A.  Well, 
in  some  cases,  no;  and  in  some  cases,  yes;  in  some  cases  the  ques- 
tion of  duration  of  life  and  state  of  health  of  the  proprietor,  you 
know,  or  something  of  that  kind — and  if  he  sells  out— if  he  is 
going  to  sell  out  that  business,  he  wants  to  get  wThat  he  thinks 


966  [Senate,. 

it  is  worth — now,  in  England  they  have  a system  of  estimating 
the  value  of  a business — the  profits  of  a certain  number  of  years 
— and  they  say,  the  profits  have  been,  for  instance,  a hundred 
thousand  pounds  a year  for  17  years — they  will  say  that  business 
is  worth  seventeen  hundred  thousand  pounds;  and  they  will 
capitalize  it,  somewhat  speculatively,  perhaps,  but  nevertheless 
with  a certain  basis  of  value;  now,  the  question  of  good  will 
which  has  been  here,  and  the  value  of  trade  marks,  are  all 
elements  which  enter  into  the  capitalization  of  business. 

By  Mr.  McCarren: 

Q.  Now,  Mr.  Thurber,  independent  sugar  refineries  have  been 
cited  here  very  often  during  the  investigation,  to  show  that  the 
American  Sugar  Refining  Company  absolutely  controls  the  price 
of  refined  sugar,  inasmuch  as  the  independent  refineries  refuse 
to  sell  their  sugar  at  a lower  price  than  that  fixed  by  the  Ameri- 
can Sugar  Refining  Company.  Do  you  believe  that  the  act  on  the 
part  of  these  independent  refineries  is  voluntary  or  not,  in  refus- 
ing to  sell  their  wares  at  a lower  price  than  that  fixed  by  the 
American  Sugar  Refining  Company?  A.  I think  that  their  action 
is  a perfectly  natural  and  reasonable  one  and  they  would  not  do 
that  if  the  margin  of  the  American  Sugar  Refining  Company  was 
too  large;  if  it  was  so  large  that  it  was  very  tempting, they  would 
cut  under  it  and  endeavor  to  increase  their  output,  don’t  you 
know,  to  get  a larger  profit  on  the  increased  output;  but  in 
point  of  fact  the  margin  of  profit  has  only  been  a fair  refining 
margin,  and  it  was  not  to  their  interest  to  reduce  that  margin; 
if  it  had  been  beneath  that  they  would,  perhaps,  have  tried  to 
grab  a larger  share  of  the  trade,  but  they  say,  “ Here  is  a margin 
of  manufacturing  profit,  and  we  are  satisfied  with  that,  and  we 


No.  40.] 


967 


will  keep  as  close  to  it  as  we  can,  and  get  as  fair  a share  of  the 
trade  as  we  can.” 

By  Mr.  Lexow: 

Q.  Are  you  arguing  now  on  general  propositions  or  from 
knowledge  of  your  own  of  the  basis  upon  which  these  so-called 
competing  companies  act?  A.  Well,  it  from  a long  acquaintance 
with  the  trade  and  observation. 

By  Mr.  McCarren: 

Q.  If  the  proposition  is  true  that  the  American  Sugar  Refining 
Company  has  it  within  its  power,  inasmuch  as  it  controls  80  per 
cent,  of  the  trade,  to  lower  the  price  of  sugar,  then  the  converse 
of  the  proposition  is  true,  that  they  have  it  within  their  pwer  to 
raise  the  price  of  sugar?  A.  Undoubtedly,  they  could  get  a 
larger  margin  than  what  they  have  been  getting  on  the  average; 
but  it  would  not  be  to  their  interest,  in  the  long  run,  because  it 
would  tempt  too  much  additional  capital  into  the  business;  there 
would  be  a larger  number  of  competing  concerns;  it  all  comes 
down  to  the  question  of  what  is  reasonable. 

By  Mr.  Lexow: 

Q.  I would  like,  Mr.  Thurber,  if  you  can  describe,  or  more 
nearly,  so  that  we  can  understand  it,  where  the  temptation  for 
an  outsider  with  small  capital  going  intoi  the  sugar  business 
exists,  when  they  know  that  80  per  cent,  of  the  product  is  con- 
trolled by  one  concern  operating  through  factors,  which  factor 
system  creates  a practical  monopoly,  because  they  would  have 
to  appeal,  in  order  to  undersell  the  American  Sugar  Refining 
Company  they  would  have  to  appeal  directly  to  the  retailer  of 
the  goods  and  pay  that  increased  expenditure  that  the  American 


968  [Senate, 

Sugar  Refining  Company  avoid.  Now,  where  is  the  temptation 
for  small  capital  to  embark  in  the  enterprise  when  they  know 
that  the  control  of  the  product  and  price  exists  in  the  hands  of 
a company  that  by  putting  down  the  prbe  can  destroy  any 
smaller  capital  that  may  go  in,  in  this  way?  A.  Why,  Mr.  Chair- 
man, these  factors  are  not  bound  to  the  Anierican  Sugar  Refining 
Company;  they  can  change  in  a moment,  if  they  choose,  to  any 
other  refinery. 

By  Mr.  Warner: 

Q.  Well,  they  don’t  choose,  do  they?  A.  They  do. 

By  Mr.  Lexow: 

Q.  Does  the  factor  not  know,  Mr.  Thurber,  that  a change  from 
the  American  Sugar  Refining  Company  to  a smaller  concern  that 
may  come  in  competitively  may  mean  the  destruction  of  the 
factor’s  arrangement  with  the  American  Sugar  Refining  Com- 
pany, after  the  destruction  of  that  competing  concern,  and,  under 
the  testimony,  the  destruction  and  ruin  of  their  business.  Do 
you  still  mean  to  say  that  there  is  any  possibility  for  competition 
by  small  capital  or  small  concerns,  under  this  system  that  is  in 
operation?  A.  That  system  has  no  bearing  whatever  on  it;  and 
it  was  not  sought  by  the  refiners;  it  was  sought  by  the  grocers, 
when  they,  sick  of  doing  business  at  a loss  they  tried  to  get  some 
system  where  they  could  reduce  that  loss;  and  they  are  not  doing 
business  now  at  a profit  on  sugar;  they  are  doing  business  at  a 
loss  less  than  what  they  did. 

By  Mr.  McCarren: 

Q.  Well,  Mr.  Thurber,  is  it  a fact,  as  a general  proposition,  that 
before  people  in  the  manufacturing  business  would  refuse  to  get 


No.  40.] 


969 


as  high  a price  as  they  can  for  their  goods,  that  it  will  be  neces- 
sary to  eliminate  the  selfishness  that  is  residing  in  the  ordinary 
human  species?  A.  I think,  sir,  that  that  is  about  right. 

By  Mr.  Lexow:  ( 

Q.  I would  like  to  ask  you  the  additional  question,  Mr.  Thurber, 
that  if  a two  million  dollar  plant  would  wreck  the  American 
Sugar  Refining  Company,  why  do  not  the  McGahans’,  in  Philadel- 
phia, do  it  — why  do  not  Mollenhauer's  of  New  York  do  it?  A. 
I said,  Mr.  Chairman,  that  a small  plant  of  a two  million  dollar 
plant,  conducted  without  desire  to  make  profit  could  do  it;  and 
these  men  are  all  doing  business  to  make  money. 

Q.  Wouldn't  there  be  an  enormous  profit  after  the  wreckage 
of  the  American  Sugar  Refining  Company  to  the  concern  that 
had  been  able  to  wreck  them?  A.  No,  sir;  because  there  is  the 
plant,  and  it  is  all  ready  to  start  at  any  time. 

Q.  And  you  really  mean,  and  desire  to  be  placed  on  the  record 
here  as  stating,  that  a two  million  dollar  plant  would  be  allowed, 
by  a concern  that  controls  seventy-five  million  and  any  number 
of  plants,  that  they  have  bought  simply  for  the  purpose  of  closing 
up  — to  remain  an  active  competitor  in  the  market  and  to  wreck 
them  — without  buying  them  out?  A.  I say  that  any  large  con- 
cern is  at  a great  disadvantage  as  compared  with  a small  concern 
that  is  actuated  by  the  desire  to  injure  the  large  concern  and  not 
make  money  in  doing  business. 

By  Mr.  McCarren: 

Q.  Well,  do  you  regard  this  refusal  on  the  part  of  Mollenhauer 
and  McGahan  and  the  rest  of  these  independent  refiners,  to  lower 
their  prices  on  sugar  from  the  standard  set  by  the  American 


970  [Senate, 

Sugar  Refining  Company  as  a positive  refusal  on  their  part  to 
become  public  philanthropists?  A.  Well,  it  is  very  much  in  that 
line;  in  point  of  fact,  however,  they  do — these  outside  refineries 
make  some  variation  from  the  prices  of  the  American  Sugar 
Refining  Company,  at  times,  when  they  get  a little  surplus,  when 
trade  is  dull  and  they  want  to  move  their  product,  they  still 
make  concessions  which  enable  them  to  do  that;  they  don’t  follow 
absolutely  the  prices  of  the  American  Sugar  Refining  Company, 
but  they  keep  as  near  them  as  they  can,  because  they  are  in 
business  to  make  money  the  margin  is  not  an  excessive  one  in  the 
sugar  refining  industry. 

Q.  And  they  take  the  American  Sugar  Refining  Company  as  a 
guide  for  them  to  make  money?  A.  Yes. 

By  Mr.  Lexow: 

Q.  The  profits  of  the  American  Sugar  Refining  Company  is 
the  standard  whereby  they  gauge  their  profits?  A.  Naturally, 
the  largest — 

Q.  Is  that  true?  A.  I think  it  is,  sir;  the  largest  concern,  nat- 
urally, you  know,  leads  in  setting  the  pace. 

By  Mr.  McCarren: 

Q.  The  same  as  the  strongest  will  lead  in  almost  any  race? 
A.  Well,  I don’t  know  that — whether  that  is  an  exact  parallel. 

By  Mr.  Lexow: 

Q.  Do  you  know,  or  have  you  investigated  the  question  as  to 
whether  the  organization  of  a trust  or  quasi-monopoly  in  indus- 
tries has  invariably  been  followed  by  a deterioration  of  the 
product?  A.  I think  it  has  been  precisely  the  reverse,  as  a rule. 

Q.  Well,  now,  do  you  know  anything  about  that?  A.  Well,  I 


No.  40.] 


971 


only  know  from  general  reputation  that  the  larger  a concern’s 
output  and  facilities  are,  the  more  careful,  as  a rule,  they  are 
concerning  the  quality  of  it;  it  is  the  natural  tendency  to,  as 
you— 

Q.  Do  you  know  anything  about  that,  Mr.  Thurber,  or  are  you 
simply  arguing  from  general  premises?  A.  Arguing  from  gen- 
eral premises — and  my  experience  in  business. 

Q.  Have  you  any  specific  knowledge  of  whether  or  not  the  ar- 
ticles made  by  combinations  after  the  forming  of  the  combina- 
tions have  deteriorated  in  quality,  as  compared  with  the  articles 
made  by  the  independent  concerns  previously  operated?  A.  I 
don't  think  you  can  find  a case  on  record  where  that  is  the  case. 

Q.  Do  you  mean  to  say,  as  contained  in  your  statement,  that  it 
is  an  absolute  rule  that  combination  has  led  to  a reduction  in 
price?  A.  I think  that  the  tendency  of  these'  large  combinations 
in  the  long  run  is  toward  reduction  in  price  and  improvement  in 
quality. 

Q.  Have  you  read  the  testimony  with  reference  to  the  rubber 
combination?  A.  I think  I have  read  some  of  it;  yes,  sir. 

Q.  That  the  price  of  all  the  important  articles,  with  the  excep- 
tion of  one,  had  been  increased  immediately  after  the  formation 
of  the  combination  and  had  not  been  diminished  since?  A.  I saw 
that  statement,  but  I am  not  familiar  with  the  rubber  trade,  and 
so  I know  nothing  about  it  personally. 

Q.  That  is  a statement  admitted  on  the  stand  by  the  treasurer 
of  the  company?  A.  I haven’t  any  doubt  that  in  many  cases — 
now,  you  will  see  that  immediately  after  the  formation  of  the 
American  Sugar  Refining  Company  prices  advanced,  the  margin 
advanced;  but  as  it  begun  to  get  all  its  facilities  working,  it  has 
steadily  declined,  until  the  total  result  is  a great  benefit. 


972  [Senate, 

Q.  Now,  let  us  see  whether  that  is  a fact,  Mr.  Thurber;  take 
the  last  three  years  of  the  marginal  difference  between  the  raw 
material  and  the  manufactured  product,  and  state  whether  or 
not,  instead  of  a steady  decline,  there  has  not  been  a steady  in- 
crease each  year?  A.  Well,  sir,  in  1894  it  was  884  thousandths; 
in  1895  8S2  thousandths;  in  1896  908  thousandths. 

Q.  Therefore,  a steady  increase,  instead  of  a steady  decrease? 
A.  No,  sir;  in  the  year  1895  it  was  28  less  than  in  1S94;  and  in 
1896  it  was  908,  against  882 — it  is  an  increase  of  16  points. 

Q.  Now,  after  seeing  that  with  reference  to  the  American  Su- 
gar Refining  Company,  do  you  think  your  statement  is  justified, 
that  after  a reasonable  period  of  time,  the  economies  develop 
themselves  and  a reduction  ensues?  A.  I do,  sir. 

Q.  Isn’t  it  borne  out  by  that  statement  there,  that  instead  of 
economies  developing  a reduction  gradually,  an  increase  is  de- 
veloped gradually?  - A.  Well,  let  me  show  you — 

Q.  (Interrupting)  Now,  isn’t  that  true?  A.  No,  sir;  it  is  not; 
you  take  the  point  of  beginning,  with  one  and  258  thousandths, 
it  gets  down  to  884,  882,  and  908. 

Q.  Now,  isn’t  it  true,  as  a general  proposition,  that  all  articles 
not  controlled  by  a combination  in  the  nature  of  a trust,  have, 
during  the  years  of  depression,  declined,  while  all  articles  con- 
trolled by  a combination  or  trust,  notwithstanding  the  depres- 
sion, have  increased  in  price?  A.  No,  sir;  I don’t  think  it  is  true, 
as  a rule;  you  may  find  exceptions,  but  they  only  prove  the  rule. 

Q.  Is  it  not  a rule  with  regard  to  combinations,  that  the  prices 
have  either  been  maintained  or  have  increased,  while  with  refer- 
ence to  articles  not  controlled  by  a combination,  during  times  of 
depression,  they  have  invariably,  or  as  a rule,  been  depressed?  A. 
I think  you  will  find  instances  where  a large  organization — 


No.  40.] 


973 


Q.  I am  asking  for  the  rule,  to  which  there  may  be  exceptions 
- I am  asking  for  the  rule  on  both  sides?  A.  Well,  I think — I 
meant  to  have  answered  that,  Mr.  Chairman,  that  I think  that  it 
is  not  the  rule;  it  may  be  an  exception;  it  may  be  correct  in  in- 
stances— but  as  a rule  that  the  tendency  of  combinations  has 
been  to  reduce  prices  and  to  maintain  quality. 

Q.  Isn’t  it  true  that  combinations  in  the  nature  of  Trusts  are 
able  to  maintain  prices  under  conditions  of  trade  when  articles 
not  controlled  by  combinations  felt  the  drift  of  the  time?  A. 
There  may  be  instances  of  that  character. 

Q.  Isn’t  that  the  rule?  A.  No,  sir;  I don't  think  it  is. 

Q.  Can  you  specify  a single  instance  where  that  rule  does  not 
apply?  If  so,  please  specify  it?  A.  Well,  sugar  (indicating 
paper  with  statement). 

Q.  Do  you  base  your  statement  that  it  is  not  the  rule  upon  that 
illustration?  A.  That  is  my  opinion,  sir. 

Q.  I mean,  is  that  the  illustration  upon  which  you  have  your 
— that  statement?  A.  Well,  you  asked  for  one;  I presume  I can 
find  manyt 

Q.  I am  asking  you,  now,  upon  what  you  base  your  statement? 
A.  Well,  there  is  oil. 

Q.  Is  your  statement  that  a Trust  is  not  able  to  control  and 
maintain  prices  under  abnormal  conditions,  based  upon  the  re- 
turn you  have  there  before  you  of  the  American  Sugar  Refining 
Company?  A.  I say,  that  as  a rule,  no. 

Q.  You  know  the  question;  you  can  answer  that  question. 
(Question  read  twice).  A.  It  is,  and  of  the  Standard  Oil  Com- 
pany, and  of  the  Transportation  figures  that  I have  given. 

Q.  Then  it  is  based  upon  the  American  Sugar  Refining  Com- 
pany’s returns  that  you  have  before  you,  the  Standard  Oil  and 
the  Transportation  Company?  A.  Yes. 


974  [Senate, 

Q.  And  is  it  based  on  anything  else?  A.  On  my  general  ex- 
perience and  observation. 

Q.  That  would  cover  a multitude  of  situations;  can  you  give 
anything  else,  definitely;  the  prices  made  or  maintained  by  what 
other  combination  in  the  nature  of  a Trust  have  guided  you  in 
making  that  answer?  A.  Well,  take  the  Starch  Trust;  that  is 
an  example;  they  have  not  been  able  to  keep  up  the  prices, 
prices  were  never  so  low  as  they  are  at  the  present  time  and  I 
have  mentioned  one  or  two  others  here.  (Reading  paper) 
Straw  Board  Trust,  Wire  Nail  Trust — there  was  an  extraordinary 
example  of  where  an  unreasonable  demand  resulted  iu  breaking 
it  up  very  speedily;  they,  instead  of  working  on  a fair  margin  of 
profit,  put  the  prices  up  to  a point  where  it  was  unfair  and  un 
reasonable,  and  as  the  result,  they  went  to  pieces;  prices  were 
never  so  low  as  they  are  now. 

Q.  They  were  unable  to  gain  sufficient  control  over  the  produc- 
tive capacity  of  the  country  to  form  what  we  understand  by  a 
Trust?  A.  No,  sir;  they — - 

Q.  Is  that  not  true?  A.  They  had  the  whole  of  it  at  one  time; 
but  they  put  their  prices  up  to  an  unreasonable  margin  of  profit, 
and  tempted  in  so  much  additional  capital  into  the  business  that 
they  were  soon  obliged  to  go  to  pieces. 

Q.  Now,  Mr.  Thurber,  you  say  that  they  had  the  whole  of  it; 
are  you  considering  your  answers  carefully?  A.  Well.  I may  be 
wrong  in  saying  that  they  had  the  whole  of  it,  but  they  had  a very 
targe  proportion  of  it. 

Q.  Do  you  know  how  much?  A.  I do  not  exactly. 

Q.  W^hat  productive  capacity  of  the  country  they  controlled? 
A.  I know  they  controlled  the  business  absolutely  for  a while. 

Q.  Is  it  not  true  that  they  controlled  simply  a fair  percentage 


No.  40.]  975, 

of  the  business  of  the  country,  and  then  sought  to  obtain  control 
by  purchasing  the  productions  of  the  other  factories  in  the  coun- 
try, without  controlling  the  production  of  those  factories?  A. 
I only  kuow  they  absolutely  controlled  prices  for  a while,  and 
they  put  their  tariff  up,  as  I say — - 

Q.  Did  they  not  do  in  the  way  I have  given  in  my  question? 
A.  It  is  possible;  because  I am  not  familiar  with  the  details 
of  it;  I only  know  they  made  their  prices — 

Q.  Are  you  familiar  w'ith  the  details  of  the  so-called  Starch 
Trust?  A.  Well,  I am  pretty  familiar  with  it. 

Q.  Do  you  know  what  prices  have  been  ruling  -within  the  last 
five  years?  A.  I know  it  has  steadily  declined,  until  it  is  now 
lower  than  it  has  ever  been. 

Q.  Do  you  know  that  to  be  a fact;  have  you  seen  those  prices? 
A.  Yes,  sir. 

Q.  Can  you  give  them  to  the  committee?  A.  I can  send  them 
to  you;  I will  be  very  glad  to  furnish  you  with  a tabular  state- 
ment on  that. 

By  Mr.  Warner : 

Q.  The  inference  seems  to  be,  from  your  statement,  that 
because  there  has  been  a reduction  in  price  of  some  of  those  com- 
modities that  that  has  been  due  to  the  formation  of  these  trusts? 
A.  Not  entirely;  but  I mean  to  say  this,  that  I believe  the  general 
tendency  is  in  every  case  towards  an  improvement  and  uniformity 
in  quality  and  the  lowering  of  price. 

Q.  Hasn’t  that  been  the  general  tendency  in  all  lines  of  pro- 
ducts— farming  products,  for  instance?  A.  Well,  there  has  been 
a general  decline,  I think  in  all  products;  that  has  been  the  ten- 
dency; but  what  I mean  to  say  is,  that  these  large  aggregations 


976  [Senate, 

of  capital,  in  the  long  run  have  not  had  the  effect  to  unduly  main- 
tain the  advanced  prices. 

Q.  Well,  they  have  not  had  the  effect  on  the  other  hand  of  un- 
duly decreasing  the  price?  A.  They  have  whenever  they  cause 
competition — because  whenever  competition  between  large  ag- 
gregations of  capital  results  it  proceeds  to  an  extreme  far  greater 
than  that  between  small  capitals. 

By  Mr.  Mazet: 

Q.  But  there  have  not  been  any  such  competitions;  there  has 
not  been  such  competition  by  the  large  aggregations  of  capital? 
A.  Oh,  yes;  there  has;  take  starch — 

Q.  Not  in  these  matters  that  we  were  talking  about?  A.  Take 
the  Starch  Trust;  take  Straw  Board  Trust;  and  the  Wire  Nail 
Trust;  and  the  Steel  Rail  Trust. 

By  Mr.  Warner: 

Q.  You  say  you  think  there  should  be  further  supervision  on  the 
part  of  the  State  over  these  Trusts?  A.  I have  stated  that  I 
thought  that  in  the  limited  publicity,  for  the  protection  of  share- 
holders that  there  ought  to  be  a regulation  and  publicity  in  some 
way  more  than  we  have  had. 

Q.  Don’t  you  think  there  should  be  something  further  in  re- 
gard to  these  factor  agreements?  A.  I don’t  see  why. 

Q.  Do  you  know  that  there  are  trust  and  factor  agreements 
the  intent  and  spirit  of  winch  is  that  the  factors  and  jobbers  shall 
deal  exclusively  in  the  goods  of  the  trust  that—.  A.  No,  they 
offer  a premium  for  their  doing  so;  I don’t  see  how  you  can  well 
stop  that. 


No.  40.] 


977 


By  Mr.  Lexow: 

Q.  You  don’t  consider  that  as  being  in  restraint  of  trade?  A. 
No,  sir;  I do  not  see  how  you  can  prevent  a manufacturer  saying 
on  what  terms  he  will  sell  his  goods. 

Q.  Although  those  terms  imply  the  restraint  — or  imply  re- 
straint upon  the  factor  in  the  selling  or  disposing  of  competing 
goods?  A.  If  you  are  a manufacturer,  and  I a dealer — 

Q.  Just  answer  that?  (Question  read).  A.  I don’t  think  that 
that  is  an  unreasonable  thing;  and  I don’t  think  that  you  can 
prohibit  the  manufacturer  from  offering  inducements  to  a dis- 
tributor to  handle  only  his  goods. 

Q.  Well,  that  will  involve  a question  of  law.  Do  you  have 
any  doubt  but  that  legislative  restraint  should  be  placed  upon 
an  agreement  of  that  kind?  A.  Well,  you  are  a much  better 
judge  of  that,  Mr.  Chairman,  than  I am. 

Q.  I assumed  that  you  had  looked  into  this?  A.  No,  sir;  I 
have  not;  but  if  you  are  a manufacturer  and  I am  a distributor, 
and  your  desire  is  of  having  my  service  in  introducing  your  goods, 
and  you  say,  “ Now,  if  you  will  handle  only  my  goods  I will  give 
you  so  much  lower  price,'”  why,  it  seems  to  me  that  that  is  not 
an  unreasonable  thing  for  you  to  say. 

Q.  Although  that  at  the  time  is  known  to  you  to  involve  the 
cost  and  of  the  sale  or  offering  of  the  goods  of  the  competing 
concern,  by  the  person  with  whom  that  contract  is  made?  A, 
Yes;  I am  not  obliged  to  accept  your  offer,  if  it  is  more  to  my 
interest  to  handle  a competing  brand. 

Q.  But  assume  that  the  fixing  of  price  means  that  unless  the 
factor  accepts  the  terms  and  conditions,  a system  has  been  cre- 
ated which  involves  his  ruin  as  a business  man.  Do  you  mean 

to  say  than  with  that  additional  factor,  it  is  not  an  agreement  in 
G2 


978  [Senate, 

restraint  of  trade  and  does  not  effectually  restrain  the  trade? 
A.  I think  if  you  were  right  in  your  premises,  that  you  would  be 
right  in  your  conclusions;  and  if  you  are  wrong  in  your  premises 
it  will  not  be. 

Q.  You  admit,  however,  that  if  these  premises  are  correct  that 
the  conclusion  would  be  correct?  A.  Yes,  sir;  I do. 

By  Mr.  Warner: 

Q.  Do  you  own  any  stock  in  the  American  Sugar  Refining 
Company?  A.  No,  sir;  none  whatever;  never  have. 

Recess  to  2.45 

COMMON  COUNCIL  CHAMBER,  NEW  YORK,  FEBRUARY 
23,  1897,  3 P.  M. 

Thurber,  F.  B.,  recalled. 

By  Mr.  Lexow: 

Q.  Where  do  you  get  the  statement  that  you  make  in  this  docu- 
ment, that  the  American  Sugar  Refining  Company  makes  a profit 
of  1-3  of  a cent  on  the  product?  A.  That  is  the  best  accepted 
opinion  of  the  grocery  trade  and  is  based  on  hearsay  through  a 
long  period  of  years. 

Q.  Do  you  mean,  therefore,  to  be  understood  as  saying  that 
this  1-3  of  one  cent  covers  a long  period  of  years  and  is  the  aver- 
age? A.  Yes,  sir. 

Q.  What  data  have  you  to  indicate  any  such  result?  A.  Only 
that  which  has  grown  out  of  long  experience  in  the  grocery  trade 
in  handling  sugars. 

Q.  Assuming  that  the  output  of  the  American  Sugar  Refining 
Company  is  2,800,000,000  pounds,  and  that  on  a capital  of  $75,- 
000,000  they  have  paid  an  average  dividend  of  9 1-2  per  cent.,  in 


No.  40.] 


979 


1894  an  extra  dividend  of  10  per  cent.,  and  have  accumulated  a 
surplus  of  about  $2,000,000  per  year  besides,  how  can  you  make 
the  figure  of  1-3  of  a cent  per  pound  agree  with  the  facts?  A. 
That  is  over  $9,000,000  per  year,  a third  of  a cent  on  2,800,000,000; 
10  per  cent,  on  $75,000,000 — 

Mr.  Lexow  (interrupting).  Does  any  such  conclusion  as  the 
amount  per  pound  earned  agree  with  the  figures  that  I have  given 
you?  A.  Yes,  sir. 

Q.  An  average  dividend  of  9^  per  cent,  on  $75,000,000  of  stock 
and  an  extra  dividend  of  10  per  cent.?  A.  Yes,  sir. 

Q.  And  a surplus  of  $2,000,000  per  year?  A.  You  take  a divi- 
dend  of  10  per  cent,  on  $75,000,000,  it  is  only  $7,50i',000. 

Q.  And  9|  would  be  how  much?  A.  Somewhat  less;  a little 
less. . 

Q.  About  $7,000,000?  A.  Yes,  sir. 

Q.  A surplus  of  $2,000,000  would  be  $9,000,000?  A.  $3,000,000 
per  year, 

Q.  Would  be  $9,000,000  and  an  extra  dividend  of  10  per  cent, 
would  make  it  how  much?  A.  That  would  be  $7,500,000  still, 
less  the  average  of  $2,000,000  per  year  for  nine  years,  or  $18,000,- 
000,  out  of  which  you  could  pay  your  10  per  cent,  extra  dividend 
of  $7,500,000  and  have  over  $10,000,000  left. 

Q.  I don’t  see  how  you  make  that?  (Answer  repeated). 

Q.  A percentage  of  9|  added  to  a surplus  of  $2,000,000  a year 
makes  the  whole  derivable  as  income  at  the  ratio  of  one-third  of 
one  cent  per  pound  without  an  extra  dividend?  A.  I figured  the 
one-third  of  a cent  on  2,800,000,000  pounds  to  be  over  $9,000,000 
per  year. 

Q.  And  9i  per  cent,  on  the  stock  together  with  the  $2,000,000 
of  surplus  makes  more  than  that,  does  it  not,  without  any  extra 


980  [Senate, 

dividends?  A.  No,  sir;  you  take  9^  per  cent,  from  $7,000,000  a 
year,  that  is,  deduct  $7,000,000  from  $9,000,000  and  you  have 
$2,000,000,  and  on  nine  years’  operation  that  would  leave  $18,- 
000,000  margin,  from  which  you  deduct  one  dividend  of  10  per 
cent,  on  $75,000,000,  $7,500,000,  it  leaves  $10,500,000.  (Question 
repeated). 

Q.  That  admits  of  a fair  answer?  A.  I should  say  no. 

Q.  How  do  you  make  9^  on  $75,000,000?  A.  Conclude  it  in 
round  numbers  to  be  $7,000,000  and  some  thing  over  that,  $7,500,- 
000;  I will  figure  it  exactly.  (Witness  makes  computations).  It 
makes  $7,125,000  per  year. 

Q.  Add  to  $2,000,000  of  surplus  to  that  makes  $9,000,000  plus, 
does  it  not?  A.  Yes;  and  that  is  what  a one-third  of  a cent 
figures  $9,000,000  plus. 

Q.  So  I say  that  without  any  extra  dividend  of  10  per  cent,  the 
whole  amount  derived  by  the  company  at  the  ratio  of  one-third 
of  a cent  per  pound  profit  will  be  equaled  by  its  per  cent,  divi- 
dend on  the  stock  together  with  the  $2,000,000  of  surplus  each 
year?  A.  It  figures  pretty  nearly,  according  to  my  estimate. 

Q.  That  is  right.  (No  answer). 

Q.  Now,  I would  like  to  have  you  give  us,  at  the  conclusion  of 
your  testimony,  the  definition  that  you  gave  us  of  a Trust  at  the 
beginning?  A.  A Trust,  in  the  popular  acceptation  of  that  term, 
seems  to  be  any  large  aggregation  of  capital.  I do  not  think  it  is 
a correct  one;  I do  not  think  that  the  American  Sugar  Refining 
Company  is  a Trust,  in  the  strict  sense  of  the  word;  it  is  a corpo- 
ration organized  under  the  laws  of  a State  in  which  a number  of 
original  companies  were  merged;  and  the  Tobacco  Trust,  as  I un- 
derstand it,  is  of  similar  formation. 

Q.  I am  speaking  now — and  when  you  use  the  word  “Trust”  in 


No.  40.] 


981 


this  pamphlet  of  yours — you  mean  that  entity  which  is  popularly 
called  "Trust”?  A.  Yes,  sir. 

Q.  I am  asking  you  now  what  you  mean  by  the  use  of  that  ex- 
pression “Trust”  as  applied  by  you  in  this  instance?  A.  I mean 
any  large  aggregation  of  capital,  because  it  is  spoken  of  as  a so- 
called  "Trust.” 

Q.  Then  you  don’t  mean  that  that  large  aggregation  of  capital 
shall  have  any  characteristics  beyond  the  mere  aggregation?  A. 
Well,  that  is  the  sense  in  which  I used  it. 

Q.  And  your  whole  argument  is  based  upon  the  proposition 
that  it  is  lawful  and  proper,  and  in  some  respects  of  economical 
advantage  for  the  capital  to  combine;  that  is  your  argument? 
A.  Yes,  sir, 

Q.  But,  Mr.  Thurber,  when  that  combination  of  capital  com- 
bines for  the  specific  purpose  of  controlling  the  market,  controll- 
ing the  price  and  controlling  the  methods  of  distribution,  and 
operates  from  the  beginning  along  those  lines,  do  you  still  insist 
that  is  a good  policy  to  foster  combinations  having  that  object 
in  view?  A.  Yes;  if  it  shows  good  results. 

Q.  Then  you  believe  that  the  ends  justify  the  means,  no  matter 
what  those  means  may  be?  A.  No;  I do  not. 

Q.  You  do  not?  A.  I distinctly  state  in  the  document  which 
I have  handed  you  that  where  abuses  exist,  where  unreasonable 
things  exist,  that  they  should  be  remedied;  but  my  general  prop- 
osition is  that  those  evils,  such  as  the  temporary  raising  of  prices 
which  they  sometimes  do,  will  remedy  themselves  in  the  regular 
course  of  trade;  and  the  figures  on  the  experience  that  wTe  have 
had  shows  it. 

Q.  And  upon  the  general  proposition  that  after  years  there 
may  come  a time  when  that  will  regulate  itself  by  the  competi- 


982'  [Senate, 

tion  arising,  you  believe  that  it  is  proper  for  the  legislature  to 
refuse  to  intervene;  is  that  your  proposition?  A.  I believe  it  is. 

Q.  That  no  matter  if  i { is  deleterious  to  the  public  good  the 
legislature  should  not  intervene,  but  allow  the  evil  to  correct 
itself  after  a lapse  of  time?  A.  I believe  that  the  legislature 
should  interfere  wherever  there  is  a palpable  wrong  growing  out 
of  the  operations  of  trade;  but  I believe  that  the  legislature  may 
act  unwisely  and  do  more  damage  than  it  attempts  to  do  good 
by  not  relying  sufficiently  upon  the  natural  laws  of  trade,  and 
seeking  to  adopt  arbitrarily  unnatural  methods  to  an  industrial 
situation. 

Q.  Do  you  not  concede  that  free  and  fair  competition  should 
be  the  normal  condition  and  not  an  unnatural  condition  in  trade? 
A.  Free  and  fair  competition  is  all  right. 

Q.  Should  that  be  the  normal  condition?  A.  I think  it  should; 
but  there  is  such  a thing  as  unfair  and  unreasonable  competition; 
I believe  that  if  the  law  of  competition  is  allowed  to  work  itself 
out  will  remedy  most  of  the  evils,  perhaps  not  all,  which  exist  in 
our  industrial  system.  Q.  Can  there  be  unfair  competition  where 
there  is  free  competition?  A.  Yes,  sir. 

Q.  Is  it  not  true  that  competition  is  unfair  only  when  it  is 
restricted?  A.  I do  not  think  it  is. 

Q.  Do  you  take  the  position,  then,  that  Mr.  Smith  occupied 
here  on  the  stand  yesterday,  that  competition  is  to  be  deprecated, 
that  it  is  ruinous;  that  situations  should  be  created  whereby 
competition  could  be  effectively  removed  by  the  fixing  of  prices 
for  that  purpose?  A.  You  cannot  absolutely  remove  competi- 
tion; it  is  impossible. 

Q.  You  don’t  believe  that  the  proposition  urged  by  Mr.  Smith 
is  a good  economic  proposition?  A.  1 think  so  far  as  his  advo- 


No.  40.] 


98a 


cacy  of  the  limited  price  system,  the  factor’s  system,  is  concerned, 
that  he  is  right;  but  your  proposition  is  one  which  does  not  exist; 
there  can  be  no  abrogation  of  competition;  it  is  impossible;  it  is 
contrary  to  those  industral  laws  which  are  superior  to  all  human 
laws. 


WEDNESDAY,  FEBRUARY  24,  1897,  3.30  P.  M. 

Harris,  Wm.  R.,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  What  is  your  office  in  the  American  Tobacco  Company?  A. 
Auditor. 

Q.  How  long  have  you  been  such?  A.  Since  about  the  early 
part  of  1891. 

Q.  What  books  does  the  company  keep  in  the  State  of  New 
Jersey?  A.  It  keeps  what  is  generally  recognized,  what  is  gen- 
erally called,  general  books;  main  books,  head  books. 

Q.  Head  books;  what  are  the  head  books?  A.  The  books  that 
we  keep  are  about  the  same  as  all  corporations  keep,  all  con- 
cerns that  have  a number  of  scattered  factories.  These  books 
are  the  main  books;  all  other  books  are  subsidiary  to  these  books. 
For  instance,  our  New  York  office  books  are  subsidiary  to  the 
New  Jersey  books;  the  Rochester  books  in  the  same  sense;  the 
Louisville  and  St.  Louis  books  are  all  subsidiary  to  the  Jersey 
books. 

Q.  Do  you  mean  to  say  that  the  general  accounts  of  the  com- 
pany are  not  kept  in  the  Twenty-second  street  factory?  A.  Yes; 

Ido. 

Q.  And  have  been?  A.  They  have  been  possibly  in  years 
gone  by. 


984 


[Senate, 


Q.  Have  they  not  been  until  recently?  A.  No,  sir. 

Q.  How  long  ago  has  the  system  changed.  A.  Our  main 
books,  or  general  books,  have  been  in  New  Jersey  some  years; 
the  exact  date  at  this  time  I am  not  able  to  state;  it  is  some 
years;  it  is  true  that  we  may  have  made  an  addition  to  the  lit- 
tle force  that  we  have  had  in  New  Jersey  about  a month  ago;  I 
sent  some  five  or  six  girls  and  a few  young  men  there  to  work  out 
some  details;  that  was  brought  about  by  the  absolute  necessity 
for  making  room  in  my  accounting  department  by  special  details 
that  we  have  had;  and  instead  of  placing  nine  more  desks  in 
my  counting  room  and  thereby  making  somebody  get  out — -there 
was  no  more  room  in  that  building;  and  that  is  how  it  was  brought 
about. 

Q.  What  had  you  in  New  Jersey  previous  to  that  time?  A. 
The  general  books  of  the  company. 

Q.  State  what  they  consisted  of?  A.  The  general  ledger,  the 
general  journal,  the  general  cash  book  and  the  check  book. 

Q.  And  do  you  mean  to  say  that  that  sj’stem  has  been  con- 
ducted by  your  company  from  its  organization  until  now?  A. 
No,  sir;  not  exactly  that  way. 

Q.  I would  like  to  have  a fair  answer?  It  is  simply  a question 
of  system;  I am  not  inquiring  as  to  particular  books,  except  for 
the  purpose  of  establishing  why  a corporation  with  its  property 
in  the  State  of  New  York  organized  in  the  State  of  New  Jersey 
without  having  its  interests  there.  You  can  answer  that  can- 
didly? A.  My  understanding  has  been  that  it  is  necessary  for  us 
to  keep  a set  of  books  over  there;  that  is;  the  general  books  of 
the  company;  just  as  soon  as  we  were  able  to  get  statements 
of  our  accounts  they  were  placed  there. 

Q.  How  long  ago  were  they  placed  there?  A.  I should  judge 
between  two  and  three  years. 


No.  40.] 


985 


Q.  Doesn't  your  New  York  office  contain  general  books  of  ac- 
count referring  to  the  different  concerns  consolidated  into  one? 

\ 

A.  No,  sir. 

Q.  No  general  books  at  all?  A.  No,  sir;  not  in  the  sense  that 
the  Jersey  books  do. 

Q.  What  is  the  “ sense  ” that  you  restrict  your  answer  to?  A. 
Not  in  the  sense  that  you  speak  of. 

Q.  You  don’t  know  what  sense  I speak  of;  I am  asking  you 
now  whether  or  not  the  books  in  your  New  York  office  do  not  con- 
tain the  general  accounts  of  the  corporation?  A.  They  do  not; 
that  is  my — 

Mr.  Lexow  (interrupting).  Do  they  not  contain  all  those  items 
that  go  to  make  up  the  general  ledger  of  the  company  in  New 
Jersey?  A.  No,  sir. 

Q.  Are  not  the  New  Jersey  books  compiled  from  the  New  York 
books?  A.  The  New  York  books  are  compiled  from  the  New  Jer- 
sey books;  they  have  to  balance  with  the  Jersey  books,  and 
Rochester  balances  with  Jersey. 

Q.  You  say  the  New  York  books  are  compiled  from  the  New, 
Jersey  books?  A.  Yes,  sir. 

Q.  Then  do  you  mean  to  say  that  the  Jersey  books  contain  the 
items  of  original  entry  and  the  New  York  books  are  compiled 
from  those?  A.  I do. 

Q.  The  items  of  original  entry  are  not  in  New  Jersey?  A.  Well, 
it  depends  upon  what  you  mean  by  original  entry. 

Q.  You  know,  as  an  auditor,  what  an  original  entry  means? 
A.  Yes,  sir;  I do. 

Q.  I ask  you  whether  items  of  original  entry  are  contained  in 
the  New  Jersey  books  and  the  New  York  books  are  compiled  from 
them?  A.  Yes,  sir. 


986 


[Senate, 


Q.  Yes,  sir?  A.  Yes,  sir. 

Q.  Then  the  transactions  even  of  your  New  York  branch  are 
first  entered  in  the  New  Jersey  books  and  then  returned  from 
New  Jersey  to  the  New  York  branch?  A.  They  are  practically 
simultaneous;  for  the  reason  that  the  New  York  books  have  got 
to  agree  with  the  New  Jersey  books;  in  other  words,  an  entry 
that  is  made  a debit  in  the  New  Jersey  books  will  possibly  be 
made  simultaneously  in  the  New  York  books,  a credit  in  the  New 
York  books. 

Q.  But  transactions  occuring  here  must  be  first  noticed  in  the 
New  York  books?  A.  Well,  possibly  certain  transactions. 

Q.  Then  the  New  Jersey  books  are  compiled  from  the  New 
York  books  so  far  as  the  New7  York  branch  of  your  corporation 
is  concerned?  A.  No,  sir. 

Q.  You  send  reports  from  New  York  State  to  New  Jersey?  A. 
Yes,  sir. 

Q.  In  what  form?  A.  In  condensed  form. 

Q.  In  the  form  of  day-book  or  journal  entries?  A.  Yes;  some- 
times. 

Q.  Haven’t  you  got  a system  that  you  follow  always,  not  only 
sometimes?  A.  Usually  there  is  an  abstract  at  the  end. 

(Question  repeated). 

A.  Yes,  sir. 

Q.  Isn’t  37our  system  such  that  original  entries  are  made  with 
reference  to  transactions  in  the  State  of  New  York  in  your  New 
York  books?  A.  A great  number  of  them  are  made  in  New  York; 
others  are  made  in  New  Jersey. 

Q.  Of  transactions  in  the  State  of  New  York?  A.  Yes,  sir; 
that  is  right. 

Q.  What  kind?  A.  Well,  for  instance,  the  passing  of  vouchers 


No.  40.] 


987 


and  the  payment  of  vouchers  here  in  New  York,  the  payment  of 
bills;  it  is  often  the  case  that  our  New  York  office,  on  account  of 
the  financial  facilities  afforded  here,  will  pay  a great  number  of 
bills  that  would  otherwise  be  paid  in  New  Jersey;  in  that  case 
our  New  York  office  may  make  the  entry  here  and  charge  .Jersey; 
and  Jersey  in  like  manner  will  make  an  entry  crediting  New 
York. 

Q.  Have  you  fiscal  arrangements  or  your  financial  treasury  in 

* 

the  State  of  New  Jersey?  A.  Yes,  sir. 

Q.  And  pay  accounts  of  the  company  in  the  State  of  New  Jei> 
sey?  A.  Yes,  -we  issue  checks  in  New  Jersey. 

Q.  In  Newark?  A.  Yes,  sir. 

Q.  For  general  business?  A.  Yes,  sir. 

Q.  Or  only  for  the  payment  of  New  Jersey  expenses?  A.  Oh, 
no;  for  whatever  happens  to  suit  us. 

Q.  For  whatever  happens  to  suit  what?  A.  To  suit  us. 

By  Mr.  Mazet: 

Q.  How  many  employes  in  Newark?  A.  About  a dozen. 

Q.  How  many  in  your  New  York  office?  A.  In  the  bookkeep- 
ing department,  say,  95,  about. 

Q.  Do  you  want  us  to  understand  that  the  Newark  office  has 
charge  of  the  entire  business  of  the  American  Tobacco  Company 
with  a force  of  12  clerks,  and  that  the  New  York  office,  with  95, 
has  only  New  York?  A.  Yes,  sir;  if  you  will  allow  me  to  explain 
I will  set  you  right;  our  Newark  office  has  an  account,  we  will 
say,  with  the  New  York  office;  it  has  another  account  with 
“ Durham;  ” another  account  with  the  Rochester  factory;  every- 
thing which  is  chargeable  to  “ Durham  ” or  “ Rochester  ” or 
“New  York,”  or  any  other  factory,  is  charged  up  in  the  Jersey 


9S8  [Senate, 

books;  now,  on  account  of  the  fact  that  the  New  York  office  has 
to  deal  with  thousands  of  customers  that  we  come  in  contact 
with,  that  we  sell  goods  to,  we  have  a larger  force  here  in  New 
York. 

Q.  Then  the  New  Jersey  office  has  nothing  to  do  with  the  pur- 
chase or  sale  of  goods  except  through  the  other  office?  A.  No,  sir. 

Q.  In  other  words,  the  purchases  and  sales  made  by  the  of- 
fices in  the  various  cities  are  compiled  and  returned,  sent  to 
Newark?  A.  To  a large  extent. 

Whelan,  George  G.,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow- 

Q.  What  is  your  business?  A.  Wholesale  dealers  in  cigars. 

Q.  Where  do-  you  live?  A.  Syracuse,  N.  Y. 

Q.  Where  is  your  business?  A.  Syracuse. 

Q.  You  are  in  litigation  with  the  American  Tobacco1  Company, 
are  you  not?  A.  We  have  a suit  before  Attorney-General  Han- 
cock, to  dissolve  the  corporation  or  stop  it  from  doing  business. 

Q.  You  have  prosecuted  that  company  during  the  last  two 
years?  A.  Yes,  sir. 

Q.  And  you  have  been  a very  energetic  prosecutor  of  that  com- 
pany? A.  So  far  as  I could. 

Q.  And  you  are  strongly  biased  against  the  company,  are  you 
not,  in  view  of  the  fact  that  you  have  these  suits?  A.  To  a cer- 
tain extent,  yes.  t 

Q.  You  feel  you  have  been  injured  A.  We  know  that  we  have 
been  injured. 

Q.  That  is  your  feeling?  A.  Yes,  sir. 

Q.  I would  like  to  have  you  state  in  what  respect  under  the  fac- 
tors’ arrangements  which  are  in  vogue,  you  feel  that  you  have 


No.  40.] 


989 


been  injured  A.  From  the  fact  that  they  have  refused  to  sell  us 
goods  except  that  we  do  business  entirely  and  exclusively  with 
them;  that  was  the  reason  why  they  cut  us  off. 

Q.  The  factors’  agreement  that  is  in  evidence  here  is  an  agree- 
ment which  substantially  provides  that  2^-  per  cent,  shall  be  al- 
lowed those  who  maintain  the  price  and  7^  per  cent,  additional 
bonus  for  those  who  deal  exclusively  in  the  goods  of  the  Ameri- 
can Tobacco  Company;  now,  explain  in  what  way  you  were  cut 
off,  if  you  were  cut  off?  A.  We  were  cut  off  previous  to  the  new 
contract;  at  the  time  we  were  cut  off  they  had  an  old  contract, 
and  under  that  we  brought  our  suit. 

Q.  How  long  ago  was  that?  A.  About  a year  ago;  a trifle 
over  that^ 

Q.  What  occurred  to  produce  that  revocation  of  the  factors’ 
agreement?  A.  The  fact  that  we  bought  goods  of  the  National 
Cigarette  Company. 

Q.  From  a competing  firm?  A.  From  a competing  firm. 

Q.  In  what  way  did  that  revocation  take  place?  A.  They  re- 
fused to  sell  us  goods  for  any  price. 

Q.  In  what  way,  verbal  or  written  notice?  A.  By  a letter 
signed  by  Mr.  Josiah  Browne. 

Q.  Where  is  that  letter?  A.  I have  it  in  Syracuse. 

Q.  Can  you  give  us  the  contents  of  it?  A.  It  says — I cannot 
remember  now. 

Q.  Not  word  for  word?  A.  The  effect  was  that  they  declined 
to  consign  us  any  goods  after  that  date. 

Q.  Assigning  any  ground  for  it?  A.  No,  sir;  simply  said  that 
they  did  not  care  to  do  it. 

Q.  Why,  then,  did  you  state  that  it  was  done  because  you  were 
dealing  in  the  goods  of  the  National  Cigarette  Company?  A. 
Because  we  know  that  that  is  the  way  they  do  their  business. 


990 


[Senate, 


Q.  How  do  you  know?  A.  I know  from  a number  of  other  job- 
bers they  cut  off  in  the  State  of  New  York;  -several  were  cut  off 
directly  after  the  time  they  commenced  to  handle  competing  com- 
panies’ goods,  or  National  Cigarette  Company’s  goods. 

Q.  Are  you  now  stating  matters  within  your  personal  knowl- 
edge or  simply — ? A.  I absolutely  know  what  I am  talking 
about;  I have  seen  letters  which  they  sent. 

Q.  To  whom?  A.  Different  jobbers  they  had  cut  off. 

Q.  Are  those  persons  mentioned  in  the  schedule  of  jobbers  con- 
tained in  the  papers  presented  by  the  American  Tobacco  Com- 
pany in  New  Jersey  in  the  form  of  a brief?  A.  I hardly  know 
about  that;  the  jobbers  I have  referred  to  are  Thomas  L.  Benham, 
of  Utica,  N.  Y. 

Q.  Have  you  not  seen  the  brief  or  statement  of  facts  submitted 
by  the  different  attorneys  in  the  case  pending  before  the  Vice- 
Chancellor  in  New  Jersey?  A.  I believe  this  case  was  com- 
menced since  that;  some  of  them. 

Q.  Is  that  a case  in  which  you  have  any  interest  or  which  you 
brought?  A.  New  Jersey  case;  I have  no  interest  in  it  what- 
ever. 

Q.  Do  you  know  the  names  of  those  mentioned  in  that  schedule 
to  whom  this  factors’  agreement  was  given  and  then  revoked? 
A.  No,  sir;  1 don't  remember  about  them. 

Q.  Confining  yourself  to  what  you  know;  do  you  know  of  any 
case  outside  of  your  own  where  a discrimination  of  this  kind  has 
been  made?  A.  T.  L.  Benham,  R.  Whalen  & Co.,  of  Rochester, 
N.  Y. ; Brewster,  Crittenden  & Co.,  of  Rochester,  N.  Y.,  is  another. 

Q.  How  do  you  know  that  those  concerns  have  been  refused 
factors’  agreements?  A.  I have  seen  the  letters,  except  in  the 
case  of  Brewster,  Crittenden  & Co.;  I don’t  believe  that  I have 


No.  40.] 


991 


seen  that  letter;  I understood  that  such  a letter  was  received, 
because  I was  told  of  it. 

Q.  Signed  by  Mr.  Browne?  A.  Josiah  Browne  as  secretary  of 
the  company. 

Q.  Any  others?  A.  I think  there  are  others  but  I cannot  re- 
call them  just  now. 

Q.  How  does  the  revocation  of  this  factors’  agreement  such  as 
made  by  the  American  Tobacco  Company  operate  upon  the  job- 
bing trade  in  the  sale  of  tobacco?  A.  You  mean  the  present 
contract? 

Q.  Yes,  sir?  A.  Why,  if  a jobber  does  not  buy  their  goods  ex- 
clusively they  will  not  sell  to  him  except  upon  the  2J  per  cent, 
basis,  and  as  it  costs  10  per  cent,  to  sell  goods  he  naturally  can 
not  make  any  money  in  cigarettes. 

Q.  He  loses  money?  A.  He  loses  money,  certainly. 

Q.  How  does  that  operate?  A.  If  you  don't  sign  their  con- 
tract they  will  not  allow  any  jobber  that  they  sell  to  direct  to 
sell  to  another  jobber  that  don’t  purchase,  claiming  that  they  re- 
serve the  right  to  do  business  with  that  man  direct;  as  an  in- 
stance, J.  P.  Hyer,  of  Syracuse — we  asked  him  to  sell  us  some 
cigarettes;  he  refused  to  sell  them,  claiming  that  he  must  have 
authority  from  the  company;  we  then  went  to  my  brother,  Louis 
Whelan  and  asked  him  and  he  declined  to  do  it,  simply  claiming 
that  he  could  not  afford  to  be  cut  off  by  the  American  Tobacco 
Company,  and  they  would  naturally  watch  him. 

Q.  Do  you  mean  to  say  that  under  the  practice  of  this  factor 
or  consignment  agreement  that  even  jobbers,  as  between  them- 
selves, cannot  sell  one  to  another?  A.  They  can  sell  to  a re- 
tailer; but  they  must  get  consent,  to  a certain  extent,  if  he  is  a 
large  retailer,  where  he  is  not  charged  with  being  a jobber;  we 


992'  [Senate, 

then  sent  to  Cleveland,  Ohio,  and  bought  25,000  cigarettes  of 
Feeder  Bros,  and  had  them  shipped  to  Syracuse;  we  tried  to  buy 
25,000  more  after  that  and  a representative  of  the  Feeder  Bros, 
told  us  that  the  American  Tobacco  Company  had  notified  them, 
had  sent  a man  there,  to  inform  them  not  to  sell  us  cigarettes 
under  any  circumstances. 

Q.  Who?  A.  This  agent. 

Q.  Do  you  know  anything  beyond  the  statement  of  the  agent? 
A.  Well,  the  fact  that  they  would  not  sell  us  again. 

Q.  Agent  for  whom?  A.  Feeder  Bros. 

Q.  What  business  relations  have  the  Feeder  Bros,  with  the 
American  Tobacco  Company?  A.  They  are  consignees. 

Q.  What  did  he  say?  A.  That  he  could  not  sell  us  any  more; 
that  the  American  Tobbaco  Company  had  sent  a man  out  there 
to  see  that  they  did  not  sell  goods  for  less  than  the  regular  price 
and  that  they  would  thereafter  decline  to  sell  us  goods. 

Q.  You  were  asking  them  to  sell  you  at  less  price?  A.  We 
were  willing  to  pay  $3.80;  we  were  willing  to  pay  the  regular 
price. 

Q.  Then  how  would  their  books  show  a sale  at  less  price?  A. 
It  didn’t  show  it;  the  reason  was  that  they  supposed  that  we  sent 
out  there  for  cigarettes  and  that  we  must  be  buying  for  less  than 
list  prices;  it  was  not  the  fact,  if  I understand  right,  as  we  paid 
$3.80. 

Q.  Which  is  the  price?  A.  To  any  retailer. 

Q.  What  effect  had  it  upon  your  business  as  jobber  to  be 
closed  out  of  the  market  for  the  cigarettes  manufactured  by  the 
American  Tobacco  Company?  A.  A jobber  cannot  do  business 
without  some  of  the  American  Tobacco  Company’s  goods;  he 
must  have  them  for  ordinary  trade. 


No.  40.] 


993 


Q.  Why  is  it  that  he  cannot?  A.  From  the  fact  that  they 
bought  everything  that  had  any  kind  of  a demand  when  they 
organized.  No  company  could  do  that  alone;  they  bought  all  the 
companies  that  were  in  existence  by  buying  out  every  man  who 
had  goods  for  which  there  was  a demand;  and  after  the  intro- 
duction of  the  factors’  agreement  no  other  concern  was  allowed 
to  get  strong  enough  to  compete  with  them. 

By  Mr.  Mazet: 

Q.  How  is  it  possible  for  the  American  Tobacco  Company  to 
trace  the  purchase  of  cigarettes,  to  Cleveland  for  instance?  A. 
Every  cigarette  is  marked  with  the  jobber’s  number;  each  job- 
ber has  a certain  number,  and  by  that  they  can  trace  any  pack- 
age of  cigarettes  to  any  jobber  or  consignee. 

Mr.  Fuller:  I desire  the  committee  to  ask  this  witness  a ques- 
tion or  two. 

Mr.  Lexow:  You  may;  but  the  questions  will  be  repeated  by 
the  stenographer  as  coming  from  the  committee. 

The  following  questions  were  asked  by  Mr.  Fuller: 

Q.  Mr.  Whalen,  are  you  not  now  and  have  you  not  been  for 
several  years  the  agent  of  the  National  Cigarette  and  Tobacco 
Company,  under  salary?  A.  I am  not  under  salary  of  the  Na- 
tional Cigarette  Company. 

Q.  How  long  since  you  ceased  to  be?  A.  About  a year  ago. 

Q.  Were  you  not  so  when  you  made  this  application  to  the 
Attorney-General?  A.  I was  and  I considered  that  I had  a per- 
fect right  to  be. 

Q.  Were  you  not  handling  goods  made  by  that  company  that 
were  fraudulent  imitations  of  the  “ Sweet  Caporal  ” brand  and 
known  as  “Royal  Sweets?”  A.  We  were  selling  a cigarette 


63 


994  [Senate, 

which  was  not  an  imitation  of  the  “ Sweet  Caporal.”  If  it  was, 
it  was  the  place  of  the  American  Tobacco  Company  to  stop  their 
manufacture.  That  was  their  business  and  not  ours.  And  the 
fact  that  they  did  not  is  evidence  that  it  was  not  an  imitation. 

Q.  Was  the  consignment  plan  of  which  you  complain  not 
adopted  earlier  than  March,  1892,  two  years  after  the  formation 
of  the  American  Tobacco  Company?  A.  I don’t  understand  ex- 
actly what  you  mean.  Do  you  mean  to  say  in  regard  to  the  con- 
tract first  being — 

Q.  I mean  this;  did  the  American  Tobacco  Company  have  any 
plan  or  assignment  or  consignment  called  factors’  plan  earlier 
than  March,  1892?  A.  I don’t  know  anything  about  that. 

Mr.  Lexow:  How  is  that  material? 

Mr.  Fuller:  It  seems  to  me  that  he  is  leaving  a wrong  impres- 
sion on  the  committee.  It  has  not  been  understood  by  me  that 
the  consignment  plan  was  originated  in  March,  1892,  which  was 
more  than  two  years  after  the  American  Tobacco  Company  was 
formed.  I wish  to  follow  that  with  another  question. 

Q.  Whether  the  National  Cigarette  and  Tobacco  Company  was 
organized  in  July,  1892,  several  months  after  the  adoption  of  the 
consignment  system  of  the  American  Tobacco  Company  and  two 
years  and  a half  after  the  formation  of  that  company? 

Mr.  Lexow:  How  is  that  material  here?  I assumed  that  this 
witness  was  antagonistic  to  the  American  Tobacco  Company,  and 
in  order  to  have  it  fairly  upon  the  record,  in  commencing  his  ex- 
amination, I showed  by  him  his  apparent  and  absolute  bias  and 
his  personal  antagonism  to  your  company;  and  it  was  only  fair 
that  that  should  be'  done.  Now,  it  seems  to  me  that  these  ques- 
tions that  you  are  putting  are  entirely  outside  of  the  subject  mat- 
ter of  this  investigation. 


No.  40.] 


995 


Mr.  Fuller:  Then,  of  course,  we  must  defer  to  the  wishes  of 
your  committee. 

Mr.  Lexow:  How  is  it  material  upon  the  question  as  to  whether 
or  not  this  suit  that  you  have  conducted  may  be  considered  inju- 
rious to  the  public  interests  or  in  restraint  of  trade.  It  is  not  a 
question  :as  to  whether  the  public  has  raised  any  particular 
clamor  against  the  company  represented  by  you.  The  question 
is  whether  the  company  represented  by  you  is  doing  business  un- 
der a system  wdiieh  is  either  not  recognized  by  the  law  of  the 
State  or  which,  if  in  vogue,  shall  be  recognized  by  the  Legisla- 
ture. We  assume  that  the  witness  is  biased. 

Mr.  Whelan : I wish  to>  say  now  that  the  suit  against  the  Ameri- 
can Tobacco  Company  brought  by  Attorney-General  Hancock, 
was  not  brought  by  the  National  Cigarette  Company.  It  was  at 
my  suggestion  and  entirely  by  me  and  I handled  every  part  of  it. 

Mr.  Fuller:  If  this  is  material,  I desire  to  ask  one  question. 

Mr.  Lexow:  It  does  not  seem  to  me  that  it  is.  We  assume  in 
all  prosecutions  of  that  kind  that  they  proceed  from  interested 
motives. 

Mr.  Whelan:  The  fact  that  I worked  for  the  National  Cigar- 
ette Company  has  nothing  whatever  to  do  with  it.  They  are  cer- 
tainly injured,  if  anybody  is  injured. 

Schulte,  Anthony,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  Where  do  you  reside?  A.  In  New  York  city. 

Q.  What  is  your  occupation?  A.  Dealer  in  cigars  and  tobacco. 

Q.  Where?  A.  39  Park  Eow  and  several  places. 

Q.  In  the  city  of  New  York?  A.  All  in  the  city  of  New  York. 

Q.  Are  you  what  they  term  a retailer?  A.  Yes,  sir. 


996  [Senate, 

Q.  Have  goods  of  the  American  Tobacco  Company  been  with- 
held from  you  as  a retailer?  A.  No,  sir. 

Q.  Never?  A.  No,  sir. 

Q.  Have  you  had  any  coercion  or  oppression  or  experienced 
any  in  your  business  as  a retailer?  A.  None  at  all,  sir. 

Q.  Do  you  deal  in  the  goods  of  the  American  Tobacco  Com- 
pany? A.  Yes,  sir;  I do. 

Q.  Largely?  A.  Quite  largely;  yes,  sir. 

V 

Q.  Interested  in  the  company?  A.  Not  at  all. 

By  Mr.  Mazet: 

Q.  Do  you  handle  any  other  cigarettes  than  those  of  that  com- 
pany? A.  I do. 

Q.  You  have  signed  this  agreement  of  the  company?  A.  No, 
sir. 

By  Mr.  Lexow : 

Q.  Did  you  sign  or  have  you  been  requested  to  sign  any  factors^ 
agreement  or  consignment  agreement?  A.  I never  have. 

Q.  Never  seen  them?  A.  Never  saw  one. 

Q.  Are  the  same  term®  and  conditions  imposed  upon  you  in 
handling  the  product  of  that  company  that  are  imposed  upon  fac- 
tors operating  under  the  consignment  system?  A.  No  special 
terms  imposed  upon  me  in  handling  their  goods  at  all. 

Q.  No  limits  upon  the  price?  A.  No,  sir. 

Q.  Never  have  been?  A.  No,  sir. 

Q.  Do  you  purchase  through  jobbers?  A.  I do;  yes,  sir. 

Q.  In  your  transactions  with  the  jobbers  from  whom  you  pur- 
chase, is  the  price  fixed?  A.  Well,  I don’t  know  what  price  is 
fixed;  we  buy  at  certain  prices,  at  the  regular  prices  from  the 


No.  40.] 


997 


jobber,  and  we  receive  a commission  from  the  company  as  a re- 
tailer. 

Q.  You  receive  a commission  from  that  company?  A.  From 
the  American  Tobacco  Company  on  the  amount  of  cigarettes  that 
we  purchase. 

Q.  What  is  the  consideration  of  that  commission?  A.  Six  per 
cent,  of  the  amount  purchased. 

Q.  And  what  are  the  terms  and  conditions  upon  which  that 
consideration  moves  to  you?  A.  Not  any  that  I know  of. 

Q.  You  get  it  without  the  performance  of  any  terms  or  con- 
ditions imposed  upon  you?  A.  Yes,  sir. 

Q.  As  to  price?  A.  Yes,  sir. 

Q.  Are  you  certain  about  that?  A.  I am;  yes,  sir. 

By  Mr.  Mazet: 

Q.  Get  the  same  rebates  from  other  companies  as  well.  A.  No; 
there  are  no  rebates  from  any  other  companies  that  we  deal  with. 

Q.  Then  you  get  cigarettes  cheaper  from  the  American  Tobacco 
Company  than  from  other  companies?  A.  No,  sir;  I didn’t  say 
that,  because  the  price  direct  that  we  buy  from  other  companies 
is  somewhat  lower;  instead  of  giving  a rebate  the  other  compa- 
nies make  a reduction  in  the  price  from  the  outset. 

Q.  What  proportion  of  the  cigarettes  that  you  purchased  are 
those  of  the  American  Tobacco  Company?  A.  Well,  probably 
nine-tenths. 

Q.  What  advantage  is  there,  then,  in  purchasing  the  cigarettes 
of  that  company  in  preference  to  those  of  other  manufacture?  A. 
Because  the  demand  regulates  that. 

Q.  What  other  cigarettes  do  you  sell  than  those  of  the  Ameri- 
can Tobacco  Company?  A.  We  sell  quite  a large  number  of  the 
National  Tobacco  Company’s  cigarettes. 


998  [Senate, 

Q.  What  brand?  A.  The  “ Admiral  ” and  the  “Yellow  Kid.” 


Q.  You  get  no  rebate  on  these?  A.  No,  sir. 

Mr.  Lexow:  The  sergeant-at-arms  will  call  the  name  of  Joseph 
Rafalovitz.  (No  answer.) 

The  stenographer  will  make  a minute  of  the  fact  that  his  name 
was  called  by  the  sergeant-at-arms  and  that  he  failed  to  respond. 

Is  Mr.  E.  B.  Smith  in  court?  (No  answer.) 

The  committee  desires  to  state  upon  the  record  that  it  has  been 
promised  the  attendance  of  Mr.  Johnson,  of  the  United  States 
Rubber  Company,  and  that  his  attendance  is  requested  to-mor- 
row. His  attendance  has  been  repeatedly  requested  and  he  has 
not  yet  been  present. 

You  may  also  state  upon  the  record  that  every  effort  has  been 
made  to  subpoena  the  manager  of  the  Liberty  Rubber  Company, 
of  Setauket,  and  that  every  effort  has  proved  unavailing. 

We  now  stand  adjourned  until  10  o’clock  to-morrow  morning. 


THIRTEENTH  PUBLIC  HEARING,  MORNING  SESSION, 
THURSDAY,  FEBRUARY  25,  1897. 

Samuel  Sloan,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  Your  residence,  Mr.  Sloan?  A.  New  York. 

Q.  City?  A.  City. 

Q.  And  occupation?  A.  President  of  the  Delaware,  Lacka- 
wanna and  Western  Railroad  Company. 

Q.  And  you  have  been  president  of  that  road  how  long?  A. 
About  thirty  years. 

Q.  And  are  president  still?  A.  Yes,  sir. 


No.  40.] 


999 


Q.  The  Delaware,  Lackawanna  and  Western  road  is  known  as 
a coal  carrier,  is  it  not?  A.  Yes,  sir. 

Q.  And  carries  a large  percentage  of  the  anthracite  coal  con- 
sumed in  the  city  of  New  York?  A.  Yes,  sir. 

Q.  How  many  coal  carriers — so-called — are  there  that  convey 
coal  from  the  coal  fields  to  the  city  of  New  York  in  addition  to 
the  Delaware,  Lackawanna  and  Western  road?  A.  I could  not 
answer  that  question;  I do  not  know. 

Q.  Did  the  presidents  of  the  various  roads  known  as  the  coal 
carrying  roads  have  a meeting  sometime  in  the  year  1896  for 
the  purpose  of  discussing  and  deciding  upon  the  methods  of  con- 
ducting or  handling  the  coal  business?  Did  they,  Mr.  Sloan?  A. 
I beg  pardon. 

(Question  repeated.) 

A.  Yes,  sir.  , 

Q.  Can  you  give  the  date?  A.  I could  not. 

Q.  About  the  date?  A.  Well,  I think  it  was — I think  it  was 
about  a year  ago. 

Q.  It  was  sometime  prior  to  the  first  day  of  February,  1896? 
A.  I think  it  was  sometime  about  that  time. 

Q.  You  were  present  at  that  meeting?  A.  I was. 

Q.  Can  you  state  to  this  committee  who  were  present  there 
besides  yourself?  A.  I could  not;  I don’t  recollect. 

Q.  Were  there  present  at  that  meeting — in  addition  to  your- 
self— either  the  president  or  some  executive  representative  of  the 
following  named  roads:  Philadelphia  and  Reading,  Lehigh  Val- 
ley, New  Jersey  Central,  Delaware  and  Hudson,  Pennsylvania, 
Pennsylvania  Coal  Company,  New  York,  Lake  Erie  and  Western, 
New  York,  Ontario  and  Western,  Delaware,  Susquehanna  and 
Western — New  York,  Susquehanna  and  Western?  A.  Yes,  sir. 


1000  [Senate, 

Q.  And  that  meeting  was  called  at  whose  instance,  Mr.  Sloan? 
A.  Well,  I don’t  recollect  who  personally  is  responsible;  the 
condition  of  the  trade  was  such  at  that  time  a conference  was 
asked  for  to  see  if  we  could  do  anything  to  improve  it. 

Q.  To  improve  the  trade  with  reference  to  the  coal  business? 
A.  Coal  transportation. 

Q.  Coal  transportation?  A.  Yes,  sir. 

Q.  Now  let  us  understand;  does  your  road  own  coal  mines? 
A.  Yes,  sir. 

Q.  In  addition  to  transporting  coal  to  the  market?  A.  Yes, 
sir. 

Q.  So  that  you  are  both  a coal  owning  corporation  and  a coal 
transporting  corporation?  A.  Yes,  sir. 

Q.  All  in  one,  or  by  means  of  sub-companies?  A.  The  charter 
of  the  Delaware  and  Lackawanna  permits  them  to  own  lands 
and  mine  the  coal. 

Q.  Well,  then  at  that  conference,  you  attended  both  in  the  in- 
terest of  the  coal  mining  and  the  coal  transporting  companies? 
A.  Yes,  sir. 

Q.  So  far  as  they  were  controlled  by  the  Delaware,  Lacka- 
wanna and  Western.  A.  Yes,  sir;  but  the  point  was  more  of  the 
transportation,  but  that  makes  no  difference  to  me  personally, 
or  the  D.,  L.  & W.  for  them. 

Q.  Now  you  represented,  as  you  stated,  your  company,  in  con- 
junction with  representatives  of  other  companies,  called  as  the 
result  of  a prior  conference,  or  as  the  result  of  a call,  issued  by 
one  of  the  presidents?  A.  Well,  I couldn’t  tell  you  that; 
whether  it  was  really  a conference;  I signed  a paper  I think 
asking  the  conference  to  meet. 

Q.  Were  you  alone  in  making  that  request?  A.  I am  not  sure, 
I don’t  recollect,  but  I think  I signed  it,  sir. 


No.  40.] 


1001 


Q.  I understand  you  to  say,  however,  that  the  calling  of  the 
conference  proceeded  from  a general  desire  among  these  com- 
panies to  make  some  adjustment  or  readjustment  of  the  coal, 
situation,  is  that  true?  A.  To  consider  the  coal  situation  as  it 
then  existed. 

Q.  Where  was  that  conference  held,  Mr.  Sloan?  A.  At  the 
Trunk  line  rooms  of  the  Trunk  Line  Association  in  Liberty 
street. 

Q.  Is  that  association  composed  of  these  companies  which  I 
have  mentioned?  A.  They  are  members  of  the  Trunk — most  of 
them,  if  not  all,  I think,  of  the  Trunk  Line  Association. 

Q.  The  Trunk  Line  Association  has  nothing  to  do  with  the  coal 
business,  has  it?  A.  No,  sir. 

Q.  It  is  an  association  of  all  the  Trunk  lines  entering  this  city? 
A.  ,Yes,  sir. 

Q.  How  long  did  the  conference  last?  A.  Well,  I couldn’t 
recollect  that;  I didn’t  remain  to  the  close,  but  I think  it  lasted 
some  hours. 

Q.  Some  hours?  A.  Yes,  sir,  I think  so. 

Q.  Can’t  you  state  whether  three,  four,  or  five  hours?  A. 
Well,  I would  state  two  hours,  certainly;  don’t  recollect  more 
than  that — I don’t  recollect  it  now. 

Q.  Your  best  recollection  is  that  it  is  more  likely  to  be  more 
than  two  hours  than  less?  A.  Very  likely,  yes. 

Q.  Were  statistics  produced  at  that  meeting  showing  the 
amount  of  coal  transported  or  mined  by  the  various  companies? 
A.  I am  not  sure  about  that,  sir;  I couldn't  say;  I don't  recollect 
it. 

Q.  Was  there  any  agreement  made  as  to  the  amount  of  coal, 
or  percentage  of  the  whole  that  should  be  carried  by  each  com- 
pany? A.  1 think  there  was,  sir. 


1002  [Senate, 

Q.  Let  me  call  jour  attention  to  certain  figures,  and  please 
then  state  whether  these  were  the  percentages  agreed  upon  at 
that  conference:  To  the  Philadelphia  and  Reading  20^  per  cent? 
A.  I could  not  answer  that — only  the  D.,  L.  & W.;  if  you  will 
name  that  I will  tell  you  about  it. 

Q.  Thirteen  and  25-100?  A.  I think  that  is  it,  sir,  the  allotment 
that  was  talked  about. 

Q.  Now  by  what  process,  Mr.  Sloan,  was  this  figure,  that  allot- 
ment reached?  A.  Well,  it  must  have  been  from  the  business  of 
the  roads  the  previous  year,  I think,  or  two  or  three  years — I 
am  not  sure  which  it  was. 

Q.  You  took  as  a basis  for  computing  then,  each  individual 
allotment  the  business  done  by  the  road,  the  particular  road,  for 
the  one,  two,  three  Tears  previously?  A.  Yes,  sir. 

Q.  There  was  a disagreenu  nt  there,  was  there  not,  as  to  partic- 
ular allotments?  A.  Oh,  always  is.  and  i don’t  think  it  amounts 
to  anything,  now  practically. 

Q.  The  disagreements  were  harmonized  before  the  conference 
concluded?  A.  Well,  if  you  call  it  harmony;  it  was  not  carried 
out;  they  did  not  live  up  to  it. 

Q.  No;  but  I am  speaking  now  of  the  purpose  of  that  confer- 
ence; so  far  as  that  conference  was  concerned,  the  several  allot- 
ments that  were  agreed  upon  then  were  supposed  to  be  binding 
on  the  various  companies  represented  there?  A.  Well,  they  did 
agree  to  it  among  themselves,  but  it  is  one  of  those  uncertain 
things  that — so  far  as  the  D.,  L.  & W.  was  concerned,  and  that  is 
all  I have  to  do  with,  we  did  not  accept  it  directly;  we  acquiesced 
in  the  principle  agreed  upon  there. 

Q.  You  acquiesced  in  the  principle  established  there,  and  the 
result  of  the  figures  showing  the  allotment?  A.  We  acquiesced; 
we  didn’t  want  to. 


No.  40.] 


1003 


Q.  And  did  the  other  companies  there  represented  acquiesce 
in  the  several  allotments  apportioned  to  them?  A.  Well,  unwil- 
lingly, pretty  generally.  ( 

Q.  They  all  wanted  more,  you  mean?  A.  That  is  the  case  with 
the  coal  men. 

Q.  And  they  finally  compromised  rather  unwillingly  on  these 
figures?  A.  Yes,  sir;  I suppose  that  is  the  best  way  to  put  it. 

Q.  When  you  left  that  conference  on  that  occasion,  Mr.  Sloan, 
you  understood,  did  you  not,  that  the  honor  of  the  various  gentle- 
men representing  that  conference,  representing  rather  the  roads 
at  that  conference,  were  pledged  to  maintain  the  allotments  ap- 
portioned to  them  at  the  conference?  A.  I don’t  think  I can  say 
yes  to  that,  sir;  I don’t  think  they  pledged  themselves  at  all,  be- 
cause the  subsequent  events  show  that  they  did  not. 

Q.  Shows  that  if  they  did  pledge  themselves,  they  violated  that 
pledge?  A.  Well,  you  can  put  it  that  way  if  you  choose. 

Q.  Yes,  but  your  understanding?  A.  Acquiesced  in  the  gen- 
eral^ 

Q.  And  among  honorable  men  that  you  had  acquiesced  in  that 
arrangement  and  would  live  up  to  it?  A.  Yes,  I suppose  it  would 
be  fair  to  say  yes. 

Q.  Now,  from  the  time  that  allotment  was  made,  Mr.  Sloan, 
whether  the  companies  have  lived  up  to  it  or  not,  effort  was  made 
to  live  up  to  it,  was  there  not?  A.  Oh,  I think  there  was;  I 
think  there  was,  but  circumstances  and  the  different  interests 
seemed  to  govern., 

Q.  Do  you  mean  that  circumstances  that  transpired  after  the 
conference?  A.  Yes,  I mean  that. 

Q.  And  by  those  circumstances  you  mean  the  individual  desire 
of  the  different  companies  to  get  the  best  of  this  conference?  A. 


1004  [Senate, 

No,  I don’t  say  that,  sir ; I think  that  the  market  was  such  that 
while  generally,  the  allotment  was  acceded  to,  the  market — no 
one  was  refused  coal — no  one — no  coal  was  withheld  from  them 
that  wanted  it;  we  supplied  our  customers — I think  that  all  the 
other  companies  did  that — they  had  in  their  mind,  of  course,  the 
allotment,  but  the  allotment  allowed  them  from  month  to  month 
if  it  could  be  got  together,  will  show  that  they  didn’t  strictly 
keep  the  allotment,  because  we  felt  that  we  could  not  bind  our- 
selves to  such  an  obligation. 

Q.  In  what  wTay  did  you  feel  that  you  could  not,  Mr  Sloan?  A. 
Because  we  thought  that  it  was  not  to  our  interests,  and  then 
again,  we  thought  that  it  was  not  consistent  with  the  interests  of 
those  we  were  serving,  the  public — and  all  concerned — that  each 
had  their  own  customers  and  they  were  supplied. 

Q.  Now,  in  making  these  supplies,  however,  in  view  of  the  con- 
ference held  and  the  acquiescence  given  to  the  output  or  to  the 
percentage  there  established,  you  held  in  mind  from  month  to 
month,  the  allotment  that  had  been  made  to  your  particular  road, 
did  you  not?  A.  Yes,  I think  we  did. 

Q.  And  honestly  sought  to  live  up  to  it?  A.  I think  we  did; 
yes,  sir;  some  months  we  couldn’t  and  some  months  we  didn’t. 

Q.  What  was  the  price  of  coal,  and  by  price  of  coal  I mean 
taking  as  a standard,  lump  coal?  A.  I couldn’t  tell  you. 

Q.  At  that  time?  A.  I couldn’t  tell  you;  I am  not  sufficiently 
posted  in  regard  to  that. 

Q.  Do  you  recollect  whether  after  the  conference  the  price  of 
coal  was  increased  in  the  market?  A.  I think  it  was,  just  at  that 
time,  but  it  didn’t  stay  to — 

Q.  It  was  increased  on  the  first  of  February,  was  it  not?  A.  I 
don’t  recollect,  sir;  our  coal  salesmen  would  be  able  to  answer 
that  question. 


No.  40.] 


1005 


Q.  Who  is  your  coal  salesman?  A.  Mr.  Holden. 

Q.  Is  his  presence  obtainable  here  to-day?  A.  Oh,  yes,  I think 
so. 

Q.  Where  is  his  address?  A.  No.  26  Exchange  place;  he  is  in 
his  office  now. 

Q.  There  will  be  no  necessity  for  a subpoena — I suppose  Mr. 
Holden  will  attend  on  request?  A.  Oh,  I think  he  would,  but  it 
would  be  as  well  for  you  to  give  him  a subpoena;  I hardly  think 
that  I should  have  come  here  without  one. 

Q.  Your  case  differed  from  Mr.  Holden’s  case;  I regarded  that 
this,  in  a sense,  would  be  a request  from  his  superior  officer  to 
attend  here?  A.  Oh,  I beg  your  pardon;  undoubtedly  he  will 
come,  sir. 

Q.  The  apportionment  made  was  to  last  from  the  first  of  Febru- 
ary, 1896,  to  the  31st  of  March,  1897,  was  it  not?  A.  I think  it 
expired  the  first  of  this  February;  but  if  it  does  not,  it  has  not 
been  regarded,  I am  sorry  to  say;  I don’t  hesitate  to  say  that 
everything  has  become  more  or  less  unsettled,  prices  are  unset- 
tled as  well  as  production  and  transportation  unsettled. 

Q.  And  the  results  of  that  conference,  as  a result,  have  been 
unsettled  also?  A.  Well,  very  much  so.  J 

Q.  Do  you  remember,  Mr.  Sloan,  how  many  increases  in  the 
price  of  coal  were  made  after  that  conference  was  held?  A.  I 
don’t,  sir. 

Q.  Do  you  remember  whether  four  were  made  of  25  cents  each? 
A.  I don’t;  I can’t  answer  that  question;  Mr.  Holden  can  tell 
you  all  about  that. 

Q.  Was  the  question  of  increasing  the  price  of  coal  discussed 
at  the  conference  that  you  were  present  at?  A.  Not — only  in  a 
general  wav,  I think  the  object  was  to  get  a better  price,  for  we 
were  all  going  wrong,  losing  money  largely. 


1006  [Senate, 

Q.  Then  the  allotment  of  coal  made  at  that  conference  included 
the  general  purpose  by  allotment  of  raising  the  price?  A.  No, 
sir;  it  did  not;  they  very  distinctly  objected  to  that;  Mr.  Roberts 
of  the  Pennsylvania  road  objected  to  that;  he  would  not  con- 
sent to  it. 

Q.  He  objected  to  what?  A.  Raising  the  price  of  coal  with  this 
allotment. 

Q.  I see  what  you  mean;  that  the  allotment  itself  at  that  time 
did  not  carry  with  it  the  announcement  of  a raise  in  prices,  but  as 
1 understand  your  former  answer  the  fact  of  making  the  allot- 
ment implies  the  purpose  to  get  a better  price  for  the  coal?  A. 
Undoubtedly,  that  is  the  object. 

Q.  Do  the  sales  agents  themselves,  without  participation  by 
the  presidents  of  the  various  companies,  fix  the  price  of  coal  from 
time  to  time?  A.  I think  they  do;  sometimes  pretty  generally, 
our  sales  agent  does. 

Q.  So  far  as  your  company  is  concerned?  A.  Yes,  sir. 

Q.  You  have — A.  Of  course  he — 

Q.  (Continuing)  — as  president,  delegated  that  authority  to 
him  without  special  conference  with  him?  A.  Oh,  I think  he 
always  consults  me;  but  that  is  his  department  that  initiates  It 
and  adopts  it. 

Q.  Can  you  state  whether  or  not  the  sales  agent  of  the  com- 
panies represented  in  the  conference  that  was  held  just  prior  to 
February  1,  1896,  themselves  held  a conference  or  conferences 
after  the  allotment  was  made?  A.  I cannot  answer  that  ques- 
tion; I do  not  know. 

Q.  Incidental  to  the  power  of  fixing  the  price  of  coal  does  the 
sales  agent  of  your  company  have  the  right  to  confer  with  others 
and  establish  uniform  prices  with  those  companies  which  shared 


No.  40.] 


1007 


in  this  general  plan  of  allotment?  A.  Oh,  I should  think  he 
would,  necessarily. 

Q.  Has  it  come  to  your  knowledge  as  president  of  the  road 
that  he  did?  A.  That  he  conferred  with  others? 

Q.  Yes?  A.  Oh,  yes,  I think  that  he  did;  I think  he  told  me 
he  did. 

Q.  You  have  a distinct  recollection,  have  you  not,  that  he  did 
make  that  statement  to  you?  A.  No,  I have  not.  * 

Q.  You  have  not?  A.  No. 

Q.  Have  you  no  official  recollection  of  an  official  conference  be- 
tween the  sales  agents  of  these  various  roads  held  subsequent  to 
the  time  that  this  allotment  was  made?  A.  I have  not. 

Q.  The  fact  that  you  do  not  know,  Mr.  Sloan,  that  there  was 
or  was  not  on  official  conference,  if  there  was  an  official  confer- 
ence between  the  sales  agents  of  the  roads,  would  not  abate  from 
the  authority  of  your  sales  agent  to  have  attended  that  conference 
and  joined  in  its  decisions,  would  it?  A.  I don’t — 

(Question  repeated.) 

A.  Oh,  I think  not. 

Q.  You  think  not?  A.  No. 

Q.  Well,  you  must  know  the  official  power  of  your  sales  agent 
— A.  I think  not,  sir. 

Q.  He  had  general  authority?  A.  He  has  had  for  years. 

Q.  And  any  prices  fixed  by  him — A.  It  is  proper  to  say  that 
his  actions — he  would  inform  me  of  these  conferences  afterwards. 

Q.  Did  he  keep  you  informed?  A.  Well,  I suppose  he  does. 

Q.  Now,  do  you  know  of  an  official  conference  that  was  held 
between  the  sales  agents  just  after  this  allotment  of  percentages 
was  made?  A.  I don’t  know  anything  about  it. 


1008 


[Senate, 

Q.  He  never  informed  you  of  one.  A.  Well,  he  must  have  in- 
formed me;  but  I don’t  know — 

Q.  You  don’t  remember?  A.  I don’t  remember;  he  must  have 
informed  me. 

Q.  Is  it  not  a fact  that  monthly  after  the  apportionment  of 
these  percentages  the  sales  agents  of  these  interested  roads  met 
and  fixed  the  price  of  coal  for  the  ensuing  month?  A.  Our  sales 
agent  did  not  meet  and  do  so. 

Q.  On  no  occasion?  A.  That  I am  aware  of. 

Q.  When  you  stated  in  your  former  answer  that  there  may 
have  been  conferences  and  you  believe  he  informed  you  of  the 
fact  that  he  had  had  some  conferences,  do  you  mean  in  your  last 
answer  to  exclude  any  such  conferences  from  such  answer?  A. 
Oh,  I could  not  answer  that  question;  I don’t  want  to  exclude 
or  include  anything;  I merely  answer  the  questions  as  you  give 
them  to  me;  he  has  general  authority  in  the  management  of  that 
department;  of  course  he  consults  and  reports,  but  we  have  so 
much — he  pretty  much  manages  the  business. 

Q.  And  you  have  had  no  occasion  to  disavow  or  disapprove  of 
any  action  taken  by  him  from  the  first  day  of  February,  1896, 
until  now,  with  reference  to  the  price  of  coal?  A.  No,  sir. 

Q.  Do  you  know  yourself  anything  about  the  prices  that  were 
established,  or  the  ruling  prices  that  ranged  between  the  first 
of  February  and  now?  A.  I do  not;  I do  not. 

Q.  Can  you  state  how  many  tons  of  coal  are  mined  by  the  com- 
panies that  were  represented  at  the  conference?  A.  I can  not 
answer  that  question;  I do  not  know. 

Q.  Leaving  then  the  allotment,  determined  at  that  conference, 
how  was  the  output  for  the  Delaware,  Lackawanna  and  Western 
fixed  as  to  months  in  the  year?  A.  My  impression  is  they  fixed 


No.  40.] 


1009 


it  from  time  to  time;  they  didn't  fix  it  for  the  year,  but  from  time 
to  time;  they  were  governed  by  the  conditions  of  the  market. 

Q.  Always,  however,  with  reference  to  the  whole  of  the  allot- 
ment permitted?  A.  For  the  year? 

Q.  Yes?  A.  Yes. 

Q.  And  your  own  and  the  other  companies  lived  approximately 
within  that  allowance,  mining  and  transporting  the  coal  to  mar- 
ket according  to  the  exigencies  of  the  trade?  A.  Yes,  sir. 

Q.  Within  the  allotment?  A.  Yes,  sir. 

Q.  So  that  at  no  time  should  the  supply  of  coal,  within  reason- 
able limits,  exceed  the  demand?  Was  that  the  general  rule?  A. 
Well,  that  was  the  general  thing,  but  the  transportation  did  ex- 
ceed, did  exceed,  in  some  instances  largely;  sometimes  one,  some- 
times the  others;  in  other  words,  the  whole  thing,  excepting  keep- 
ing in  our  mind,  was  a failure;  that  is  what  I mean. 

Q.  Do  you  mean  that  the  entire  allotment  made,  I mean  the 
sum  of  the  allotment  made,  exceeded  the  demand  A.  I don’t 
get  your  question. 

Q.  Now  the  allotment,  the  sum  of  the  allotment  made,  was  on 
the  basis  of  an  output  of  40,000,000  of  tons,  was  it  not?  A.  I 
don’t  recollect  what  that  was;  I couldn’t  answer  that  question. 

Q.  Well,  was  it  about  that?  A.  I should  think  it  would  be. 

Q.  Now  my  question  was,  that  the  sum  of  the  allotment  made, 
to  wit,  about  40,000,000  of  tons,  exceeded— did  it— the  demand? 
A.  At  different — from  month  to  month;  some  months  it  did  and 
some  months  it  didn’t;  those — 

Q.  But  taking  the  whole,  Mr.  Sloan?  A.  Well  the  figures  are 
not-  can  be  reached  showing  the  whole,  all  that  are  on  record — 
there  is  no  trouble  about  it. 


64 


'10X0  [Senate, 

Q.  I am  not  talking  so  muck  of  the  figures  as  the  principle  that 
underlies  the  arrangement;  you  fixed  upon  a gross  amount  of 
coal  to  be  transported?  A.  That  we  think  the  market  will  take. 

Q.  That  is  it?  A.  That  is  it. 

Q.  Basing  your  estimates  upon  former  years — A.  Yes — 

Q.  And  you  allotted  that  in  percentages  to  the  various  com- 
panies? A.  Yes,  sir. 

Q.  Based  upon  experience  tables?  A.  Yes,  sir. 

Q.  Now  I ask  you  whether  the  experience  of  the  year  show 
that  the  gross  sum  allotted  as  the  intended  output  exceeded  the 
demand?  A.  No,  I think  that  they  all  exceeded  the  quantity  of 
allotment,  the  allotment  that  they  talked  of  at  the  time;  that  the 
output  exceeded  what  we  estimated  it  would  be. 

Q.  Then  the  demand  exceeded  the  output  estimated  by  you 
upon  which  these  percentages  were  based?  A.  I think  it  did* 
I think  it  did;  but  Mr.  Holden  is  very  familiar  with  all  this,  he 
can  give  you,  he  can  give  you  all  the  information  you  desire. 

Q.  I believe  you  stated,  did  you  not,  that  the  output  for  each 
of  the  roads  within  the  limits  of  the  apportionment  was  fixed 
from  month  to  month?  A.  Yes,  I think  so. 

Q.  And  by  the  sales  agent,  not  by  you?  A.  Yes,  the  sales 
agent,  so  far  as  we  are  concerned;  he  reported  to  me  what  was 
proper,  and  I either — 

Q.  Can  you  explain  to  this  committee  what  the  necessity  was, 
I mean  on  following  the  rules  of  supply  and  demand — what  the 
necessity  was  for  increasing  the  price  of  coal  about  the  first  of 
February,  1896?  A.  Coal  was  very  low  at  that  time,  I think, 
and  it  was  increased  in  consequence  of  the  great  loss  to  the  com- 
panies; I think  it  was  that. 

Q.  The  increase  was  made  by  the  companies?  A.  Yes. 


No.  40.] 


1011 


Q.  Because  they  considered  that  coal  ruled  too  low  in  the 
market?  A.  Yes,  sir. 

Q.  And  not  because  there  was  a demand  larger  than  the  supply? 
A.  No,  because  the  coal,  as  we  regarded  it,  was  too  low  in  price. 

Q.  You  considered  that  a commodity  upon  which  you  had  the 
right  as  owners  to  fix  the  price?  A.  We  think  we  have. 

Q.  I am  asking  for  your  principle?  A.  Well,  we  think  we 
have,  we  think  we  should. 

Q.  Can  you  or  the  general  salesman,  Mr.  Holden,  give  the  cost 
of  production  and  transportation  of  coal  to  market?  A.  He  can. 

Mr.  Lexow:  That  will  be  all,  Mr.  Sloan. 

Mr.  Sloan:  I am  much  obliged  to  you. 

Mr.  E.  B.  Thomas,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  Where  do  you  live,  Mr.  Thomas?  A.  In  New  York. 

Q.  New  York  city?  A.  Yes,  sir. 

Q.  What  is  your  occupation?  A.  President  of  the  Erie  Rail- 
road. 

Q.  Officially  known  as  the  New  York,  Lake  Erie  and  Western? 
A.  No,  sir. 

Q.  It  has  changed  its  name?  A.  We  have  annual  reorganiza- 
tions of  that  property,  and  we  have  changed  our  name. 

Q.  What  is  it  now?  A.  The  Erie  Railroad. 

Q.  Was  it  on  the  first  day  of  February,  1896,  known  as  the 
New  York,  Lake  Erie  and  Western?  A.  It  was  not. 

Q.  What  was  its  then  name?  A.  The  Erie  Railroad. 

Q.  The  reorganization  was  finished  before  that  time?  A.  Yes, 
sir;  the  old  corporation  of  the  New  York,  Lake  Erie  and  Western 
is  still  in  existence;  I am  also  the  president  of  that;  but  the  prop- 


1012  [Senate, 

erty  itself  is  known  as  the  Erie  Railroad  since  its  reorganization 
December  1,  1S95. 

Q.  You  have  heard  the  testimony  of  Mr.  Sloan?  A.  Yes. 

Q.  Were  you  present  at  a conference  held  by  the  presidents  of 
the  various  coal  carriers  about,  or  just  prior  to  the  first  day  of 
February,  1896?  A.  Yes,  sir. 

Q.  And  participated  in  the  deliberations?  A.  To  some  extent. 

Q.  And  the  conclusions  reached  by  that  conference;  the  New 
York,  Lake  Erie  and  Western  road  received  an  apportionment  of 
percentage  of  4 per  cent.,  did  it  not?  A.  No,  sir. 

Q.  What  was  the  per  cent?  A.  The  Erie  Railroad  received  an 
allotment  of  4 per  cent. 

Q.  I mean  the  Erie  received  an  allotment  of  4 per  cent?  A. 
Y"es,  sir. 

Q.  Do  you  remember  the  allotments  made  to  other  companies? 
A.  I do  not;  I haven’t  them  in  my  mind  at  the  moment. 

Q.  If  I call  your  attention  to  the  figures,  you  would  remember 
them?  A.  Approximately,  undoubtedly. 

Q.  The  Philadelphia  and  Reading  20 J per  cent?  A.  I think  that 
is  correct. 

Q.  The  Lehigh  Valley  15  and  65-100?  I cannot  answer  ac- 
curately; I assume  that  was  approximately  correct;  about  that. 

Q.  I would  like  the  approximate  figures  to  have  them  on  the 
record?  A.  Yes,  sir. 

Q.  The  New  Jersey  Central  11  and  70-100?  A.  I think  that  is 
substantially  correct. 

Q.  Mr.  Sloan  has  answered  for  the  Delaware,  Lackawanna  and 
Western;  the  Delaware  and  Hudson,  9 and  60-100;  is  that  your 
recollections?  A.  That  is  my  recollection. 

Q.  The  Pennsylvania,  11  and  40-100?  A.  I think  that  is  about 
it. 


No.  40.] 


4013 


Q.  The  Pennsylvania  Coal  Company,  4 per  cent?  A.  Yes. 

Q.  Your  company  4 per  cent?  A.  Yes. 

Q.  The  Ontario  and  Western,  3 and  10-100?  A.  Yes. 

Q.  The  Delaware,  Susquehanna  and  Schuylkill  3 and  50-100? 
A.  They  declined  to  accept  any  such  allotment. 

Q.  That  was  the  allotment  made  to  them  that  they  declined  to 
accept?  A.  Yes,  sir. 

Q.  The  New  York,  Susquehanna  and  Western  3 and  20-100?  A. 
I think  that  is  about  the  amount. 

Q.  Now  was  the  Delaware,  Susquehanna  and  Schuylkill  road 
the  only  road  that  refused  to  accept  the  percentage  allotted?  A. 
I think  they  were. 

Q.  Did  they  ultimately  refuse  and  finally  refuse  to  accept  it? 
A.  I think  the  figures  show  that  they  never  complied  with  it. 

Q.  Well,  I am  speaking  now  of  an  official  refusal;  did  they  ever 
serve  the  conference  or  its  chairman,  either  then  or  thereafter, 
with  an  official  declination  of  that  percentage  or  allotment?  A. 
Well,  Mr.  Warner,  who  represented  that  company  at  the  con- 
ference, declined  to  vote;  that  is  all  the  proceeding  that  ever  took 
place  in  respect  to  it. 

Q.  The  statement  of  Mr.  Sloan  made  here  was  correct,  accord- 
ing to  your  recollection,  was  it  not,  that  the  other  companies 
acquiesced  in  the  allotment  made?  A.  Substantially. 

Q.  Although  some  of  them  unwillingly?  A.  All  of  them. 

Q.  All  of  them?  Did  you  live  up  to  the  allotment,  Mr.  Thomas? 
A.  Not  entirely. 

Q.  Within  reasonable  limits?  A.  So  far  as  the  demand  on  us 
for  coal  permitted  of  our  doing  so. 

Q.  Did  that  exceed  the  allotment?  A.  It  did,  at  various  times. 
Q.  Substantially?  A.  Well,  that  is  rather  a difficult  question 


1014  [Senate, 

to  answer ; I haven’t  the  figures  as  to  exactly  how  the  amount  of 
coal  produced  after  that  discussion,  at  that  time,  finally  worked 
up. 

Q.  Are  the  figures  of  output  not  accessible  to  the  presidents 
of  these  conferring  roads  from  month  to  month  not  only  so  far  as 
their  own  roads  are  concerned,  but  as  to  all  of  the  roads  that  went 
in  the  conference.  A.  The  statistics  of  the  anthracite  output 
are  kept,  and  copies  of  them  were  sent  over;  I occasionally  see 
them;  at  other  times  I do  not;  I don’t  keep  very  close  track  of 
them. 

Q.  Do  you  keep  track  of  the  prices  made?  A.  I do  not. 

Q.  Have  you  any  knowledge  of  the  figures  set  upon  coal  by 
your  own  company  from  month  to  month?  A.  No,  those  prices 
are  made,  dependent  upon  the  demand  for  coal. 

Q.  And  fixed  by  whom,  Mr.  Thomas?  A.  They  are  fixed  by  no 
one  individual — by  the  law  of  supply  and  demand. 

Q.  Who  fixes — A.  There  are  frequent,  I have  no  doubt  there 
are  consultations  occasionally  among  the  sales  agents  as  to  what 
prices  they  are  going  to  charge,  as  there  are  in  other  avocations 
of  life. 

Q.  You  have  no  personal  recollection,  have  you,  of  the  fact 
that  there  were  conferences  between  the  sales  agents  of  these 
conferring  roads.  A.  I have  not. 

Q.  Have  you  any  knowledge  or  information  as  to  any  definite 
conferences  or  consultations  that  were  held  between  the  sales 
agents  of  these  various  roads?  A.  I have  not. 

Q.  Do  you  wish  to  be  understood  as  stating  in  your  official  ca- 
pacity as  president  that  your  sales 'agent  did  not  under  the  au- 
thority of  his  employment,  attend  a conference  of  that  character? 
A.  I have  no  knowledge  of  his  attending  any  conference  of  that 
kind. 


No.  40.] 


1015- 


Q.  Never  reported  to  you?  A.  He  has  never  reported  to  me;  I 
know  he  undoubtedly  consults  with  others  as  to  the  market,  de- 
mand for  coal;  what  the  market  will  probably  take. 

Q.  With  you?  A.  No,  sir. 

Q.  With  other  sales  agents?  A.  Not  to  my  knowledge. 

Q.  Who  is  the  sales  agent  of  your  road?  A.  Williams  & 
Peters. 

Q.  Their  address?  A.  No.  1 Broadway. 

Q.  Will  you  kindly  state  the  name  of  that  man  in  the  firm  who 
more  particularly  represents  the  road  in  fixing  the  price  of  coal? 
A.  I don’t  think  there  is  any  difference  between  them. 

Q.  Do  you  knowT  the  first  name  of  Mr.  Williams?  A.  R.  H. 

Q.  And  Mr.  Peters?  A.  S.  T. 

Q.  No.  1 Broadway  is  a place  where  a number  of  offices  of  sales 
agents  of  these  conferring  roads  is  to  be  found,  isn’t  it?  A.  I 
think  there  are  several  coal  companies  that  have  their  offices 
there. 

Q.  Has  it  not  come  to  your  notice  that  these  sales  agents  meet 
together  at  No.  1 Broadway  and  have  conferences  and  consulta- 
tions looking  to  a uniform  rate  for  coal?  A.  It  has  not. 

Q.  That  rate  is  uniform,  is  it  not,  Mr.  Thomas?  A.  I am  sorry 
to  say  it  is  not. 

Q.  There  is  a uniform  rate  fixed  whether  by  the  sales  agents 
or  by  the  laws  of  supply  and  demand,  monthly, according  to  which 
the  various  roads  sell  their  coal?  A.  If  there  is,  it  is  hardly  ever 
maintained. 

Q.  Is  that— is  that  subject  to  the  same  variations  as  did  this 
conference  agreement,  fixing  the  percentage?  A.  I don’t  get 
your  question. 

Q.  (Question  repeated).  A.  I must  confess,  I would  like  to  an- 
swer that  question,  but  I don’t  quite  understand  it. 


1016  [Senate, 

Q.  Is  the  price  subject  to  the  same  variation  as  was  this  per- 
centage that  was  fixed  at  the  conference  of  the  presidents?  A. 
I think  the  price  is  more  subject  to  the  ability  of  the  sales  agents 
to  sell. 

Q.  Now,  that  is  regulated,  is  it  not,  by  the  amount  of  coal  pro- 
duced, mined  and  exported?  A.  I hardly  think  so,  because  we 
are  at  all  times  prepared  to  supply  any  demand  for  coal. 

Q.  Provided  that  demand  comes  with  the  price  fixed  by  your 
roads,  isn’t  that  true?  A.  Provided  that  it  comes  at  a price 
which  is  satisfactory  to  our  agents. 

Q.  You  do  not  dispute  then,  the  proposition  that  with  lower 
prices  for  coal  a larger  demand  is  to  be  found  in  the  market?  A. 
We  didn’t  find,  in  1895,  when  we  produced  more  coal  than  1896, 
that  we  got  any  larger  market — the  coal  was  simply  piled  up. 

Q.  Restriction  of  output  increases  demand,  or  apparent  de- 
mand, does  it  not?  A.  The  restriction  of  output? 

Q.  Yes?  A.  I don’t  think  so. 

Q.  If,  instead  of  mining  50,000,000  tons,  you  mine  40,000,000  of 
tons,  the  demand  becomes  more  pronounced,  does  it  not,  and  the 
price  raises?  A.  That  would  seem  to  be  the  natural  consequence 
but  as  they  never  have  produced  50,000,000  tons — 

Q.  That  was  the  object,  though,  for  the  holding  of  that  con- 
ference among  the  presidents  of  these  roads,  to  fix:  the  output  so 
that  the  price  of  coal  would  reach  what  in  your  judgment,  was 
its  fair  value?  A.  The  question  of  the  amount  of  coal  to  be  pro- 
duced was  never  discussed  at  any  meeting  that  I have  ever  at- 
tended. 

Q.  You  heard  Mr.  Sloan  say,  did  you  not,  here  on  the  stand, 
that  it  was  the  effort  of  the  companies  and  one  of  the  objects  of 
that  conference  to  obtain  a fair  price  for  coal?  A.  In  eighteen 
ninety — 


No.  40.] 


1017 


Q.  Do  you  agree  with  him  in  that?  A.  To  some  extent;  in 
1895  the  companies  produced,  transported,  more  coal  than  there 
was  a market  for;  there  were  a large  accumulation  of  coal  on 
hand,  and  prices  were  low;  it  was  in  the  hope  that  we  might 
secure  some  little  remuneration  for  the  industry  that  the  agree- 
ment, or  the  understanding  of  which  you  speak,  was  held. 

Q.  And  that  goes  hand  in  hand,  does  it  not,  with  the  restricting 
or  fixing  the  output  at  such  a figure  that  the  demand  would  in- 
crease the  price  or  value  of  your  coal  to  what  you  considered  to 
he  a fair  price?  A.  No,  there  has  never  been  any  agreement 
whatever  to  my  knowledge  of  any  restrictions  in  quantity. 

Q.  I am  not  speaking  of  agreement,  I am  asking  for  the  princi- 
ples underlying  your  form  of  doing  business;  that  is  the  principle, 
is  it  not,  and  was  the  principle  that  was  understood  by  you,  in 
entering  into  that  conference?  A.  We  undertook  to  not  produce 
ourselves  more  coal  than  we  can  sell;  we  didn’t  care  to  pile  up 
our  coal  as  we  did  the  year  before. 

Q.  And  when  you  say  any  more  coal  than  you  could  sell  do  you 
not  imply,  wish  to  imply,  more  than  you  could  sell  at  what  you 
considered  to  be  a fair  price  for  your  coal?  A.  Yes. 

Q.  Are  you  miners  as  well  as  transporters  of  coal?  A.  The 
Erie  Railroad  does  not  mine  any  coal. 

Q.  Have  you  affiliated  companies  that  mine  coal?  A.  We  have 
a company  called  the  Hillside  Coal  and  Iron  Company  which 
mines  coal. 

Q.  So  that  your  company  either  directly  or  indirectly  is  inter- 
ested in  the  production  of  the  coal  and  in  its  transportation  to 
the  shore,  to  the  city  of  New  York?  A.  Slightly  in  its  produc- 
tion; more  largely  in  its  transportation. 

Q.  You  produce  then,  but  you  transport  more  than  you  pro- 
duce? A.  We  do. 


1018  [Senate, 

Q.  Can  you  give  the  committee  the  figures  that  ruled  during 
the  year  1896,  from  the  time  of  the  conference  until  now,  approx- 
imately? A.  You  mean  the  prices  of  coal? 

Q.  Yes?  A.  I could  not. 

Q.  The  sales  agent,  can  he?  A.  The  sales  agent  can. 

Q.  Do  you  remember,  Mr.  Thomas,  that  immediately  after  the 
holding  of  this  conference,  the  price  of  coal  went  up  25  cents  a 
ton?  A.  I have  no  recollection  of  that. 

Q.  That  a month  after  that  it  went  up  another  25  cents  a ton? 
A.  I don’t  keep  track  of  the  prices. 

Q.  Do  you  remember  generally  that  since  the  holding  of  that 
conference  the  price  of  coal  has  gone  up  $1  a ton?  A.  I do  not. 

Q.  Which  upon  the  allotment  of  40,000,000  of  tons  means 
$40,000,000  additional?  A.  I never  knew  of  any  allotment  being 
made  of  40,000,000  tons;  any  advance  in  prices  applies  only  to 
broken  sizes. 

Q.  Do  you  remember  whether  at  that  conference  the  figures 
shown  by  the  respective  companies  indicated  an  output  of  over 
45,000,000  of  tons?  A.  For  what? 

Q.  For  the  previous  year?  A.  There  were  about  46,000,000  of 
tons  of  coal  produced  in  1895,  anthracite  coal. 

Q.  Forty-six?  A.  Forty-six,  in  round  numbers. 

Q.  That  is  what  I want;  now  is  it  not  true  that  at  your  con- 
ference upon  the  basis  of  the  percentages  fixed,  there  was  a gen- 
eral understanding  to  the  effect  that  the  allotment  of  the  whole 
should  amount  to  40,000,000  of  tons  for  the  year?  A.  I never 
have  had  any  discussion  as  to  that  nor  any  understanding  at  any 
time. 

Q.  Whether  by  agreement  or  by  coincidence  was  it  the  fact 
that  the  output  for  the  year  exceeded  only  by  a trifle  40,000,000 


No.  40.] 


1019 


of  tons?  A.  There  were  about,  between  43,000,000  and  44,000,000 
of  tons  of  anthracite  coal  produced  in  this  country  last  year. 

Q.  Your  recollection  is  that  it  was  about  3,000,000  less  than 
the  year  before?  A.  Somewhere  between  2,000,000  and  3,000,000, 
but  more  than  was  produced  in  1894. 

Q.  More  than  in  1894?  A.  Yes;  I can  give  you  the  figures  for 
a few  years,  if  you  desire  them. 

Q.  If  you  please?  A.  They  are  approximately,  and  in  round 
numbers : 

In  1891  40,000,000 


In  1892 
In  1893 
In  1894 
In  1895 
In  1896 


42.000. 000 

43.000. 000 

41.000. 000 

46.000. 000 

43.000. 000 


These  are  approximate  figures  only  and  in  round  numbers;  the 
truth  is  that  this  country  has  an  ability  to  produce  about  60,000,- 
000  of  tons  of  anthracite  coal  per  annum;  it  has  an  ability  to  mar- 
ket somewhere  in  the  neighborhood  of  40,000,000. 

Q.  These  companies?  A.  Yes. 

Q.  Will  you  explain  how  it  was  that  between  1894  and  1895 
the  output  of  coal  increased  5,000,000  of  tons,  while  between  1895 
and  1896  the  output  decreased  3,000,000  of  tons?  A.  Well,  I 
think  in  1895  the  people  endeavored  to  conduct  the  business 
more  on  the  lines  of  commercial  sense  than  in  1895. 

Q.  You  mean  in  1896?  A.  In  1896. 

Q.  You  mean  in  1896  those  companies  operated  on  a standard 
of  greater  commercial  reason.  A.  I do. 

Q.  Than  they  did  the  year  before?  A.  I think  they  had  some 


1020  [Senate, 

glimmerings  of  commercial  sense  and  endeavored  not  to  give 
away  their  product,  and  one  which  is  impossible  of  replacement. 

Q.  Do  you  mean  to  be  understood  in  making  that  statement 
that  the  companies  were  actuated  by  the  desire  to  market  coal 
at  only  what  they  considered  to  be  a fair  price?  A.  I can’t  speak 
for  the  others;  I only  speak  for  ourselves;  we  endeavored  not  to 
produce  a quantity  of  coal  in  excess  of  that  that  we  could  mar- 
ket; we  had  less  of  coal  on  hand  at  the  upper  lakes;  we  had  less 
of  coal  in  store  at  Buffalo,  less  at  tidewater,  than  in  1895;  and 
made  no  money  out  of  the  business  in  1895. 

Q.  Mr.  Thomas,  doesn’t  the  ability  to  market — is  not  rather 
the  ability  to  market,  largely  dependent  on  the  price  you  fix? 
A.  No,  sir;  not  entirely. 

Q.  Do  you  not  find  that  upon  putting  an  additional  price  upon 
your  coal  you  at  once  contract  your  market?  A.  The  anthracite 
coal  has  a great  deal  of  difficulty  now  in  sustaining  its  market 
by  reason  of  the  competition  of  oil,  or  gas,  and  of  the  low  prices 
of  bituminous  coal;  they  are  a constant  menace  to  the  price. 

Q.  That  is  because  you  hold  the  price  of  anthracite  coal  so 
considerably  beyond  that  of  bituminous  coal  that  notwithstand- 
ing its  advantages,  the  advantages  of  anthracite,  you  have  hard 
work  in  competing;  is  that  it?  A.  The  only  advantage  that  I 
know  of  in  anthracite  is  its  cleanliness;  a ton  of  bituminous  coal 
will  produce  more  steam  than  a ton  of  anthracite,  and  the  low 
price  at  which  it  can  be  mined  and  placed  upon  the  cars  in  com- 
petition with  the  anthracite  must  always  prevent  any  exorbitant 
price  being  secured  for  anthracite  coal. 

Q.  When  you  speak  of  this  output  of  43,  46  and  41,000,000,  you 
mean  of  anthracite  coal,  do  you  not?  A.  I mean  all  sizes,  pea, 
buckwheat — 


No.  40.] 


1021 


Q.  Of  anthracite?  A.  Of  anthracite,  all  sizes;  no  bituminous 
coal;  I am  speaking  of  anthracite  coal  only. 

Q.  Were  you  never  informed  by  the  sales  agent  of  your  com- 
pany of  any  uniform  price  schedules  as  between  these  conferring 
roads?  A.  I have  never  been  informed  of  their  ability  to  main- 
tain any  uniform  price. 

Q.  Not  of  the  ability  to  maintain,  Mr.  Thomas,  but  of  the  fact 
that  they  have  agreed  to  maintain?  A.  I have  never  known  of 
any  conference. 

Q.  Never  been  informed  of  it  by  your  sales  agent?  A.  Not  to 
my  recollection. 

Q.  Would  he  have  had,  does  he  possess  under  your  authority, 
full  power  and  authority  to  attend  a conference  and  establish 
prices.  A.  Never  been  any  official  authority  delegated  to  him  in 
that  respect;  he  is  expected  to  meet  the  markets  and  to  market 
the  amount  of  coal  that  we  purchase,  or  rather  we  produce  the 
amount  that  he  can  market. 

Q.  Do  the  sales  agents  post  notices  of  the  monthly  prices?  A. 
I do  not  know  how  the  detail  in  which  the  business  is  conducted 
— I am  not  advised  as  to  that. 

Q.  Don’t  you  know  the  detail  of  the  method  of  the  conduct 
of  your  own  sales  agent?  A.  I do  not  know  any  of  its  details. 

Q.  Mr.  Sloan  has  stated  that  at  least  two  hours,  and  probably 
more,  were  occupied  in  this  conference,  that  is,  prior  to  February 
1,  1896;  do  you  remember  the  time?  A.  I do  not. 

Q.  Was  it  a longer  time?  A.  Why,  I think  there  was  several 
hours  in  conference,  including  lunch  and  all;  I didn’t  charge  my 
mind  with  any  special  reference  to  the  time;  it  may  be  well  to 
state  at  this  point  that  the  understanding  that  was  arrived  at 
at  that  time  expired  on  the  first  of  February,  1897. 


1022  [Senate, 

Q.  Did  it  not  extend  to  the  31st  of  March.  A.  Not  to  my  rec- 
ollection, sir;  I know  of  no  understanding  that  exists  at  this  mo- 
ment. 

Q.  Under  and  by  its  terms  was  it  operative  for  a limited  period 
of  time  then  well  understood  and  fixed?  A.  My  recollection  of 
the  discussion  and  the  understanding  of  the  gentlemen  was  that 
it  expired  on  the  first  of  February,  1897,  and  there  has  never 
been  any  meeting  since. 

Q.  Was  there  any  meeting  since  the  first  of  February,  1896? 
A.  No,  sir;  not  that  I have  attended. 

Q.  Either  by  the  conference  as  a whole  or  by  any  committee 
appointed  by  the  conference?  A.  There  was  no  committee  ap- 
pointed by  them  and  there  has  been  no  meeting — 

Q.  Who  was  chairman  of  the  conference?  A.  Well,  I can’t  rec- 
ollect; I wish  I could. 

Q.  You  probably  remember  whether  Mr.  Oliphant  was  chair- 
man? A.  No,  he  was  not;  my  recollection  is  that  it  was  Mr.  Rob- 
erts of  the  Pennsylvania,  but  I am  not  certain  as  to  that. 

Q.  What  is  the  price  of  coal  now,  Mr.  Thomas?  A.  I don’t 
know  what  the  price  of  coal  is. 

Q.  Are  you  not  aware  as  to  whether  or  not  as  the  result  of 
that  conference,  or  subsequent  to  that  conference,  by  degrees, 
the  price  of  coal  was  raised  one  dollar?  A.  I am  not;  I think 
we  secured  better  prices  in  ’94,  or  1896,  than  we  did  in  1895. 

Q.  By  about  one  dollar?  A.  I don’t  think  by  anywhere  ap- 
proaching that  sum;  there  was  no  advance  whatever  on  steam 
sizes,  pea,  buckwheat,  and  those  smaller  sizes  were  lower  than 
in  1895. 

Q.  The  advances  were  made  on  grate,  egg,  stove  and  chestnut? 
A.  If  there  were  any  advances  they  were  on  what  are  called 
prepared  sizes. 


No.  40.] 


1023 


S7 


E 


Frederick  H.  Gibbons,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow. : 

Q.  Wliere  do  you  reside?  A.  New  York  city. 

Q.  What  is  your  occupation?  A.  Treasurer  of  the  Delaware, 
Lackaw’anna  and  Western  Company. 

Q.  Treasurer?  A.  Treasurer. 

Q.  Have  you  anything  to  do  with  the  sales  of  coal?  A.  No, 
sir;  I have  not. 

Q.  Any  official  relation  to  the  coal  department  of  the  company? 
A.  None  at  all,  except  to  take  the  money  which  is  turned  in  for 
sales  of  coal. 

Q.  Do  you  know  what  the  output  of  the  Delaware,  Lackawanna 
and  Western  Company  was  for  1896?  A.  I don’t  know  the  out- 
put; I think  that  the  output — the  coal  mined  by  ourselves  and 
transported  for  others  was  in  the  neighborhood  of  8,000,000  of 
tons,  but  I don’t  know  exactly  the  figures. 

Q.  Did  that  come  within  the  percentage  fixed  at  the  conference 
of  presidents  about  February  1, 1896?  A.  I don’t  know. 

By  Mr.  Mazet: 

Q.  What  was  your  answer,  the  number  of  tons?  A.  Between 
8,000,000  and  9,000,000  mined  and  transported. 

Q.  By  your  road?  A.  Yes. 

By  Mr.  Lexow : 

Q.  How  did  that  compare  in  relation  to  the  percentage  fixed 
at  this  president's  conference?  A.  I do  not  know,  sir,  whether 
it  was — what  the  relation  was. 

Q.  You  mined  and  transported  then  about  one-fifth  of  the  total 
product  of  the  year?  A.  I have  made  no  examination  of  the  ton- 
nage, sir,  I can’t  say. 


1024  [Senate, 

Q.  Have  you  any  special  authority  over  the  sales  agent  of  your 
company?  A.  None  at  all. 

Q.  Any  communication  with  him?  A.  Communication  in  the 
course  of  business — 

Q.  As  to  the  fixing  of  prices?  A.  Not  at  all. 

Q.  Or  establishment  of  the  amount  of  output?  A.  No,  sir; 
none  whatever. 

Q.  Have  you  any  special  knowledge  of  the  practice  pursued 
by  him  in  his  business?  A.  I have  not. 

Q.  Do  you  not  know  that  the  prices  of  coal  are  fixed  monthly  by 
conference  between  the  sales  agents  of  these  conferring  compan- 
ies? A.  I do  not  know  that,  sir. 

Q.  Have  you  any  information  on  that  subject?  A.  I have  not. 

By  Mr.  Mazet: 

Q.  What  prices  did  you  get  per  ton  during  1896?  A.  I could 
not  answer  that. 

Q.  Haven’t  you  a knowledge  of  that  as  treasurer  of  the  com- 
pany ; don’t  you  know  as  to  the  comparative  price  between  1896 
and  1895?  A.  I think  it  was  slightly  higher  in  1896. 

Q.  How  much?  A.  I do  not  know;  but  I should  suppose  30  to 
40  cents;  somewhere  in  that  neighborhood. 

Q.  Per  ton?  A.  I should  think  so. 

Q.  What  was  the  comparative  tonnage  of  1895  and  1896  trans- 
ported by  your  road?  A.  I am  not  able  to  say  that,  sir. 

Q.  Was  it  more  in  1896  or  less  than  in  1895?  A.  My  impres- 
sion is  more,  but  I have  not  examined  those  figures. 

Q.  Did  you  hear  Mr.  Thomas’s  testimony  that  a great  deal  of 
coal  was  mined  in  1895  and  was  piled  up  hete  and  unsold?  A. 
I did  not  hear  that,  but  I think  that  was  the  case;  I believe  that 
that  was  true. 


No.  40.] 


1025 


Q.  Tliat  would  seem,  would  it  not,  that  there  was  more  mined 
and  transported  by  your  company  in  ’95  than  ’96?  A.  I am  un- 
able to  say  anything  definite  about  the  tonnage;  I have  not  closely 
followed  that. 

I 

Q.  But  your  impression  is  that  between  ’95  and  ’96  the  price 
was  increased  about  30  or  40  cents  per  ton?  A.  That  is  my  im- 
pression. 

Q.  That  is  all  the  knowledge  you  have  on  the  subject?  A. 
That  is  all  I have  definitely  that  I could  state. 

Q.  What  is  the  price  at  the  present  time  as  compared  with  ’95 
and  ’96?  A.  I could  not  state  that. 

.Q.  You  don’t  know  the  price  at  the  present  time?  A.  No,  I do 
not. 

By  Mr.  Lexow:  That  is  all. 

Mr.  Charles  A.  Walker,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  What  is  your  name?  A.  Charles  A.  Walker. 

Q.  Occupation?  A.  Treasurer  of  the  Delaware  and  Hudson 
Canal  Company. 

Q.  Of  which  Mr.  Oliphant  is  president?  A.  Yes,  sir. 

Q.  Who  is  the  sales  agent  of  the  Delaware  and  Hudson  Canal? 
A.  Thomas  F.  Torrey,  21  Cortlandt  street. 

Q.  Did  you  attend  the  conference  of  presidents  about  February 
1,  1896?  A.  I did  not. 

Q.  You  were  not  present?  A.  I was  not. 

Q.  Have  you  any  official  authority  over  the  sales  agent  of  your 
road?  A.  No,  sir. 

Q.  Do  you  know  anything  about  his  transactions,  the  system 
upon  -which  he  carries  on  that  department  of  the  company?  A. 


65 


1026  [Senate, 

Well,  to  a partial  extent;  of  course,  I must  know  all  that  is  going 
on,  but  the  methods — v 

Q.  Who  fixes  the  prices  of  coal  from  month  to  month  for  your 
company?  A.  The  general  sales  agent. 

Q.  How  does  he  fix  it?  A.  I don’t  know. 

Q.  How  is  the  notice  given  of  the  price  fixed?  A.  Well,  all 
I know  is  he  issues  circulars  to>  our  customers  establishing  the 
price.  / 

Q.  For  the  ensuing  month?  A.  Well,  until  changed;  I don’t 
know  how  often  they  change  it. 

Q.  Is  it  not  a fact  that  the  prices  are  established  as  a matter 
of  fact  monthly?  A.  No,  they  are  not. 

Q.  In  your  company,  I mean?  A.  In  my  company. 

Q.  A notice  stands  good  at  the  price  indicated  therein  until 
countermanded?  A.  Until  changed  by  a subsequent  circular. 

Q.  By  a subsequent  circular;  that  is  with  reference  to  your 
general  customers,  or  permanent  customers — have  you  any  tran- 
sient trade,  do  you  sell  except  to  customers  who1  are  permanent? 
A.  Well — i 

Q.  I mean  permanent,  more  or  less  permanent?  A.  We  con- 
sider all  our  customers  are  permanent. 

Q.  You  have  no  transient  trade?  A.  I don’t  understand  what 
you  mean  by  transient  trade;  we  sell  only  to  dealers — 

Q.  You  sell  only  in  large  lots  to  customers'  supposed  to  be  per- 
manent? A.  We  consider  every  one  who  goes  upon  our  books 
that  he  is  a permanent  customer. 

Q.  Do  you  sell  to  dealers  as  well?  A.  Yes. 

Q.  In  small  lots?  A.  Well,  we  sell  in  boat  loads. 

Q.  Anything  less  than  boat  loads?  A.  Well,  that  is  a — I don’t 
think  I can  answer  that  question;  my  end  is  the  financial  part  of 


No.  40.]  1027 

the  company;  those  are  questions  that  the  sales  agent  will 
answer. 

Q.  Do  you  know  whether  he  is  in  the  city  to-day?  A.  I be- 
lieve he  is. 

Richard  H.  Williams,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  Where  do  you  live,  Mr.  Williams?  A.  New  York  city. 

Q.  Occupation?  A.  Coal  merchant. 

Q.  Do  you  bear  any  relation  to  the  Erie  Railroad  Company? 
A.  We  are  their  general  sales  agents. 

Q.  Your  firm?  A.  Williams  & Peters. 

Q.  Is  the  sales  agent  for  the  Erie  and  has  been  so  during  the 
year  of  1896?  A.  Yes,  sir. 

Q.  Is  yet?  A.  Is  yet. 

Q.  Do  you  remember  a conference  of  sales  agents  that  took 
place  in  the  year  1896?  A.  No,  I do  not;  it  may  be  proper  for  me 
to  state  that  I was  abroad  from  the  29th  of  February  to  the  29th 
of  May. 

Q.  At  no  time  that  you  were  in  the  city  of  New  York,  do  you 
know  of  any  conference  occurring  between  the  sales  agents  of 
the  roads  that  came  in  conference  just  prior  to  the  first  of  Febru- 
ary, 1896?  A.  I think  it  most  probable,  and  it  is  possible  that  I 
was  there;  it  was  formal;  it  was  customary  to  have  informal 
talks  over  the  situation. 

Q.  When?  A.  Well,  generally. 

Q.  WThere?  A.  At  various  offices,  wherever  a man  happened 
to  be;  one  man  would  visit  one  man  one  month,  and  another  man 
visit  another  man  another  month;  people  coming  over  from  Phil- 
adelphia would  come  to  various  offices. 

Q.  I am  speaking  now  of  the  conference  that  is  more  formal  in 
its  character  than  that,  in  which  either  all,  or  a majority  of  the 


1028 


[Senate, 


roads  that  conferred  about  the  first  of  February  through  their 
presidents,  on  the  coal  situation,  met  and  discussed  the  situa- 
tion and  reached  some  conclusion;  do  you  remember  any  such 
conference?  A.  Yo,  I do  not;  I do  not. 

Q.  At  any  of  these  informal  conferences  that  you  have  spoken 
of,  how  many  were  together,  the  most?  A.  Three  or  four,  I 
should  think. 

Q.  Representing  what  roads?  A.  Well,  at  various  times  the 
Lackawanna,  the  Reading,  the  Lehigh  Valley,  the  Erie,  and  the 
other  coal  roads. 

Q.  Were  you  informed  of  the  allotment  or  percentage  that  had 
been  given  your  road  by  the  conference  of  presidents?  A.  I was 
informed  that  the  Erie  road  would  have  4 per  cent,  of  the  total 
tonnage  brought  to  market,  to  haul,  transport. 

Q.  You  bore  that  in  mind  during  that  year,  did  you  not;  you 
held  that  in  mind  in  making  your  arrangements  for  the  disposi- 
tion of  coal?  A.  Yes.  ( 

Q.  And  were  guided  by  the  allotment  that  had  been  made  in 
disposal  of  coal?  A.  You  mean  to  say  that  tonnage  allotment  of 
4 per  cent.? 

Q.  Yes?  A.  Yes. 

By  Mr.  Mazet: 

Q.  What  do  you  mean  by  4 per  cent,  of  the  tonnage;  as  the  de- 
mand should  indicate,  or  was  the  total  output  fixed?  A.  Oh,  no; 
the  total  output  was  not  fixed. 

Q.  How  could  you  ascertain  what  4 per  cent,  would  be  if  you 
didn’t  know  what  the  total  would  be?  A.  It  was  customary  to 
discuss  what  the  probable  requirement  for  the  following  month 
would  be. 

Q.  And  on  that  you  would  base  the  output  for  the  month?  A. 
Yes,  sir. 


No.  40.] 


1029 


Q.  You  fixed  the  output  for  each  month,  didn’t  you,  approxi- 
mately? A.  Approximately,  yes. 

Q.  And  figured  the  percentage  on  that?  A.  Yes. 

Q.  You  determined  particularly,  or  generally,  once  a month,  and 
fixed  the  output  for  the  succeeding  month?  A.  We  didn't  fix  the 
output;  we  discussed  as  to  what  would  be  the  probable  require- 
ments for  that  month,  and  were  guided  in  our  mining  operations 
by  that  decision. 

Q.  That  was  the  basis  on  which  you  conducted  your  work?  A. 
Yes. 

By  Mr.  Lexow: 

Q.  When  you  refer  to  “ we,”  Mr.  Williams,  whom  do  you  mean? 
A.  I mean  sales  agents  or  officers  of  the  several  coal  companies, 
what  we  call  the  initial  railroad  companies  or  transporters  of 
anthracite  coal. 

Q.  By  those  you  mean  the  conferring  companies,  those  compa- 
nies that  conferred?  A.  The  representatives  of  those  companies 
did  confer,  yes,  sir. 

Q.  The  companies  that  conferred  about  the  1st  of  February? 
A.  Those  are  the  companies  of  which  I speak. 

Q.  And  it  was  your  practice,  was  it,  to  meet  from  time  to  time 
in  informal  conference  and  fix  your  estimate  of  the  amounts  to 
be  mined  respectively  by  those  conferring  companies  in  view  of 
the  allotment  that  had  been  made?  A.  Well,  we  would  discuss 
as  to  the  probable  requirements  of  the  succeeding  month. 

Q.  Yes,  and  in  respect  to  the  allotment,  that  is  to  say,  after 
fixing  the  requirements  as  you  judged  the  market?  A.  Yes. 

Q.  You  would  then  divide  that  according  to  the  allotment  at 
the  president’s  conference.  A.  Yes. 


1030 


[Senate, 


Q.  And  that  would  furnish  the  amount  which  your  company  on 
its  allotment  of  four  per  cent,  would  bring  to  the  seaboard?  A. 
Yes;  but  not  necessarily  all  to  the  seaboard. 

Q.  I understand;  you  mean  transport?  A.  That  is  right. 

Q.  Would  offer  to  the  consumer,  that  is  it,  is  it  not?  A.  Well, 
yes. 

Q.  Do<  you  deal  with  retailers?  A.  Yes,  we  sell  retail  dealers. 

Q.  In  making  those  sales  do  you  officially  represent  your  com- 
pany, or  are  you  acting  in  an  arbitrary  capacity  as  a firm?  A. 
We  handle  the  entire  output  of  the  Erie  road  and  guarantee  sales, 
responsible  for  results  and  all — 

Q.  You  are,  in  a sense,  factors?  A.  Well — yes,  if  you  please. 

Q.  Why  was  it  that  the  price  of  coal  was  increased  25  cents 
a ton  immediately  after  the  holding  of  this  conference  of  the 
respective  presidents  of  these  roads?  A.  Well,  because  the  price 
had  been  so  low  in  1895  that  there  was  absolutely  no  money  in 
doing  the  mining  business. 

Q.  You  considered  that  you  were  getting  too  little  for  your 
coal?  A.  Altogether. 

Q.  You  considered  that  you  were  losing  money  on  your  coal? 
A.  Yes. 

Q.  And  you  considered  that  you  had  a right  to  fix  the  price 
upon  the  coal  which  in  your  judgment  was  its  fair  value?  A. 
Certainly. 

Q.  And  you  believed  that  you  had  a right  to  confer  together 
and  by  mutual  understanding  reach  both  an  allotment  and  a 
figure  which  would  give  you  what  in  your  judgment  was  a fair 
price  for  your  product?  A.  Absolutely. 

Q.  And  it  was  upon  that  principle  that  you  worked  together^ 
but  the  result  of  it  was,  was  it  not,  a restriction  in  production?  A. 
Well,  I am  sorry  to  say  it  was  not. 


No.  40.] 


1031 


Q.  I mean — A.  We  might. 

Q.  The  object?  A.  No;  the  object  was  not,  the  object  was  not 
to  mine  more  coal  than  we  could  market,  because  it  costs  a great 
deal  of  money,  and  the  coal  deteriorates  when  above  ground;  it 
costs  less  inside,  to  carry  it  in  the  ground. 

Q.  When  you  say  market,  Mr.  Williams,  you  mean  market  it 
at  such  price  as  you  in  your  judgment  fixed  as  a fair  value  of 
your  product?  A.  We  didn’t  fix  it;  there  are  other  considerations 
that  enter  into  it. 

Q.  You  try  to  fix  it  as  near  as  you  can?  A.  Yes. 

Q.  And  you  don’t  succeed  always  because  of  the  law  of  supply 
and  demand?  A.  Well,  and  competition  of  other  coals;  25  to  33 
per  cent,  of  our  output  is  steam  coal,  buckwheat  and  pea,  sizes 
under  domestic  sizes,  and  those  prices  are  regulated  very  largely 
by  the  price  of  bituminous  coal. 

Q.  Do  you  mean  that  the  price  of  bituminous  coal  regulates 
the  price  of  anthracite  in  the  New  York  market?  A.  To  a very 
great  extent;  oh,  yes,  always  has — I mean  in  the  steam  sizes. 

Q.  The  price  of  steam  sizes?  A.  Yes. 

Q.  The  price  of  anthracite  coal  is  subject  to  still  greater  con- 
trol and  regulation  by  restriction  of  production,  is  it  not?  A. 
Why,  if  absolute  restriction  could  be  carried  out;  it  never  has 
been;  it  would  have  some  bearing  on  it. 

Q.  Anything  that  would  retard  the  independent  action  of  these 
companies  in  mining,  such  as  they  deemed  proper,  and  limiting 
them  to  a specific  amount  supposed  to  represent  the  demand  of 
the  market,  would  have  the  effect  of  adding  to  the  price,  would 
it  not?  A.  If  it  w'ere  carried  on  to  a greater  degree  than  it  has 
even  been  done. 

Q.  And  if  the  companies  lived  up  to  any  agreement  that  they 


1032  [Senate, 

might  enter  upon?  A.  If  the  companies  would  do  that  it  would 
be  far  more  arbitrary;  it  never  has  been. 

Q.  I understand  the  claim  has  been  made  by  Mr.  Sloan  that 
the  companies,  or  some  of  them,  did  not  live  up  to  their  allot- 
ments; that  was  true,  was  it  not?  A.  Why — 

Q.  (Continuing)  But  the  establishment  of  that  allotment  was 
for  the  purpose  of  only  securing  enough  coal  to  be  brought  to 
the  seaboard  to  meet  the  demand,  as  considered  established  by 
the  figures  of  the  preceding  years;  is  that  true?  A.  Well,  not 
exactly. 

Q.  What  is  true?  A.  It  is  true  that  more  coal  has  always 
been  brought  under  this  agreement  to  tide  water  than  could  be 
marketed  at  reasonable  figures. 

Q.  Was  the  advance  of  coal  of  25  cents  a ton  made  after  the 
conference  of  these  presidents,  the  result  of  that  conference?  A. 
I should  say  so. 

Q.  When  was  the  next  increase?  A.  I am  not  positive,  but  I 
think  in  about  May  or  June. 

Q.  About  the  first  of  May,  was  it  not?  A.  I think  so;  yes. 

Q.  You  then  increased  the  price  25  cents  more?  A.  I think 
that  was  it. 

Q.  Was  that  the  result  of  the  conference?  A.  It  was. 

Q.  Do  you  remember  the  next  increase — was  it  about  the  first 
of  July?  A.  I think  it  was. 

Q.  That  was  also  an  increase  of  25  cents?  A.  I think  so. 

Q.  And  the  next,  the  first  of  September?  A.  Well,  there  was 
a September — 

Q.  And  that  was  also  an  increase  of  25  cents?  A.  I think  it 
was. 

Q.  So  that  between  the  first  of  February  and  the  first  of  Sep- 


No.  40.] 


1033 


tember,  as  the  result  of  that  conference  held  immediately  prior 
to  the  first  of  February  there  was  an  increase  in  price  of  about 
a dollar  a ton — or  just  a dollar  a ton?  A.  There  was  an  actual 
increase  of  one  dollar  a ton  in  the  circular  price;  the  September 
circular  was  never  realized,  and  that  size  was  stove  coal,  which 
is  about  20  to  22  per  cent,  of  the  total  output;  that  was  the  only 
size  that  was  affected  to  such  an  extent;  that  was  actually  af- 
fected about  75  cents  instead  of  one  dollar,  as  the  circulars  will 
show. 

By  Mr.  Mazet: 

Q.  What  percentage  of  the  coal  consumed  here  is  steam  coal, 
Mr.  Williams?  A.  Well,  that  is  a little  difficult  to  answer;  but  I 
would  say  25  to  30  per  cent.,  I should  think. 

Q.  And  that  is  the  one  in  which  there  is  the  most  competi- 
tion? A.  That  is,  the  soft  coal  regulates  the  price  more  of  that 
by  its  low  prices. 

Q.  And  the  other  70  per  cent,  there  is  not  so  much  competi- 
tion? A.  Not  so  much  competition. 

By  Mr.  Lexow : 

Q.  Is  it  not  true  that  between  the  dates  named  in  the  question 
just  asked,  the  price  of  grate,  egg.  stove  and  chestnut  was  raised, 
including  February  1,  189G,  and  September,  1896,  one  dollar  per 
ton?  A.  Oh,  no;  the  price  of  stove  coal  in  September — oh,  in 
September,  1896,  you  say? 

Q.  Yes?  A.  My  recollection  is  that,  that  the  price  of  stove 
coal  for  January  and  February  was  about  $3.25  a ton. 

Q.  And  $1.00  fixed  in  September?  A.  Well— yes. 


1034  [Senate, 

Q.  That  is  right,  so  that  with  the  addition  of  25  cents  in  Feb- 
ruary, $4.00  in  September  showed  an  increase  of  $1.00  per  ton? 
A.  About  $1.00  per  ton  was  shown  in  the  stove  size;  grate  did  not 
participate,  nor  did  egg  nor  chestnut. 

Q.  Was  the  egg  $3.50  as  fixed  by  the  increase  in  February? 
A.  It  was  not  selling,  it  was  not. realizing  that  price. 

Q.  And  did  you  not  fix  $4.25  by  your  circular  issued  in  Sep- 
tember? A.  None  was  sold  in  1896  at  that  price. 

Q.  Well,  whether  you  sold  it  or  not,  is  it  not  a fact  that  you 
issued  a circular  fixing  that  as  the  price?  A.  Yes;  I think  it 
was. 

Q.  And  isn’t  the  same  true  with  reference  to  the  other  two 
sizes  that  without  reference  to  the  question  as  to  whether  you  got 
the  money,  you  did  issue  a circular  which  made  a raise  of  one 
dollar  during  the  period  mentioned  in  my  question?  A.  About 
that;  yes. 

Q.  What  was  there  in  the  situation,  Mr.  Williams,  to  warrant 
or  justify  a raise  of  one  dollar  per  ton?  A.  Why, the  fact  that  for 
the  18  months  prior  to1  October,  1895,  that  we  had  been  mining 
coal,  coal  had  been  steadily  declining  about  a dollar  and  a half, 
and  the  companies  had  all  that  time  been  losing  a great  deal  of 
money,  they  were  trying  to  get  their  properties  back  on  a paying 
basis. 

Q.  You  considered  that  the  value  of  your  product  had  not 
been  reached  in  those  years?  A.  Oh,  no;  decidedly  not. 

Q.  And  that  you  were  justified  in  fixing  this  higher  price  upon 
it  as  a reasonable  value  for  your  product?  A.  Yes. 

Q.  Do  you  consider  yourselves  justified  to  make  an  agreement 
among  competing  companies  fixing  a uniform  price  which  was 
higher  than  that  ruling  or  prevailing  upon  what  is  considered  a 
necessary  of  life?  A.  We  made  no  actual  agreement. 


No.  40.] 


1035 


Q.  Do  you  call  the  deliberate  results  of  a conference  other 
than  an  agreement?  A.  We  worked  on  the  same  lines  and  ob- 
tained similar  results. 

Q.  And  you  wish  to  be  understood  that  it  was  simply  a coin- 
cidence that  that  result  was  obtained?  A.  No;  we  were  operat- 
ing to  get  more  money  for  our  coal. 

Q.  And  you  were  trying  to  do  it  in  that  way?  A.  We  were 
trying  to  do  it  in  that  way. 

By  Mr.  Mazet: 

Q.  What  is  the  cost  of  mining  coal  per  ton?  A.  Well,  that 
varies  a great  deal. 

Q.  Approximately — the  average?  A.  I should  say  from  $1.60 
to  $1.80  a ton  at  the  breaker;  the  first  cost  of  these  breakers  is, 
of  course,  very  great,  and  the  cost  of  developing  the  property  is 
very  great. 

Q.  How  are  the  miners  paid,  by  the  day  or  by  the  ton?  A. 
Some  per  day  and  some  per  ton. 

Q.  How  much  are  they  paid  per  ton?  A.  Well,  I am  not  inter- 
ested in  that  end  of  it;  at  least,  I could  not  give  you  the  accu- 
rate figures. 

Q.  But  your  impression  is  that  the  cost  of  mining  is  about 
?1.50?  A.  It  would  average  more  than  that. 

Q.  What  does  it  cost  to  bring  it  from  the  mine  to  the  sea- 
board? A.  That  is  a part  of  the  railroad  branch  of  the  business; 
I am  not  in  the  railroad  business. 

Q.  That  you  are  not  familiar  with?  A.  No. 

Edwin  R.  Holden,  being  duly  sworn,  testified  as  follows; 

Examined  by  Mr.  Lexow: 

Q.  What  is  vour  full  name?  A.  Edwin  R.  Holden. 

Q.  Your  residence,  Mr.  Holden?  A.  New  York  city. 


1016  [Senate, 

Q.  TV  hat  is  your  occupation?  A.  Vice-president  of  the  Dela- 
ware, Lackawanna  and  Western  railroad. 

Q.  Are  you  sales  agent  of  that  road?  A.  That  is  not  my  official 
title. 

Q.  Are  you?  A.  Well,  the  business  of  the  sale  of  coal  is 
under  my  direction. 

Q.  You  have  the  same  control  over  the  sales  of  coal  of  your 
road  that  Mr.  Williams  and  his  firm  have  over  the  Erie?  A. 
Well,  I don’t  know  what  control  they  have  over  the  Erie. 

Q.  General  sales  agents?  A.  I don’t  know  the  nature  of  their 
control  over  the  business. 

Q.  Isn’t  the  relation  of  a general  sales  agent  to  a coal-carrying 
railroad  fairly  well  understood?  A.  It  is  not  necessarily  identi- 
cal. 

Q.  Is  not?  A.  No,  sir. 

Q.  Have  you  got  exclusive  charge  of  the  sales  of  coal  made  by 
your  road?  A.  I have  under  authority  of  the  president  and  the 
board  of  directors. 

Q.  And  fix  the  price?  A.  Ido. 

Q.  And  hold  whatever  conferences  there  are  to  be  held  with 
reference  to  the  establishment  of  prices,  or  the  fixing  of  the 
amount  to  be  mined  and  transported?  A.  I have  known  of  no 
such  conferences  for  some  time  past. 

Q.  There  have  been  in  the  past?  A.  Oh,  some  years  ago,  prior 
to  1895;  there  was  some  of  the  men  known  as  sales  agents  used 
to  meet  for  conference  occasionally,  but  I have  known  of  none 
since. 

Q.  Do  you  know  Mr.  Williams?  A.  I do. 

Q.  He  has  testified  here  that  there  were  what  he  designated  as 
informal  conferences  between  the  sales  agents  of  the  various 


No.  40.] 


1037 


roads  that  conferred  about  February  1,  189G,  subsequent  to  that 
time;  .were you  not  present  at  any  of  them?  A.  I have/not  been. 

Q.  Any  held  in  your  office?  A.  No;  if  1 might  be  permitted 
to  say,  that  unless  you  are  to  call  a casual  meeting  of  their  men 
who  come  into  my  office,  as  for  example  the  gentlemen  whom  I 
have  just  left  there,  but  no  conference  in  the  sense  which  I 
should  term  a conference. 

Q.  How  many?  A.  No  meeting  by  appointment,  nor  anything 
of  that  sort. 

Q.  But  there  was  an  interchange  of  ideas  that  occurred  every 
month  during  the  year  1S96?  A.  Not  to  my  knowledge. 

Q.  (Continuing)  And  which  resulted  from  the  conference  held 
about  the  first  of  February,  1896?  A.  I know  of  none,  heard  of 
none,  attended  none. 

Q.  Didn't  these  companies  that  formed  part  of  the  president’s 
conference — you  know  what  I refer  to — of  about  the  first  of 
February,  1896?  A.  I do. 

Q.  At  which  an  apportionment  was  established  as  between  the 
various  roads,  and  in  which  your  road  received  the  apportionment 
of  13  and  35-100  per  cent,  of  the  whole. 

To  stenographer:  Just  read  the  question,  please. 

(Question  read). 

Q.  (Continuing)  Through  their  sales  agents  confer  together 
about  monthly  after  that  presidents’  conference?  A.  To  my 
knowledge  there  has  been  no  such  conference. 

Q.  Informal,  I mean?  A.  Either  formal  or  informal,  unless 
you  would  so  call,  as  I said  before,  the  casual  meetings  of  indi- 
vidual gentlemen  together,  and  exchanging  views  in  regard  to 
the  situation,  and  I know  I don’t  recall  any  such  conferences  as 
that  even  that  would  extend  to  more  than  two  or  three  indivi- 
duals. 


1038  [Senatb, 

Q.  About  four  individuals  control  tliree-fourths  of  the  entire 
output  of  the  anthracite  coal  carrying  companies,  do  they  not? 
A.  Well,  I could  not  answer  that  at  the  moment. 

Q.  Does  not  the  Reading,  the  Lehigh  Valley,  the  Delaware, 
Lackawanna  and  Western,  and  the  New  Jersey  Central,  together 
with  the  Pennsylvania,  control  three-fourths  of  the  entire  coal 
carrying  anthracite  coal  carrying  trade?  A.  I can’t  say  as  to 
that. 

Q.  Is  that  your  best  impression  as  an  expert?  A.  Let  me  see 
if  I understand  the  Chairman ; you  asked  first  whether  or  not  four 
persons  did  not  control — 

Q.  (Interrupting)  I now  include  five?  A.  Well,  if  you  were  to 
include  a large  enough  number  it  would. 

Q.  Five?  A.  That  I can’t  say;  I should  say — if  you  would 
allow  me  one  moment;  it  would  be  about  60  or  70  per  cent.,  I 
should  say,  if  I understand  the  term  “ control  ” in  the  sense  the 
Chairman  does. 

Q.  I mean  that  according  to  experience  tables  used  at  the 
presidents’  conference  of  about  the  first  of  February,  1896,  their 
percentage  was  fixed  so  that  that  would  indicate  a control  in  the 
hands  of  those  five  roads.  A.  The  experience  tables — I don’t 
know  any  such. 

Q.  Your  experience  in  the  way  of  production?  A.  Well,  I 
should  say  it  would  be  between,  somewhere,  those  interests 
named  wrnuld  have  to  do  with  60  to  70  per  cent. 

Q.  Did  you  in  1896  exceed  the  amount  of  percentage  appor- 
tioned to  you  of  13  and  35-100  of  the  whole?  A.  I can’t  say;  I 
can’t  say  as  to  that. 

Q.  Have  you  never  investigated  into  that?  A.  Yes,  if  the 
Chairman  will  permit  me,  I would  say  that  the  percentages  to 


No.  40.]  1039 

which  he  refers  had  to  do  were  addressed  entirely  to  the  trans- 
portation of  coal,  and  it  is  within  my  knowledge  that  the  aggre- 
gate amount  of  coal  transpored  over  our  road  between  the  31st 
of  January,  1896,  and  the  1st  of  February,  1897,  did  exceed  that 
quantity,  that  percentage. 

Q.  To  a substantial  extent,  or  only  to  a slight  extent?  A. 
Probably  not  very  much. 

Q.  It  was  your  purpose,  was  it  not,  in  the  production  of  coal, 
or  transportation  of  coal  to  keep  within  the  limits,  reasonably 
wdthin  the  limits  fixed  at  that  presidents’  conference?  A.  That 
had  no  bearing  upon  it. 

Q.  Did  you  not  consider  it  at  all?  A.  Well,  it  was  a fact  not 
absent  in  my  mind — it  was  constantly  within  my  knowledge. 

Q.  Within  your  knowledge  and  in  your  mind,  and  do  you  mean 
to  say  that  that  did  not  guide  at  all  in  the  policy  of  the  company? 
A.  Most  assuredly. 

Q.  You  do?  A.  I do. 

Q.  Then  you  differ  from  Mr.  Sloan?  A.  Well,  however  much 
I may  dislike  to  differ  from  my  superior  officer,  I think  if  Mr. 
Sloan  had  qualified  what  he  might  have  said  about  that — if  he 
said  it  was  matters  with  which  he  was  not  very  familiar. 

Q.  Did  you  have  personal  knowledge  of  this  question  of  ap- 
portionment as  to  transportation,  or  was  your  duty  more  confined 
to  the  sales  of  coal?  My  duties  include  both. 

Q.  Both;  did  you  meet  Mr.  Williams  at  any  time  during  the 
year  1896  upon  the  question  of  output  and  price?  A.  I don’t 
think  I ever  did;  never  recollect  having  done  so;  I have  met  Mr. 
Williams  frequently  in  the  ordinary  intercourse  of  business; 
doubtless  that  was  during  the  year;  I can’t  recall  any  specific 
instance,  however. 


1040  [Senate, 

Q.  And  no  instance  at  which  the  question  of  fixing  the  price  of 
output  was  discussed?  A.  Not  any. 

Q.  In  its  relation  to  the  price  or  the  output  to  be  fixed  by  the 
Erie  Railroad  Company?  A.  Not  at  all. 

Q.  Or  your  company?  A.  Not  at  all;  if  the  Chairman  will  per- 
mit me,  perhaps  I may  simplify  the  examination  somewhat;  if 
he  will  permit  me  to  state  the  facts  as  they  exist. 

Q.  Certainly;  we  would  like  to  know  them?  A.  In  the  begin- 
ning of  the  year  1896  there  was  a conference  held  by  the  represen- 
tatives of  the  several  principal  coal  carrying  railroads,  the 
avowred  purpose  of  which  was  to  see  if  by  some  means,  some  law- 
ful means,  a betterment  of  the  deplorable  condition  of  the  busi- 
ness might  be  arrived  at.  After  considerable  discussion,  it  was 
proposed  by  Mr.  Roberts,  president  of  the  Pennsylvania  railroad, 
that  the  transportation  of  anthracite  coal  should  be  divided 
among  the  several  roads  upon  an  agreed  basis  or  percentage;  that 
was  assented  to;  difficulties  were  found  in  satisfying  the  different 
parties,  and  finally  a committee  was  appointed  who  would  take 
the  matter  in  hand  and  recommend  a schedule  of  percentages  for 
the  division  of  the  transportation  of  anthracite  coal,  of  which 
committee  I was  a member.  That  committee  met  and  prepared 
a schedule  which  was  submitted  at  a subsequent  meeting  of  the 
same  gentlemen,  and  was  not  assented  to  unanimously. 

Q.  There  was  one  road  which  dissented?  A.  There  was  one 
road  which  dissented. 

Q.  That  is  the  Delaware  and  Schuylkill?  A.  The  Delaware 
and  Schuylkill  declined  to  accept;  then  a committee  was  ap- 
pointed to  formulate  a plan  for  carrying  this  into  effect,  and  it 
was  supposed,  certainly  by  myself,  that  one  of  the  matters  to 
which  that  committee  would  address  itself  would  be  the  attitude 


No.  40.]  1041 

of  this  dissentment;  that  committee  never  made  any  report,  and 
so  far  as  I know,  so  far  as  I have  known  at  any  time,  the  reason 
of  their  making  none,  that  they  could  formulate  no  plan  that 
could  be  efficacious,  that  would  not  be  obnoxious  to  the  law;  and 
the  matter  was  dropped;  since  that  time  the  different  interests 
have  struggled  along,  trying  to  do  the  best  they  could  without  un- 
necessary collisions,  and  so  far  as  the  question  of  fixing  an  allot- 
ment as  it  is  termed,  for  the  production  of  coal,  the  company  I 
represent  has  strenuously  and  repeatedly  insisted  that  it  would 
produce  all  of  the  coal  that  it  could  sell;  it  has  pursued  that  line 
and  has  never  departed  from  it. 

Q.  When  you  speak  of  the  policy  of  the  company  as  to  the  pro- 
duction of  all  the  coal  that  it  could  sell,  do  you  mean  to  be  under- 
stood a%  intending  to  produce  all  the  coal  that  it  could  sell  at  any 
price,  or  all  of  the  coal  that  it  could  sell  at  such  price  as  the  com- 
pany considered  to  be  a fair  value  of  the  article  furnished?  A. 
That  is  the  condition  precedent,  the  price  should  be  satisfactory, 
which,  I regret  to  say,  it  has  not  been. 

Q.  Will  you  explain,  Mr.  Holden,  to  this  committee,  how  it  was 
that  immediately  after  this  presidents’  conference  of  February, 
1S96,  the  price  of  four  of  the  principal  grades  of  coal  advanced 
25  cents  a ton?  A.  How  was  it  advanced? 

Q.  Yes?  A.  The  price  of  coal  for  a long  time  prior  to  that  had 
been  abnormally  low,  ruinously  low,  and  the  cessation,  in  a meas- 
ure of  depressing  influences  upon  the  market,  made  an  advance 
of  25  cents — if  that  be  the  amount,  I don’t  recollect,  exactly — 
made  it  practicable. 

Q.  Is  there  anybody  immediately  under  you  in  authority  with 
reference  to  the  sales  of  coal  in  your  company,  who  has  special 


66 


1042 


[Senate, 


knowledge  of  the  prices  that  were  fixed  during  the  year  1890?  A. 
Xo  person  that  has  knowledge  that  I do  not  possess  myself. 

Q.  Was  there  anybody  who,  under  you,  had  authority,  or  who 
did  confer  with  the  sales  agents  of  other  roads  for  the  purpose  of 
establishing  uniform  prices  and  an  output  commensurate  with 
the  percentages  established  at  the  presidents’  meeting?  A.  Xo 
one;  no  one  under  me  has  authority. 

Q.  Nor  did,  as  far  as  you  know,  anybody  arrogate  to  himself 
any  authority  so  to  act?  A.  Not  to  my  knowledge. 

Q.  Can  you  explain?  A.  If  the  Chairman  will  pardon  me,  per- 
haps I may  be  able  to  explain  a seeming  discrepancy  between 
what  I have  just  testified  in  that  respect,  and  what  seems  to  be 
in  the  mind  of  the  committee.  These  several  allotments,  however 
they  may  have  been  determined,  if  they  were  determined,  and  if 
they  were  determined,  it  was  by  sidewalk  talk,  or  something  of  that 
nature,  so  far  as  my  knowledge  goes,  they  were  merely  tentative 
estimates  of  the  possibility  of  the  market  for  am  ensuing  period, 
and  it  was  in  practice  as  well  as  in  expectation,  it  was  the  re- 
quirements of  the  market  as  they  were  found  to  be  that  would 
determine  the  value  of  production  rather  than  the  tentative 
estimate  made  before  hand. 

Q.  The  tentative  estimate  made  beforehand  was  on  a basis  of 
a production  of  40,000,000  tons  per  year,  was  it  not?  A.  No,  sir, 
it  was — 

Q.  Was  it  on  the  basis  of  any  production?  A.  I never  heard 
that  it  was,  and  the  division  or  volume  of  transportation  was  not 
a division  of  any  given  quantity,  but  of  the  total,  or  total  poten- 
tial quantity. 

Q.  Do  you  mean  to  be  understood  then  as  insisting  that  this 
conference  of  February,  or  abomt  February,  1896,  had  not  in  mind 


No.  40.] 


1043 


the  establishment  of  any  production  based  upon  a supply  of  the 
demand  of  the  market  consistent  with  the  maintenance  of  fair 
values  for  the  coal?  A.  The  principal,  sir;  the  principal  gen- 
tlemen present  at  that  conference  distinctly  disclaimed  any  wil- 
lingness to  consider  the  question  of  production  of  coal ; I have  in 
mind  more  especially  Mr.  Roberts,  president  of  the  Pennslyvania 
company;  he  repeatedly  enforced  that  view  upon  the  other  gen- 
tlemen; he  was  there  as  the  representative  of  a common,  carrier, 
having  nothing  to  do  with  the  production  of  coal. 

Q.  But  the  object  of  the  conference  was,  was  it  not,  to  put  an 
end  to  what  was  considered  to  be  a disastrous  and  ruinous  busi- 
ness, due  to  the  sale  of  coal  at  a figure  below  what  was  considered 
by  the  company  its  real  value?  A.  The  main  object  of  the  con- 
ference had  that  in  view;  the  methods  whereby  that  result  might 
be  brought  about,  or  what  was  considered  at  conference — and  as 
I have  said,  Mr.  Roberts  and  others  distinctly  refused  to  have 
anything  to  do  with  the  production  of  coal;  he  was  a common 
carrier  and  he  only  spoke  as  a common  carrier. 

Q.  This  percentage,  however,  that  you  say  was  fixed  tenta- 
tively? A.  I beg  pardon? 

Q.  What  object  had  it  unless  it  affected  the  amount  of  the 
probable  output?  A.  I beg  pardon  if  I said  that  the  percentages 
were  fixed  tentatively;  I made  a mistake;  I had  reference  to  the 
so-called  monthly  volume  of  production;  I said  that  those  were 
mere  tentative  estimates  of  the  requirements  of  the  near  future; 
the  percentages  referred  to  were  not  tentative. 

Q.  They  were  permanent?  A.  They  were  intended  to  be  if 
they  had  been  adopted. 

Q.  They  were  adopted,  were  they  not,  except  as  to  the  one 
road,  the  Schuylkill  road?  A.  They  were  not  adopted  by  any, 
that  one  road  being — 


1044  [Senate, 

Q.  Or  to  use  the  words  of  the  president  of  the  road  “ they  were 
acquiesced  in”?  A.  Well,  I should  not  say  so;  I certainly  did 
not  acquiesce  for  our  company. 

Q.  Were  you  present  at  the  meeting?  A.  I was  present,  and 
the  only — during  part  of  the  time,  was  the  only  representative  of 
the  company  present. 

Q.  Mr.  Sloan  was  there  part  of  the  time?  A.  He  was  there 
several  times,  but  he  was  not  there  continuously. 

By  Mr.  Mazet: 

Q.  How  then  were  those  percentages  fixed,  Mr.  Holden,  if  the 
representatives  of  the  respective  companies  did  not  acquiesce  in 
them,  approve  of  them.  A.  The  percentages  fixed,  which  have 
been  talked  about,  were  experimentally  submitted  by  the  com- 
mittee appointed  for  that  purpose. 

Q.  By  a special  committee  who  made  a report?  A.  A special 
committee  which  I have  previously  referred  to,  of  which  I was  a 
member,  made  a report,  and  that  report,  failing  to  be  unanimous, 
was  not  adopted  by  anybody;  that  is  my  own  version  of  it. 

By  Mr.  Lexow: 

Q.  I understood  you  to  say  in  answer  to  the  former  question 
that  you  drew  a distinction  between  output  and  between  per- 
centages; in  that  output  was  tentative,  and  percentages  were 
permanent  or  fixed,  and  that  the  only  question  with  reference  to 
percentages  was  as  to  whether  or  not  the  Schuylkill  Valley  Road 
could  be  prevailed  upon  to  take  the  percentage  allowed  to  it  by 
that  conference;  is  that  true?  A.  I don’t  quite  understand  the 
question? 

(Question  read.) 


No.  40.] 


1015 


A.  I only  know  as  to'iny  own  attitude  toward  the  question, 
and  I held,  as  I have  stated,  that  failing  to  be  assented  to  by  all 
concerned  this  schedule  of  percentages  applied  to  none. 

Q.  Why  then  Mr.  Holden  did  you  bear  that  percentage  in  mind 
during  the  year  1S96,  as  stated  by  you,  “ had  that  in  view  in  the 
product  of  the  company  ”?  A.  I say,  did  not  have  that  in  view 
in  the  product  of  the  company;  I intended  to  be  so  understood. 

Q.  You  undoubtedly  stated  otherwise  in  answer  to  the  ques- 
tion; Mr.  Stenographer,  will  you  turn  back  to  that  part  of  the 
witnesses’  testimony: 

(The  stenographer  read  the  following  questions  and  answers 
previously  given). 

" Q.  It  was  your  purpose,  was  it  not,  in  the  production  of  coal, 
or  the  transportation  of  coal,  to  keep  within  the  limits,  reason- 
ably within  the  limits — fixed  at  that  presidential  conference?  A. 
That  had  no  bearing  upon  it.  Q.  Did  you  not  consider  that  at 
all?  A.  Well,  it  was  a fact  not  absent  in  my  mind;  it  was  con- 
stantly within  my  knowledge.  Q.  Within  your  knowldege  and 
in  your  mind,  and  do  you  mean  to  say  that  that  did  not  guide  at 
all  in  the  policy  that  the  company  pursued?  A.  Most  assuredly. 
Q.  You  do?  A.  I do.” 

Q.  You  said  in  other  words,  it  was  in  your  mind?  A.  In  my 
mind,  as  I may  use  the  term,  as  a historic  fact,  but  that  such  a 
schedule  of  percentages  had  been  prepared,  presented,  and  not 
adopted. 

Q.  Your  road  increased  the  price  of  coal,  did  it  not,  immediately 
after  that  presidents’  conference?  A.  I think  so. 

Q.  Twenty-five  cents  a ton?  A.  I think  so. 

Q.  And  in  May  another  25  cents  a ton?  A.  Well  I would  not 

like  to  speak  with  accuracy  in  regard  to  that — I don’t  think  that 
there  was  such  an  increase  as  that  in  the  results  of  the  business. 


1046  [Senate, 

Q.  Well,  whether  you  actually  increased  it  to  the  consumer, 
the  fact  was  that  the  schedule  price  announced,  contained  an  in- 
crease of  that  amount,  did  it  not?  A.  Well,  so  far  as  circular 
prices  are  concerned,  we  issue  no  circulars;  adopt  none. 

Q.  What?  A.  We  issue  no  circular  price. 

Q.  What  is  your  method?  A.  Our  method  is  that  a man  ap- 
plies to  purchase  coal;  it  is  a matter  of  bargain  and  sale  on  the 
moment. 

Q.  Don't  you  fix  a price  that  rules  until  countermanded?  A. 
Not  in  any  general  sense;  an  individual  buyer  may  come  to  me, 
and  I will  give  him  a price  that  will  be  good  until  withdrawn. 

Q.  Did  you  not  quote  prices  in  the  month  of  February  follow- 
ing that  presidents’  conference,  of  twenty-five  cents  per  ton 
higher  on  the  grades  of  grate,  stove,  chestnut  and  egg  than  the 
preceding  months?  A.  It  may  be;  I can’t  say. 

Q.  Don't  you  remember?  A.  I remember  this  fact,  that  the 
aggregate  quantity  of  coal  that  we  floated  at  Hoboken,  our  ship- 
ping point,  for  the  month  of  February,  realized  less  per  ton  than 
it  did  in  the  month  of  January;  we  tried  to  get  more  money 
for  coal  in  February  than  we  did  in  January,  and  I presume 
that  25  cents  was  the  extent  of  that  offered. 

Q.  That  the  prices  quoted  were  25  cents  higher,  whether  real- 
ized or  not — I am  speaking  now  of  quoted  prices — wrere  25  cents 
higher  than  during  January?  A.  I presume  they  were. 

Q.  And  in  May  wras  another  addition  of  25  cents  per  ton  for 
the  grades  mentioned  made?  A.  It  was  not  made,  that  was,  it 
was  not  realized. 

Q.  It  was  quoted?  A.  May  have  been,  yes,  sir. 

Q.  Is  not  that  your  recollection?  A.  Well,  in  that  respect,  my 


No.  40.]  1047 

recollection  -would  have  to  be  based  upon  information  and  be- 
lief; I was  out  of  the  country  at  the  time. 

Q.  Do  you  remember  a similar  advance  of  25  cents  for  those 
grades  in  July?  A.  Well,  I can't  say  as  to  that,  whether  there 
was  another  advance  at  that  time  or  not. 

Q.  And  in  September  another  advance  of  twenty-five  cents? 
A.  September  there  was  an  attempt  made  to  advance  prices;  it 
was  a failure. 

Q.  Is  it  not  a fact  that  during  that  year  the  price  of  the  four 
grades  of  coal  mentioned  in  my  former  question  was  advanced, 
or  attempted  to  be  advanced,  by  circular  or  advice,  one  dollar 
per  ton?  A.  I don’t  understand  what  the  Chairman  means  by 
“advice”;  I would  say  that  in  respect  of  the  coal  of  our  own 
company  that  as  I have  stated  we  issue  no  formal  circular  of 
prices,  and  in  respect  to  advice  that  I take  it  only  from  the 
superior  officers  of  the  company. 

Q.  You  send  out  advices  to  your  sales  agents,  do  you  not? 
A.  We  have  no  sales  agents  in  this  part  of  the  country,  outside  of 
our  own  office  and  Exchange  place. 

Q.  You  send  out  advices  to  your  customers?  A.  Yes,  on  ap- 
plication; sometimes  prior  to  application. 

Q.  Now,  was  the  result  of  the  operations  of  the  year  1896  that 
you  sent  out  advices  to  your  customers  in  this  part  of  the 
country,  and  agents  in  other  parts  of  the  country,  stat- 
ing an  advance  in  the  aggregate  of  the  prices  of  the  four 
grades  of  coal  mentioned  in  my  former  question,  of  one  dollar? 
A.  Well,  I can’t  say  as  to  that,  sir;  whenever  it  appears  to  me 
that  we  can  safely  advance  the  price  of  coal  we  do  it,  and  when 
we  find  that  we  are  obliged  to  reduce  it,  we  reduce  it,  and  advices, 
acts  in  either  direction  would  be  disseminated. 


1048  [Senate, 

Q.  Mr.  Sloan  stated  that  you  mined  between  8,000,000  and  9,000,- 
000  of  tons  of  coal  during  the  year  1S96.  An  advance  of  one  dol- 
lar per  ton  would  be,  as  I figure  it,  between  $8,000,000  and  $9,000,- 
000,  if  realized.  Do  you  mean  to  be  understood  as  stating  that 
you  do  not  know  with  reference  to  so  substantial  an  amount  as 
to  whether  or  not  in  your  department  that  had  been  done?  A.  At 
the  risk  of  being  reprimanded  by  the  Chairman  for  differing  from 
the  president,  I would  wish  to  correct  his  statement  very  mate- 
rially; the  quantity  of  coal  mined  by  the  company  was  less  than 
half  the  amount  stated;  the  company  mines  about  70  per  cent, 
of  the  tonnage  which  it  markets;  the  remainder  is  purchased  from 
so-called  individual  operators;  the  company's  mining  from  its 
own  property  is,  as  I said,  less  than  half  the  quantity  stated;  the 
aggregate  quantity  of  coal  sold  by  the  company  was  about  5,000,- 
000  tons,  between  5,000,000  and  five  million  and  a half  of  the  whole 
country’s  at  large;  but  in  respect  to  the  arithmetical  calculation 
of  the  Chairman  I have  no  reason  to  impugn  one  dollar  a ton  on 
8,000,000  tons  would  be  .$8,000,000;  but  the  fact  is,  that  taking 
what  is  more  accurately  in  my  mind  the  basis  of  the  calculation, 
what  is  called  the  tidewater  market,  we  actually  realized  on  all 
the  coal  floated  in  New  Jersey  not  over  25  cents  a ton  more  than 
during  the  year  1895. 

Q.  In  the  aggregate?  A.  In  the  aggregate. 

Q.  So  that  the  fact  is  that  according  to  that,  that  while  its 
advances  were  made  they  were  not  realized?  A.  They  were  not 
realized,  and  they  were  the  advances  that  were  made,  were  tried 
to  be  made,  were  not  realized;  I don’t  think  there  has  been  a 
month  of  the  year  when  they  have  been. 

Q.  Can  you  explain  how  it  is  that  those  advances  were  not 
realized — whac  was  the  reason  for  the  failure  to  realize  their  full 


No.  40.] 


1049 


value?  A.  Well,  unregulated  competition  arising  from  different 
degrees  of  interest  on  the  part  of  the  sellers  of  coal  partly, 
mainly  in  fact. 

Q.  What  do  you  mean,  Mr.  Holden,  by  “ unregulated  compe- 
tition?” A.  Competition  not  regulated  by  rules  of  business 
prudence  and  good  sense. 

Q.  Those  rules  would  be  made  by  the  competitors  themselves? 
A.  The  fact — ■ 

Q.  But  opearting  together?  A.  Operating  coincidentally,  not 
together,  in  the  sense  of  interchangeable  authority. 

Q.  Was  the  failure  of  this  attempted  advance  in  price  due  to 
a violation — a not  observance,  more  properly  speaking — of  those 
percentages  that  you  say  were  not  adopted  finally  at  the  presi- 
dent's meeting  in  February?  A.  I can  only  venture  an  opinion 
on  that  subject. 

Q.  I am  asking  that?  A.  My  opinion  is  that  they  were  not; 
that  is  to  say,  that  the  failure  to  realize  the  desired  prices  was 
not  the  result  of  non-observance  of  any  schedule  whatever. 

Q.  Was  not  the  result?  A.  Was  not  the  result,  no,  sir. 

Q.  It  was  the  result  of  free  competition?  A.  Yes,  together  with 
other  elements,  as  for  example,  the  reduced  purchasing  of  the 
consuming  community  was  an  element  of  the  case  which  inten- 
sified the  competition  on  the  part  of  the  seller;  and  the  substi- 
tution of  other  fuels  in  different  parts  of  the  country  because  of 
that  reduced  purchasing  power,  still  further  intensified  the  com- 
petition among  the  sellers. 

By  Mr.  Bedell: 

Q.  Where  your  company  takes  the  output  of  individual  pockets, 
what  kind  of  an  arrangement  do  you  have  with  them  for  paying 


1050  [Senate, 

for  the  coal  which  you  take?  A.  Different  arrangements;  differ- 
ent arrangements. 

Q.  Well,  will  you  specify  one  arrangement?  A.  We  have  from 
the  time  the  company  was  organized  until  the  present,  we  have 
had  contracts  with  individual  producers  of  coal;  under  one  sys- 
tem we  paid  for  the  coal  laid  in  cars  at  the  breaker  a price  based 
upon  the  average  cost  of  labor  at  certain  collieries  of  our  own 
known  as  the  “ mine”  labor;  that  is  to  say,  we  pay  a miner  so 
much  a car  for  mining  coal  and  loading  it  in  that  car  in  the  mine, 
that  car  having  a certain  standard  cubical  contents;  then  the 
sum  total  of  that  divided  by  the  number  of  tons  of  market  coal 
loaded  into  the  car  is  the  price  at  the  breaker  which  forms  the 
basis  of  price  upon  which  we  pay  the  miner;  another  system  of 
purchase  we  have  is  based  upon  the  price  which  we  receive  for 
the  coal  at  tidewater;  and  another — 

Q.  What  percentage,  then,  do  you  pay  the  owner  of  the  mine? 
A.  We  pay  the — in  that  case  there  are  different  arrangements, 
and  in — some  of  this  coal  we  buy  without  any — we  do  not  have 
any  fixed  understanding — 

Q.  Well,  where  you  do  have  an  agreement  with  the  mine  owner 
to  pay  a certain  percentage  of  the  price  that  the  coal  brings  at 
tidewater,  about  what  percentage  is  that?  A.  That  percentage 
in  our  case  is  modified  by  certain  arbitrary  conditions;  for  ex- 
ample we  have  contracts  for  the  purchase  of  the  entire  product 
of  collieries  based  upon  a percentage  of  what  we  receive  our- 
selves for  certain  sizes  of  coal,  the  average,  adding  thereto  cer 
tain  arbitrary  margins  per  ton  for  different  sizes  of  coal,  the 
basis  of  ours  on  that  being  50  per  cent.;  then  I think  in  one  such 
contract  I have  in  mind  there  is  a stipulation — perhaps  it  may 
only  be  implied,  but  it  is  a fact  followed,  however,  that  if  in  case 


No.  40.] 


•1051 


that  we  are  shown  within,  between  the  first  and  fifteenth  of  the 
following  month,  that  the  price  we  are,  have  paid  for  the  months 
of  coal  producing,  is  less  or  more  than  other  operators  receive 
from  other  purchasers,  large  companies  for  example,  that  a read- 
justment will  be  made  on  the  subsequent  months. 

Q.  These  readjustments  almost  always  take  place,  do  they?  A. 
Every  month;  that  is,  they  are  very  slight,  however. 

Q.  Then  the  total  apportionment  that  the  mine  owner  receives 
from  the  selling  price  of  the  coal  is  from  fifty  to  sixty  per  cent., 
is  it  not?  A.  It  is  substantially  60  per  cent.;  that  is  to  say — 

Q.  That  would  be  a fair  estimate  to  base  most  of  the  trans- 
action on,  would  it  not,  about  60  per  cent.?  A.  I think  so;  that 
is  to  say,  it  is  a well-known  fact  that  in  the  trade,  perhaps  at  the 
time,  that  on  the  Lehigh  Valley  road,  the  Lehigh  Valley  Coal 
Company  produces  about  60  per  cent,  of  the  entire  tonnage  pass- 
ing over  the  Lehigh  Valley  railroad;  the  contracts  with  pur- 
chasers of  that  coal  provide  that  the  seller  and  producer  shall 
receive  60  per  cent,  of  the  price  realized  by  the  Lehigh  Valley 
Coal  Company  on  board  vessels  at  tidewater  for  each  separate 
size  of  coal  above  the  size  known  in  the  market;  the  refuse  sizes, 
pea  and  buckwheat  being  arranged  on  a smaller  percentage,  so 
that  that  comes  practically  to  be  the  standard  of  purchase. 

Q.  And  so  the  railroad  company,  that  is  the  transporter,  re- 
ceives 40  per  cent,  as  its  compensation  for  the  carrying  of  the 
coal  from  the  mine  to  tidewater?  A.  That  I don’t  know  any- 
thing about. ^ 

Q.  Well,  where  does  this  40  per  cent,  go?  A.  I don’t  know 
anything  about  it;  I know)  on  our  road,  in  fixing  the  rates  of  trans- 
portation we  don’t  take  that  into  account. 

Q.  But  here  is  40  per  cent,  left;  some  one  must  receive  it;  now 


1052  [Senate, 

wliat  I am  trying  to  arrive  at  is  who  does  receive  it?  A.  That  is 
not  within  my  knowledge. 

Q.  You  have  no  knowledge  on  the  subject?  A.  I have  no  knowl- 
edge on  the  subject., 

Q.  Isn’t  it  a fair  inference  that  the  railroad  company  receives 
it?  A.  That  is  an  inference  that  anybody  can  draw. 

Q.  Well,  is  it  not  a fair  inference?  A.  I should  prefer  to 
testify  to  facts  than  inferences. 

Q.  Well,  now,  Mr.  Holden,  you  are  engaged  in  the  business; 
you  represent  the  railroad  company,  do  you  pot?  A.  I do. 

Q.  And  you  have  no  knowledge  whatever  as  to  the  disposition 
of  the  40  per  cent.?  A.  The  gentlemen’s  previous  interroga- 
tory, if  he  will  pardon  me,  were  addressed  to  conditions  which  I 
had  spoken  of  as  existing  on  the  Lehigh  Valley  Railroad. 

O.  Does  it  exist  upon  your  road?  A.  I said  it  did  not;  that 
we  do  not  on  our  road;  in  fixing  the  rate  of  transportation  is  fixed 
according  to  tin?  tariff,  and  the  tariff  is  published  and  is  the  rate 
for  transportation. 

Q.  Have  you  no  contracts  with  individual  mine  owners  by 
which  your  road  pays  to  them  60  per  cent,  of  the  price  that  is 
realized  upon  the  coal  at  tidewater?  A.  Not  in  terms,  but  in 
effect. 

Q.  In  effect?  A.  In  effect  we  readjust  those  prices  when  we — 
when  they  are  found  to  be  below  what — the  rates  of  freight  re- 
ceived from  others. 

Q.  Now,  do  you  find  that  in  effect  the  mine  owner  receives  60 
per  cent.;  now  with  reference  to  your  own  individual  road, 
won't  you  please  explain  what  becomes  of  the  other  40  per  cent.? 
A.  In  our  own  individual  road  the  practice  is  that  the  40  per 
cent,  is  not  taken  into  account  as  fixing  the  rate  of  transporta- 
tion, that  is.  on  that  coal ; it  is  merged  with  the  mass  of  the  coal 


No.  40.] 


1053 


of  the  company's  own  production  and  an  arbitrary  rate  of  trans- 
portation charged  upon  the  whole. 

Q.  Who  receives  the  40  per  cent.;  where  does  it  go  to?  A. 
Well,  the  gross  receipts  of  all  of  the  business  goes  into  the  com- 
pany’s treasury. 

Q.  Yes,  and  they  pay  out  60  per  cent,  of  it  to  the  mine  owners? 
A.  Not  entirely. 

Q.  Well,  I mean  practically?  A.  I beg  to  say  in  that  respect, 
that  the  difference  between  the  coal  produced  by  the  company, 
the  coal  mined  by  the  company,  any  the  coal  purchased  by  the 
company,  the  difference  in  cost  is  very  material;  they  are  all 
merged  together,  no  distinction  made. 

Q.  I am  speaking  now  where  the  company  makes  a purchase 
from  individual  mine  owners,  and  if  there  is  any  profit,  element 
of  profit,  between  the  cost  that  the  company,  that  you  have  to 
pay  to  the  individual  mine  owner  and  the  amount  that  you  receive 
for  the  coal  at  tidewater,  your  company  gets  the  benefit  of  it? 
A.  That  coal  is  — immediately  that  coal  is  purchased  — 

Q.  Well,  is  that  the  fact?  A.  It  is  not  a fact  — immediately 
that  coal  is  purchased  it  loses  its  identity,  and  does  not  neces- 
sarily — the  tidewater,  its  tidewater  price  is  a mere  arbitrary 
basis,  and  the  coal  may  go  to  Jericho  or  Jerusalem;  it  does  not 
follow  that  it  goes  to  tidewater. 

Q.  But  the  tidewater  price  gives  the  price  which  you  pay  the 
individual  miner?  A.  In  that  respect,  yes. 

Q.  Well,  where  does  the  difference  go  — into  the  treasury  — 
A.  The  whole  proceeds  — 

Q.  Into  the  treasury  of  your  company?  A.  The  whole  pro- 
ceeds of  the  coal,  whether  tidewater  or  elsewhere,  goes  into  the 
company’s  treasury. 


1054  [Senate, 

Q.  Well,  then,  the  only  payment  that  the  company  has  to  make 
out  of  the  total  100  per  cent,  is  the  approximately  60  per  cent, 
that  it  pays  to  the  individual  mine  owner,  isn’t  that  true?  A.  It 
would  be  true  if  this  particular  business  retained  its  identity, 
which  it  does  not. 

Q.  Well,  we  will  assume  it  does  not,  but  the  fact  remains  that 
the  transaction  could  be  traced  out?  A.  It  could  not. 

Q.  Could  not?  A.  No,  sir.  , 

Q.  But  the  fact  still  remains  that  the  company  receives  100 
per  cent.,  which  is  the  selling  price,  and  it  has  to  pay  over  to 
the  mine  owner  a certain  percentage  for  the  coal;  now,  the 
balance  remains  in  the  treasury  of  the  company  even  if  you  do 
not  disconnect  it  from  the  other  transaction,  is  that  not  true? 
A.  It  remains  there  as  an  undivided  element. 

Q.  Now,  are  there  any  other  payments  that  the  company  makes 
outside  of  the  payment  to  the  individual  mine  owner?  A.  Well, 
with  every  desire  to  give  the  gentleman  all  the  information  that 
the  committee  call  for,  I respectfully  suggest  that  he  rather 
transcends  the  limits  of  the  inquiry. 

Q.  In  what  direction,  sir?  A.  In  making  an  inquiry  into  the 
company’s  affairs  with  regards  to  details  of  its  business  which 
are  not  within  the  purview  of  this  inquiry. 

Q.  Well,  it  is  not  the  desire  of  this  committee  to  in  any  way 
transcend  its  authority,  or  to  ask  questions  that  the  committee 
does  not  have  the  right  to  ask,  and  it  seems  to  me  that  that  is 
a question  that  is  pertinent  to  the  issue  here,  and  I would  repeat 
the  question,  and  I would  ask  an  answer.  (Question  read.)  A. 
Do  you  mean  to  limit  that  question  to  that  particular  coal? 

Q.  I do;  I mean  in  reference  to  the  coal  that  is  received  from 
the  individual  mine  owner?  A.  The  companvpays  out  only  whatit 


No.  40.] 


1055 


pays  for  the  coal,  and  it  pays  for  its  carriage,  the  cost  of  carriage, 
that  is  to  say,  the  cost  of  wages,  employes,  etc. 

Q.  All  that  would  go  into  the  regular  channel  of  the  expenses 
of  the  operation  of  the  company?  A.  Precisely  the  same  as  the 
coal  does. 

Q.  What  I mean  to  ask  is  whether  there  are  any  other  per- 
centages that  are  p(aid  out,  that  would  reduce  the  profit  that 
goes  to  the  carrying  company  below  the  40  per  cent.,  is  is  evident 
which  remains  in  their  hands  after  settling  with  the  individual 
mine  owner?  A.  If  I understand  the  gist  of  the  gentleman’s 
question  I should  say  no. 

Q.  That  is  what  I wish  to  arrive  at  exactly.  A.  I would  like  to 
correct  the  gentleman  in  regard  to  that  statement  in  respect  to 
60  per  cent.;  the  assumption  of  the  inquiry  implies  that  the 
amount  of  coal  purchased  of  any  given  individual  operator  is  in 
the  aggregate  transported  to  a given  point,  and  that  the  price 
received  for  it  forms  the  basis  for  this,  for  its  purchase,  which 
is  not  true;  moreover  the  constant  reference  to  60  per  cent,  being 
paid  for  that  class  of  coal  is  also  fallacious  inasmuch  as  that  60 
per  cent,  does  not  apply  to  more  than  70  to  75  per  cent,  of  the 
tonnage  purchased;  in  other  words  the  sizes  of  coal  taking  a 
lower  percentage  at  the  colliery  forms,  perhaps,  on  the  average 
25  per  cent,  of  the  total. 

Q.  Well,  I only  wanted  to  bring  out  the  fact  as  to  individual 
transactions;  that  is  to  say,  where  you  had  a transaction  with 
an  individual  mine  owner,  where  you  paid  to  him,  60  per  cent., 
we  wanted  to  trace  what  became  of  the  other  40  per  cent.  A. 
Briefly  stated,  I would  say  that  when  we  buy  coal  of  an  indi- 
vidual owner  we  buy  it  as  cheaply  as  we  can  and  get  as  much 
out  of  it  as  we  can. 


1056 


[Senate, 


By  Mr.  Mazet: 

Q.  Do  you  know  how  tlie  the  price  of  ruining  coal  is  regulated, 
the  wages  paid  to  the  miners  by  the  company, — have  you  any 
knowledge  on  that  subject?  . A.  Not  in  detail. 

Q.  Do  you  know  whether  there  is  an  organization  of  the 
miners,  and  whether  they  fix  the  price,  or  does  the  company 
determine  what  it  pays  per  ton  for  mining  coal?  A.  Well,  the 
prices  of  labor  at  the  mines  have  not  been  disturbed  for  some 
years  but  just  the  method  whereby  it  has  been  adjusted,  if  it 
has  been,  I am  really  not  informed. 

Q.  Do  you  know  this  fact, — do  you  know  whether  or  not  the 
miners,  when  the  price  of  coal  is  raised,  get  any  additional  price 
per  ton  for  the  mining  of  coal?  A.  Not  immediately. 

Q.  Do  not?  A.  Nor  have  their  wages  been  reduced  when  the 
price  of  coal  has  been  lowered. 

Q.  The  price  of  coal  does  not  affect  the  question  of  the  amount 
paid  to  the  miner.  A.  In  some  of  the  mining  regions  they  have 
what  is  known  as  the  basis  system  existing,  where  they  have 
some  sort  of  a scheme  whereby  the  price  of  coal  is  supposed  to 
have  an  effect  upon  the  wages;  it  is  not  in  vogue  in  our  region. 

Q.  There  is  no  arrangement,  then,  between  the  miners  and  the 
company  to  regulate  the  cost  of  mining?  A.  None  whatever, 
except  such  arrangements  as  have  existed  between  any  employer 
and  employe. 

Q.  I mean,  there  is  no  scale  of  prices  determined  by  the  selling 
price  of  coal?  A.  No,  sir;  not  in  our  business,  and  I do  not  know 
of  any  prevailing  in  our  region. 


Recess  until  2 o'clock. 


No.  40.] 


1057 


THURSDAY  AFTERNOON,  FEBRUARY  25,  1897,  ROOM  20, 
CITY  HALL,  NEW  YORK. 

Krenning,  Francis  H.,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  Where  do  you  reside?  A.  St.  Louis. 

Q.  Are  you  in  business  in  the  city  of  St.  Louis?  A.  Yes,  sir. 

Q.  And  have  been  for  how  long?  A.  About  10  years. 

Q.  What  is  the  nature  of  the  business  you  transact?  A.  Whole- 
sale grocer.  j 

Q.  And  during  the  time  mentioned  you  have  been  such  whole- 
sale grocer?  A.  Yes,  sir. 

Q.  Jobber?  A.  Yes,  sir. 

Q.  In  sugar,  coffee  and  the  like?  A.  Yes,  sir. 

Q.  Have  you  in  the  course  of  your  business  as  jobber  had  trans- 
actions with  the  American  Sugar  Refining  Company?  A.  Yes, 
sir. 

Q.  State  to  the  committee  when  those  transactions  commenced. 
A.  Practically  as  long  as  we  have  been  in  business,  10  years  ago. 

Q.  Directly  with  the  American  Sugar  Refining  Company?  A. 
Yes,  sir. 

Q.  Did  you  accept  what  was  known  as  the  factors’  plan  or  sys- 
tem of  doing  business?  A.  No,  sir. 

Q.  You  refused  so  to  do?  A.  Yes,  sir. 

Q.  State  whether  or  not  this  paper  that  I hand  you  is  the  sys- 
tem in  use  in  that  part  of  the  United  States  covered  by  your 
operations?  A.  Yes,  sir.  (Marked  Exhibit  No.  1,  Feb.  25th, 
p.  m.) 

Q.  That  is  the  system  of  rules  and  regulations?  A.  Yes,  sir. 

Q.  I call  your  attention  particularly  to  the  10th  clause;  it  is 


67 


1058  [Senate, 

headed  “ Instructions  to  Salesmen;  ” I read:  “ We  are  permitted 
to  sell  factors  of  the  American  Sugar  Refining  Company  at  re- 
finers’ prices  and  terms;  but  we  are  obliged  to  see  that  purchas- 
. ing  factors  maintain  full  list  price.”  A.  Yes,  sir. 

Q.  That  is  one  of  the  conditions  governing  the  business  in 
your  section  of  the  country?  A.  Yes,  sir. 

Q.  And  without  the  observance  of  which  factors’  agreement 
sugar  is  not  consigned  to  you  or  anybody  else?  A.  No,  sir. 

Q.  Now,  was  it  suggested  to  you  to  accept  this  system?  A. 
Yes,  sir. 

Q.  What  did  you  do?  A.  Refuse  to  accept  it. 

Q.  Then  what  did  the  American  Sugar  Refining  Company  do? 
A.  Shortly  after  the  factors’  system  went  into  operation,  about 
November  5th,  they  notified  their  brokers  that  we  should  pay 
nine  points  more  for  sugar  than  factors;  they  made  a deliberate 
price  on  all  their  sugar  and  the  factor  is  to  pay  the  carload  rate 
on  the  sugar,  we  to  pay  the  regular  rate,  which  made  a difference 
of  nine  points;  we  would  also  lose  3-16  rebate  which  the  factor 
gets,  making  a total  difference  of  36  points  or  about  $1.30  per 
barrel,  practically  prohibiting  us  from  buying  sugar,  as  this  was 
more  than  the  retailer  paid  for  sugar  and  more  than  the  factor 
made;  the  American  Sugar  Refining  Company  also  always  car- 
ries a “ spot-stock  ” of  sugar  in  St.  Louis;  on  this  sugar  we  made 
them  an  offer,  and  a few  days  later — 

Mr.  Lexow,  interrupting:  WThen  was  this?  A.  About  Novem- 
ber 1st. 

Q.  Of  last  year?  A.  Eighteen  hundred  and  ninety-five. 

Q.  Of  1895?  A.  Yes,  sir;  their  price  on  “ spot-sugar  ” was  4.65, 
less  a rebate  of  3-16  and  1 per  cent.,  or  4.43  net;  they  telegraphed 
their  broker — - 


No.  40.] 


1059 


Mr.  Lexow,  interrupting:  Look  at  that  document  and  state 
what  it  is?  A.  It  is  a telegram  from  the  American  Sugar  Refin- 
iug  Company  to  their  broker. 

Q.  To  the  broker  representing  them  where?  A.  St.  Louis. 

Q.  Received  by  that  broker?  A.  Yes,  sir. 

Q.  And  how  did  it  come  into  your  possession?  A.  He  pre- 
sented me  a telegram  and  I made  a copy. 

Q.  Of  the  original  telegram?  A.  Yes,  sir. 

Q.  Please  read  that  telegram.  A.  It  is  dated  November  22, 
1895.  “ Have  no  consigned  sugar  to  offer  Krenning.  Can  sell 

4 3-4  direct  shipment. 

“ THE  AMERICAN  SUGAR  REFINING  COMPANY.” 

Q.  You  swear  that  is  a true  copy  of  the  telegram  that  wan 
handed  to  you  by  the  representative  of  the  American  Sugar  Re- 
fining Company  at  St.  Louis?  A.  Yes,  sir.  (Exhibit  2,  February 
25,  1897,  p.  m.) 

Q.  As  having  been  received  by  them?  A.  Yes,  sir. 

Q.  What  then  occurred?  A.  Their  price  at  that  time  was  4.65, 
less  a rebate  of  3-16  and  1 per  cent.,  or  4.43  net;  they  then  sent 
us  the  telegram  which  I just  read  offering  to  sell  sugar  at  4.75 
direct  shipment;  add  to  this  20  cents  rate  of  freight  the  sugar 
would  have  cost  us  4.95,  or  52  cents  per  hundred  over  the  factors’ 
price;  they  also  stated  that  all  “ spot-sugars  ” must  be  sold  to 
factors  only;  about  November  20th,  we  made  another  offer  on 
sugar,  and  in  place  of  accepting  or  declining  it,  they  wired. 

Mr.  Lexow:  Look  at  this  document  and  state  whether  that  is 
a copy  of  the  telegram  that  you  received.  A.  Yes,  sir. 

Q.  Where  did  you  see  that  telegram?  A.  In  St.  Louis. 

Q.  In  whose  possession?  A.  In  the  possession  of  the  broker 
of  the  American  Sugar  Refining  Company. 


1060 


[Senate, 


Q.  And  you  made  a copy  of  that  telegram?  A.  Personally; 
yes,  sir. 

Q.  And  swear  that  the  telegram  contained  what  is  stated  in 
this  copy?  A.  Yes,  sir. 

Q.  Please  read  the  telegram. 

“ All  sugars  are  for  other  deliveries  and  all  orders  for  Kren- 
ning  & Sons  must  be  sent  to  Searles  direct. 

“ Dated  November  21,  1895. 

“ THE  AMERICAN  SUGAR  REFINING  COMPANY.” 

Q.  What  occurred  then,  Mr.  Krenning?  A.  The  broker  was 
then  instructed  not  to  consign  us  any  more  sugar  as  they  would 
not  fill  any  orders  until  we  signed  a factors’  agreement. 

Q.  From  whom  did  you  learn  that?  A.  Their  broker  told  me, 
Mr.  Hutchinson. 

Q.  Mr.  Hutchinson?  A.  Yes,  sir. 

Q.  Did  he  act  for  them?  A.  Yes,  sir. 

Q.  What  occurred  thereafter?  A.  They  tried  in  every  possible 
way  through  the  Association  of  Wholesale  Grocers  to  hinder  us 
from  getting  sugar;  they  even  placed  spies  around  our  store  to 
find  out  where  we  got  our  sugar  and  if  possible  to  cut  off  the 
supply. 

Q.  Did  you  make  any  effort  to  obtain  supplies  of  sugar  from 
any  ostensibly  competing  concern?  A.  Yes,  sir. 

Q.  From  what  concern?  A.  The  Mollenhauer  and  the  Na- 
tional. ' 

Q.  Dm  you  receive  any  communication  from  them?  A.  Yes, 
sir. 

Q.  Will  you  look  at  this  paper  and  state  what  it  is?  A.  Yes, 
sir;  it  is  a telegram  respecting  an  offer  we  made  to  Howell,  who 
represents  the  National  and  Mollenhauer  Companies. 


No.  40.] 


IO6I1 


Q.  Please  read  it. 

“ Market  unchanged.  Howell  declines  to  sell  Krenning,  any 

terms. 

“ TURNER  BROS.” 

They  are  agents  for  B.  H.  Howell  & Co.  in  this  city. 

Q.  Did  the  Mollenhauer  and  National  concern  refuse  to  sell 
you  continuously  from  that  time  on?  A.  Yes;  they  have  never 
sold  since. 

Q.  And  always  refuse  to  sell  after  you  got  into  difficulties  with 
the  American  Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  Was  there  any  reason,  Mr.  Krenning,  why  they  should  have 
tefused  to  sell  you  sugar?  A.  None  whatever,  as  we  were  al- 
w ays  on  friendly  terms. 

Q.  How  is  your  standing  as  to  credit  in  the  community?  A. 
* A.  No.  1 ” 

Q.  Illustrate.  A.  We  discount  all  our  bills. 

Q.  You  mean  by  that  that  you  pay  vour  bills  before  they  be- 
come due?  A.  No,  sir;  we  discount  seven-day  sugar  bills. 

Q.  That  is  to  say,  you  pay  cash  in  seven  days?  A.  Yes;  on  all 
goods. 

Q.  Was  any  objection  ever  made  on  account  of  your  credit  by 
the  American  Sugar  Refining  Company  or  the  Mollenhauer  or  the 
National  concern?  A.  No,  sir. 

Q.  Was  there  anything  in  the  situation  that  caused  the  Mollen- 
hauer concern  or  the  National  to  refuse  to  sell  you  on  any  terms, 
except  that  you  had  refused  to  sign  a factors’  agreement  for  the 
American  Sugar  Refining  Company?  A.  None  whatever. 

Q.  Now,  describe  how  the  factors’  agreement  results  to  the 
benefit  of  the  refiner  or  to  the  benefit  of  the  American  Sugar 
Refining  Company?  A.  They  practically  prohibit  the  jobber 
from  buying  foreign  granulated. 


1062 


[Senate, 


Q.  When  you  say  practically  prohibit,  just  explain  what  you 
mean  by  that.  A.  Some  of  the  jobbers  in  St.  Louis  shortly  after 
the  factors’  agreement  was  formed  bought  foreign  sugars,  and 
the  American  Sugar  Refining  Company  was  notified,  and  a few 
days  later  the  president  of  the  Wholesale  Grocers’  Association 
read  a letter  informing  the  jobbers  that  in  case  they  continued 
to  buy  foreign  sugars  they  would  lose  their  factorship  and  also^ 
forfeit  their  rebate. 

Q.  So  that  they  had  the  choice  between  giving  up  the  sale  of 
foreign  sugar  entirely  or  losing  their  factorship  agreement  with 
the  American  Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  And  when  you  speak  of  the  American  Sugar  Refining  Com- 
pany do  you  include  also  the  companies  known  as  the  Mollen- 
hauer  and  the  National  Company?  A.  Yes,  sir. 

Q.  So  that  the  agreement  as  to  one,  when  a factors’  agreement 
is  made,  applies  to  all?  A.  Yes,  sir. 

Q.  And  results  in  excluding  foreign  sugars  from  the  American 
market?  A.  Yes,  sir. 

Q.  Is  that  true  even  if  foreign  refined  sugars  are  offered  at 
prices  largely  below  those  which  form  the  product  of  the  Ameri- 
can Sugar  Refining  Company’s  product?  A.  Yes,  sir;  it  makes 
no  difference. 

Q.  Can  you  illustrate  by  any  instance  in  your  experience?  A. 
Well,  the  factor  plan  of  the  American  Sugar  Refining  Company 
makes  only  one  price  on  granulated  sugar;  that  is  the  Eastern 
price;  and  as  a general  thing  it  is  impossible  to  sell  “ German 
Granulated  ” at  the  same  price,  as  99  per  cent,  of  the  sugar  is 
not  as  good  as  that  of  the  American,  and  it  will,  therefore,  have 
to  be  sold  for  less  or  not  at  all;  and  as  they  have  only  one  price,, 
alone  would  prohibit  the  sale  of  the  “ German  Granulated.” 


No.  40.] 


106a 


Q.  Have  you  known  of  cases  when  the  imported  sugar  ruled, 
so  far  as  offering  prices  wras  concerned,  as  low  as  one-half  a cent 
per  pound  less  than  the  price  of  the  American  Sugar  Refining 
Company’s?  A.  Yes,  sir. 

Q.  Yet  it  was  still  entirely  excluded  from  the  American  mar- 
ket under  the  operation  of  this  agreement?  A.  Yes,  sir;  quite 
often. 

Q.  Do  you  mean  by  that  that  it  is  a general  situation?  A.  Yes, 
sir.  ! 

Q.  After  you  had  positively  declined  to  execute  any  factors’ 
agreement  did  you  have  trouble  in  securing  sugars?  A.  Yes,  sir. 

Q.  What  is  the  difficulty  in  the  way  of  securing  sugar?  A.  We 
had  to  resort  mostly  to  foreign  sugars,  because  the  principal 
refiners  of  the  United  States  would  not  sell  us  at  any  price. 

Q.  Is  your  territory,  St.  Louis,  included  within  the  territory 
of  the  Southern  Wholesale  Grocers’  Association?  A.  No,  sir;  I 
think  not;  the  grocers  of  St.  Louis  worked  under  an  association 
of  the  State  of  Missouri. 

Q.  Are  jobbers  operating  under  factors’  agreement  permitted 
to  sell  sugar  to  you?  A.  No,  sir. 

Q.  Because  you  have  no  agreement?  A.  Yes,  sir. 

Q.  Not  having  an  agreement?  A.  No,  sir. 

Q.  Is  there  a difference  in  the  price  between  sugar  sold  in  the 
St.  Louis  market,  or  in  that  vicinity,  and  the  price  of  the  Eastern 
sugar?  A.  Do  you  mean  sugar  made  in  Louisiana  by  the  Ameri- 
can Sugar  Refining  Company? 

Q.  Yes,  sir.  A.  Yes,  sir. 

Q.  That  is  to  say,  the  product  manufactured  by  the  American 
Sugar  Refining  Company  in  Louisana  has  a different  price  from 
the  product  manufactured  in  the  Eastern  district  by  the  same 
company?  A.  Yes,  sir. 


1061  [Senate, 

Q.  What  is  the  difference?  A.  The  difference  varies;  during 
the  grinding  season  of  the  Louisiana  crop  — probably  the  months 
of  November,  December  and  January  — the  price  is  very  often 
a quarter  of  a cent  lower  than  the  same  sugar  made  in  the  East. 

Q.  How  does  that  come  about?  A.  The  American  Sugar  Re- 
fining Company  tries  to  market  that  crop  just  as  quickly  as  pos- 
sible and  makes  a lower  price,  practically  shutting  out  the 
Eastern  granulated  sugar  from  St.  Louis  and  similar  markets. 

Q.  That  is  to  say,  during  the  grinding  season,  in  the  territory 
in  which  the  Southern  crop  of  this  country  is  produced,  the  price 
is  cheaper?  A.  Yes,  sir. 

Q.  At  the  time  when  the  crop  comes  into  the  market?  A.  Yes, 
sir. 

Q.  And  after  the  crop  has  come  into  the  market  and  has 
been  bought  up,  what,  then,  is  the  effect  or  result?  A.  The 
price  is  generally  advanced  very  promptly,  making  only  a slight 
difference  between  the  Eastern  and  the  Southern  price. 

Q.  Do  you  know  of  any  attempt  having  been  made  by  the 
American  Sugar  Refining  Company  to  exclude  the  Louisiana 
planters’  sugar  from  sale  by  factors?  A.  Yes,  sir;  they  did;  they 
excluded  planters’  sugars  just  the  same  as  imported  sugars;  that 
is  the  granulated. 

Q.  The  sugar  that  competes  with  their  sugar  as  granulated 
sugar?  A.  Yes,  sir. 

Q.  In  what  way?  A.  By  simply  only  having  one  price  on 
sugar;  and  as  the  “ Plantation  Granulated  ” is  much  inferior,  it 
cannot  be  sold  at  the  same  price. 

Q.  Are  factors  permitted  to  deal  in  the  granulated  sugars  of 
the  Louisiana  planters?  A.  In  1896  they  were  brought  together, 
all  together;  but  in  1897  they  were  allowed  to  handle  them  under 
certain  restrictions. 


No.  40.] 


1065 


Q.  A year  ago?  A.  This  year. 

Q.  The  last  two  years?  A.  During  the  grinding  season. 

Q.  What  is  the  grinding  season?  A.  During  the  grinding 
months. 

Q.  That  is  from  the  middle  of  November?  A.  The  months  of 
November,  December  and  January. 

Q.  In  1896  the  planters’  sugars  were  excluded?  A.  Yes,  sir. 

Q.  That  is  to  say,  the  factors  were  not  permitted  to  sell  plant- 
ers’sugars?  A.  Except  at  the  same  price  as  the  best  granulated, 
which  it  was  impossible  to  do. 

Q.  And  this  year,  what  is  the  system?  A.  They  are  allowed  to 
sell  them  at  six  points  less  than  the  standard  granulated. 

Q.  Could  they  sell  them  on  that  basis?  A.  Only  to  a small 
extent. 

Q.  Has  the  price  of  Louisiana  product  been  increased  within 
the  last  year?  A.  Do  you  mean  the  price?  I don’t  know. 

Q.  The  price  of  sugar,  of  the  Louisiana  product?  A.  No,  sir; 
the  price  is  lower  than  it  was  last  year;  all  sugars  are  lower. 

Q.  Was  the  price  increased  year  before?  A.  Yes,  sir. 

Q.  How  many  points?  A.  I don't  remember. 

Q.  Was  the  price  increased  nineteen  points?  A.  There  was 
an  advance  of  nineteen  points  on  Louisiana  sugar  about  two 
weeks  ago  without  any  corresponding  increase  in  the  “ raws.” 

Q.  Without  any  corresponding  advance  on  the  raw  material? 
A.  No,  sir. 

By  Hr.  McCarren : 

Q.  Why  did  you  refuse  to  become  a factor?  A.  I did  not  think 
it  was  a right  way  of  doing  business;  it  stifled  competition. 

Q.  In  what  way  would  it  stifle  competition?  A.  Well,  the 


1066  [Senate, 

jobbers  were  compelled  to  make  tbe  same  price  on  sugars;  and 
it  practically  puts  the  control  in  a gigantic  monopoly,  a trust, 
a combination;  after  they  do  that  they  can  do  as  they  wish  and 
they  generally  do. 

Q.  How  long  have  you  been  in  business?  A.  Ten  years. 

Q.  You  testified  that  the  factors  were  not  permitted  to  buy 
foreign  sugars  and  sell  them  at  a lower  price  than  the  sugars 
of  the  American  Sugar  Refining  Company?  A.  Yes,  sir. 

Q.  And  also  that  the  factors  had  to  choose  between  selling 
American  Sugar  Refining  Company’s  product  and  the  foreign 
product?  A.  Yes,  sir. 

Q.  Do  you  know  of  an  instance  where  the  factor  chose  to  sell 
the  foreign  product  instead  of  the  product  of  the  American  Sugar 
Refining  Company?  A.  No,  sir. 

Q.  No  instance?  A.  No,  sir. 

Q.  You  so  state?  A.  Yes,  sir.  ; 

By  Mr.  Lexow: 

Q.  You  mean  that  the  American  seller  would  rather  handle 
the  American  product  than  the  foreign  product?  A.  Yes;  it  is 
easier  for  him  to  handle  the  American  product. 

By  Mr.  McCarren: 

Q.  You  also  stated  that  the  foreign  sugar  was  sold  at  a lower 
price  than  the  American  sugar  because  of  the  inferiority  of  the 
foreign  product.  A.  No;  not  altogether  that;  it  is  somewhat  in-/+ 
ferior;  some  brands. 

Q.  I am  speaking  of  granulated.  A.  Yes;  granulated  is  some- 
what inferior. 

Q.  The  foreign  product  is  inferior.  A.  To  the  German. 


No.  40.] 


1067 


Q.  You  say  foreign.  A.  There  is  a “ Dutch  granulated  ” which 
is  as  good  as  the  American. 

Q.  Do  you  know  of  any  instance  where  an  offer  was  made  to 
sell  the  Dutch  granulated  at  a lower  price  than  the  American 
product?  A.  Yes,  sir.  < 

Q.  Is  the  Dutch  granulated  as  good  as  the  American  granm 
lated?  A.  Yes,  sir. 

Q.  Is  the  Dutch  the  standard?  A.  It  is  the  best  foreign  sugar 
made. 

I 

By  Mr.  Lexow: 

Q.  Is  it  the  standard  for  judging  of  sugars?  A.  I don’t  exactly 
understand  you. 

Q.  Do  you  judge  of  the  purity  of  sugar  according  to  the  Dutch 
standard?  (No  answer.) 

By  Mr.  McCarren : 

Q.  That  is  the  crude  sugar?  A.  Crude  sugar;  yes,  sir. 

Q.  Can  you  explain  to  the  committee  why  it  is  that  the  foreign 
sugar  refiner  is  enabled  to  sell  a product  equally  as  good  as  the 
American  sugar  at  a lower  price?  A.  Because  he  is  satisfied 
with  a smaller  margin  than  the  American  Sugar  Refining  Com- 
pany. 

Q.  Does  the  question  of  labor  that  enters  into  the  product  have 
anything  at  all  to  do  with  it?  A.  I have  made  inquiry  and  I 
find  that  the  European  laborer  is  paid  just  as  well  as  the  ordinary 
laborer  in  America;  I am  speaking  about  ordinary  labor,  not 
presidents  and  secretaries. 

Q.  Where  did  you  get  your  information?  A.  I was  in  New 
Orleans,  and  also  made  some  inquiries  around  here  last  year. 


1068  [Senate, 

Q.  From  whom  did  you  get  that  information?  A.  The  people 
connected  with  the  sugar  business. 

Q.  They  told  you  that  foreign  labor  in  sugar  refineries  was 
paid  as  high  a rate  of  wages  as  labor  in  the  American  Sugar 
Refining  Company’s  factories?  A.  The  common  labor. 

Q.  Do  you  know  the  wages  of  foreign  labor  in  the  foreign  sugar 
refineries?  A.  They  get  in  the  neighborhood  of  a dollar  a day. 

Q.  Do  you  know  what  wages  unskilled  workmen  receive  from 
the  American  Sugar  Refining  Company?  A.  I was  told  in  New 
Orleans  that  it  was  13  cents  an  hour,  or  a dollar  and  four  cents 
a day. 

Q.  Do  you  know  what  it  is  in  the  east?  A.  No,,  sir. 

By  Mr.  Lexow: 

Q.  Do  you  know  whether  it  is  12J  cents  per  hour?  A.  No,  sir; 
I couldn’t  tell. 

By  Mr.  McCarren: 

Q.  Do  you  sell  sugar  now?  A.  Yes,  sir. 

Q.  Where  did  you  get  it?  A.  Mostly  foreign  sugars;  also  a 
few  sugars  from  a certain  small  refinery  in  the  South. 

Q.  A certain  small  refinery  in  the  South?  A.  Yes,  sir. 

Q.  What  brand  do  you  buy  from  that?  A.  Generally  called 
“ plantation  granulated.” 

Q.  How  does  that  compare  in  grade  with  the  product  of  the 
American  Sugar  Refining  Company?  A.  Always  compares  very 
favorably,  as  a general  thing,  but  the  goods  are  not  as  good; 
this  brand  compares  favorably  with  any  brand  made  in  Louisi- 
ana by  that  company. 

Q.  It  is  inferior?  A.  As  a general  thing  plantation  granulated: 


is  inferior. 


No.  40.] 


1069 


By  Mr.  Lexow: 

Q.  But  in  this  particular  case  it  is  about  the  same?  A.  Yes, 

sir. 


By  Mr.  McCarren. 

Q.  What  do  you  pay  for  your  sugars  now?  A.  Do  you  mean 
foreign  sugar? 

Q.  Any  sugar  that  you  buy.  A.  That  is  different. 

Q.  Answer  it  differently.  A.  For  instance,  for  a sugar  equal  in 
quality  to  that  manufactured  by  the  American  Sugar  Refining 
Company  we  pay  nearly  the  same  price  as  the  price  of  the  Ameri- 
can product,  probably  a trifle  less. 

Q.  What  do  you  mean  by  saying  nearly  as  much  and  probably 
a trifle  less?  A.  It  is  not  a material  difference. 

Q.  It  is  practically  the  same?  A.  Yes,  sir. 

Q.  Then,  so  far  as  competition  between  the  American  Sugar 
Refining  Company  and  the  company  or  companies  from  which 
you  buy  your  sugar  now  is  concerned,  so  far  as  you  are  finan- 
cially concerned,  there  is  no  benefit  to  you  at  all;  so  far  as  the 
price  that  you  now  pay  to  outside  refiners  is  concerned  and  that 
which  you  would  pay  to  the  American  Sugar  Refining  Company, 
you  practically  derive  no  benefit?  A.  By  buying  outside? 

Q.  Yes,  sir.  A.  No,  sir. 

Q.  No  benefit?  A.  No,  sir. 

Q.  Then  do  you  consider  that  you  are  at  a disadvantage  in  not 
being  able  to  deal  with  the  American  Sugar  Refining  Company? 
A.  Yes,  sir. 

Q.  In  what  way?  A.  The  other  sugars  can  only  be  had  during 
a few  months  in  the  year. 

Q.  How  long  did  you  say  that  you  were  in  the  grocery  business? 
A.  Ten  years. 


1070 


[Senatb. 


Q.  I understood  you  to  say  that  it  was  in  October  or  November, 
1895,  that  the  American  Sugar  Refining  Company  refused  to 
consign  you  sugar?  A.  Yes,  sir. 

Q.  That  was  about  18  months  ago?  A.  Yes,  sir;  just  about. 

Q.  Prior  to  that  time  you  had  been  eight  years  and  a half 
in  the  grocery  business?  A.  Yes,  sir. 

Q.  Can  you  give  an  approximate  idea  of  the  amount  that  you 
sold  yearly  during  those  eight  years  and  a half?  A.  I don’t 
know  exactly  how  many  barrels  we  sold  each  year. 

Q.  Where  did  you  get  your  sugar  from  prior  to  that?  A» 
From  the  American,  the  Mollenhauer,  the  National,  the  Spreck- 
els  and  the  Franklin. 

Q.  In  how  many  barrel  lots?  A.  Oh,  1,000  or  2,000  barrels,  100 
barrels,  200  barrels — just  as  the  market  warranted. 

Q.  Did  you  sell  several  thousand  barrels  every  year?  A.  Yes, 
sir. 

Q.  Can  you  give  an  approximate — 9,000  to  10,000?  A.  We 
have  sold  as  high  as  50,000  barrels. 

Q.  In  one  of  the  years  prior  to  October,  1895?  A.  Yes,  sir; 
prior  and  since. 

Q.  Have  you  sold  just  as  large  an  amount  since  October,  1895, 
as  you  did  prior  to  that  time?  A.  Yes,  sir. 

Q.  Your  trade  has  not  fallen  off  in  any  respect?  A.  Our  trade 
has  increased  somewhat;  we  make  greater  efforts  than  ever  be- 
fore. 

Q.  And  that  increase  is  due  to  greater  efforts?  A.  Yes,  sir. 

Q.  Have  you  extended  your  stores  or  increased  them?  A.  Yes, 
sir. 

Q.  And  the  price  to  you  as  a wholesale  buyer  has  been  compara- 
tively the  same?  A.  How  do  you  mean? 


No.  40.] 


1071', 


Q.  I mean  that  you  hare  paid  about  the  same  for  your  sugars 
that  you  did  prior  to  October,  1895;  you  just  stated  a moment 
ago  that  the  difference  between  the  price  of  the  American  Sugar 
Refining  Company  and  the  price  of  the  sugar  of  the  companies 
from  which  you  now  buy  was  comparatively  the  same;  that  there 
was  no  difference?  A.  Just  at  present  during  the  grinding  sea- 
son of  the  Southern  sugars. 

Q.  What  would  be  the  difference  in  price  during  the  non-grind- 
ing season?  A.  We  just  take  our  luck;  we  get  American  sugars 
unless  we  can  get  the  imported. 

Q.  In  taking  your  luck  how  do  you  fare  in  getting  American 
sugar?  A.  Well,  during  the  winter  months  we  fare  fairly  well. 

Q.  That  is  the  grinding  season;  I am  trying  to  fix  in  your  mind 
that  I want  to  get  some  notion  of  your  trade  outside  of  that? 
A.  We  then  handle  mostly  imported  sugars. 

Q.  I understood  you  to  say  that  it  was  because  you  couldn’t 
get  American  sugar?  A.  Yes,  sir. 

Q.  Do  you  get  any  American  sugar  outside  of  the  grinding 
season  at  all  outside  this  certain  refiner  that  you  spoke  of?  A. 
No,  sir. 

Q.  None  outside  of  that?  A.  Very  little;  very  little* 

Q.  Have  you  at  any  time  since  October,  1895,  ever  found  it 
difficult  to  supply  your  trade?  A.  At  times;  yes,  sir. 

Q.  You  have  received  orders  that  you  could  not  fill?  A.  No, 
sir;  we  have  always  been  able  to  fill  them. 

Q.  And  you  have  been  making  a greater  profit  in  some  in- 
stances than  you  would  have  made  if  you  had  been  dealing  with 
the  American  Sugar  Refining  Company?  A.  Well,  I don’t  think 
the  profit  has  been  any  larger. 

Q.  Been  about  the  same?  A.  About  the  same,  probably;  I 


1072  [Senate, 

cannot  state  exactly  the  difference;  it  depends  greatly  on  how 
the  market  goes,  because  in  buying  European  sugars  at  four 
months  we  take  the  risk  of  the  market  during  that  time. 

Q.  Profits  have  been  the  same?  A.  Last  year  at  the  com- 
mencement of  the  season  there  was  a large  profit  in  the  imported, 
but  at  the  end  of  the  season  there  was  no  profit  because  the  mar- 
ket went  down,  and  at  the  commencement  the  market  went  up. 

Q.  Then,  so  far  as  you  are  personally  concerned,  you  have  no 
grievance  against  the  American  Sugar  Refining  Company  be- 
cause of  a financial  loss,  have  you?  A.  No;  so  far  as  we  are 
concerned  personally  I don’t  think  that  we  have  suffered  much. 

Q.  What  was  your  purpose  in  coming  here  to  testify?  A. 
Just  to  show  the  way  they  are  trying  to  prohibit  foreign  sugars 
being  handled  in  this  country,  and  by  that  operation  to  get  a 
tremendous  profit  on  their  sugar;  in  order  to  show  how  they  try 
to  prevent  the  sale  of  foreign  sugar. 

Q.  In  order  to  show  how  they  try  to  prevent  the  sale  of  foreign 
sugar  and  how  unsuccessful  they  are  in  the  attempt?  A.  They 
are  not  unsuccessful. 

Q.  Are  you  not  an  illustration  of  the  unsuccess  of  the  attempt 
of  the  American  Sugar  Refining  Company  to  interfere  with  the 
trade  of  a grocer  outside  of  those  who  accept  the  factors’  agree- 
ment? A.  They  have  1,800  factors  and  we  are  about  the  only 
ones  outside,  so  they  have  been  pretty  successful. 

Q.  You  are  a living  illustration  of  the  unsuccessful  attempt  of 
the  American  Sugar  Refining  Company  to  injure  your  trade?  A. 
Yes,  sir. 

Q.  And  there  are  1,800  factors  operating  this  system  whereby 
the  American  Sugar  Refining  Company,  the  Mollenhauer  and  the 
National  distribute  their  product  as  against  you,  the  sole  exam- 


No.  40.]  1073 

pie  of  one  who  distributes  without  a factors’  agreement?  A. 
I think  that  is  about  the  number,  1,000  or  1,800. 

By  Mr.  Lexow: 

Q.  You  said  something  in  regard  to  preserving  your  independ- 
ence as  a business  man;  does  that  operate  in  refusing  to  under- 
take the  terms  and  conditions  of  the  factors’  agreement?  A. 
Yes,  sir.  .. 

Q.  You  refused,  with  other  words,  to  be  made  one  of  the  ma- 
chinery whereby  the  sugar  interests  of  the  whole  United  States 
are  controlled  by  a company  or  a syndicate  of  companies?  A. 
Yes,  sir. 

Q.  Have  you  had  similar  experiences  because  of  a refusal  to 
undertake  factors’  agreements  in  the  coffee  business  and  in  the 
tobacco  business?  A.  Yes,  sir. 

Q.  Have  you  invariably  refused  to  accept  factors’  agreements, 
both  as  to  the  sale  of  coffee  and  the  sale  of  tobacco?  A.  We 
have  refused  to  comply  with  the  conditions  which  they  ask  and 
they  have  taken  the  agreement  away  from  us. 

By  Mr.  McCarren: 

Q.  Was  that  a coffee  concern?- 

Mr.  Lexow. — And  tobacco? 

A.  Yes,  sir. 

Q.  So  that  you  stand  substantially  on  a par  with  reference  to 
this  class  or  system  of  factors’  agreement.  A.  Yes,  sir. 

By  Mr.  McCarren: 

Q.  Isn’t  vour  chief  object  in  coming  here  and  giving  your 
testimony  for  the  purpose  of  showing  that  you  want  to  maintain 


68. 


1074  [Senate, 

jour  independence  as  an  individual  wholesale  dealer?  A.  We 
want  to  maintain  that  at  all  hazards. 

Q.  You  have  been  successful  in  doing  it?  A.  Yes,  sir;  so  far. 

By  Mr.  Lexow: 

Q.  Is  there  anything  in  the  situation  developed  under  this 
system  that  indicates  that  you  will  not  be  able  to  maintain  your 
independence  permanently?  A.  If  there  should  be  any  change  in 
the  tariff,  such  as  putting  a larger  duty  on  foreign  sugars,  we 
would  be  obliged  to  get  out  of  business  or  sign  a factors’  agree- 
ment. 

\ \ 

By  Mr.  McCarren: 

Q.  Explain  that,  please.  A.  If  a higher  duty  is  put  on  refined 
sugars  it  will  practically  shut  out  the  European  article. 

By  Mr.  Lexow: 

Q.  And  then  you  would  have  to  submit  to  the  terms  of  the 
factors’  agreement  and  abandon  your  independence  as  a business 
man  or  go  out  of  the  wholesale  grocery  business?  A.  Yes,  sir. 

By  Mr.  McCarren : 

Q.  Have  you  known  any  such  condition  as  you  have  outlined 
to  exist  in  this  country  at  any  time?  A.  What  do  you  mean? 

Q.  Such  a condition  as  that  pictured  by  you — a condition  that 
would  compel  you  to  go  out  of  business  in  the  event  of  the 
happening  of  certain  things  with  reference  to  the  tariff;  has  any 
such  condition  ever  existed  up  to  the  present  time?  A.  Not  that 
I know  of. 

Q.  Then,  why  do  you  anticipate  that?  A.  I don’t  anticipate 
it;  I simply  said  if. 


No.  40.] 


107^ 


Mr.  McCarren  (interrupting). — If  the  clouds  should  fall  they 
wouldn’t  be  above  us. 

By  Mr.  Lexow: 

Q.  With  other  words,  if  I understand  you,  unless  it  were  for 
the  fact  that  you  are  able  to  buy  imported  sugars  you  would  not 
be  able  to  undertake  the  business  of  sugar  broker?  A.  Yes,  sir. 

Q.  And  anything  that  would  exclude  you  now  from  the  pur- 
chase of  foreign  sugar  would  make  it  necessary  for  you  to  either 
bind  yourself  under  a factors’  agreement  or  quit  the  business? 
A.  Yes,  sir. 

By  Mr.  McCarren : 

Q.  Are  you  generally  in  favor  of  selling  foreign-made  articles 
in  preference  to  American-made  articles?  A.  No,  sir. 

Q.  Would  you  sacrifice,  to  the  extent  of  paying  a fractionally 
higher  price  for  the  American  article,  in  order  to  sell  that  in 
preference  to  a foreign  article?  A.  Certainly. 

Q.  Then  why  don’t  you  do  it  in  this  instance?  A.  Can’t  get  it. 

Q.  Can’t  you  get  it  if  you  comply  with  certain  conditions  and 
requirements?  A.  If  we  sign  a factors’  agreement  we  can. 

Q.  If  it  were  made  apparent  to  you  that  it  would  be  necessary 
to  maintain  and  employ  American  labor  that  you  should  sign  the 
factors’  agreement,  would  you  sign  it?  A.  If  necessary. 

Q.  You  would  sign  it  if  it  were  made  apparent  to  you  that  it 
would  promote  the  employment  of  American  labor?  A.  If  you 
put  it  to  me  that  way;  if  it  would  help  the  American  laborer. 

Q.  Don’t  you  think  it  would  tend  to  employ  foreign  labor  if  all 
the  refined  sugar  made  in  other  countries  had  the  preference  in 
this  port  in  competition  with  the  American  article?  A.  Sugar 
can  be  made  just  as  cheap  in  America  as  elsewhere. 


1076  [Senate, 

Q.  Have  you  ever  been  in  the  sugar  refining  business?  A. 
No,  sir. 

Q.  How  do  you  know  about  that?  A.  I have  heard  it  said 
by  refiners. 

Q.  Do  you  believe  everything  that  you  hear?  A.  No,  sir. 

By  Mr.  Lexow: 

Q.  You  consider  the  signing  of  a factors’  agreement  substan- 
tially the  surrender  of  your  independence  as  a business  man?  A. 
Yes,  sir.  < 

Q.  And  you  would  sacrifice  rather  than  surrender  that  inde- 
pendence? A.  Yes,  sir. 

By  Mr.  McCarren: 

Q.  He  testified  the  other  way.  A.  Not  at  all. 

Q.  On  certain  conditions  you  said  that  you  would  be  willing 
to  sign  a factors’  agreement.  A.  If  it  were  necessary  to  keep 
American  labor  employed. 

Q.  In  that  case  you  would  be  willing?  A.  If  that  could  be 
proven. 

By  Mr.  Lexow: 

Q.  But  you  refuse  to  sign  for  the  purpose  of  maintaining  con- 
trol in  the  hands  of  a few  of  the  whole  sugar  product  of  the 

United  States?  A.  Yes,  sir. 

^ . ■ " 

EXHIBIT  No.  1,  FEBRUARY  25,  189'T,  P.  M. 


INSTRUCTIONS  TO  SALESMExt. 

Dear  Sir. — On  and  after  June  1st  each  and  every  sale  of  refined 
sugar  must  be  made  strictly  according  to  the  equality  plan  and 
in  accordance  with  the  refiners’  rules. 


No.  40.] 


107T 


1st.  All  orders  for  sugar,  whether  taken  by  a salesman  or 
sent  direct  by  customers  by  mail,  telephone,  telegraph  or  other- 
wise, shall  and  must  be  billed  at  the  price  ruling  at  the  hour  and 
minute  of  time  the  order  is  so  taken  or  sent. 

You  will  notice  that  under  this  rule  you  cannot  name  a price 
for  sugar,  but  that  it  will  be  at  the  market,  whatever  it  may  be, 
at  the  minute  the  order  is  taken  by  you  or  sent  direct  to  the 
house  by  the  customer.  You  will  state  on  each  order  the  exact 
hour  and  minute  at  which  it  is  taken  and  it  will  be  priced  accord- 
ingly. There  is  no  objection  to  your  putting  the  equality  price 
on  the  order,  but  in  all  cases  it  is  subject  to  revision  should  a 
change  in  the  market  have  taken  place  between  the  time  of  your 
last  advice  and  the  time  the  order  itself  was  taken.  We  shall 
continue  to  advise  you  of  changes  in  the  market  as  heretofore, 
giving  you  the  exact  hour  and  minute  of  time  at  which  any 
change  may  take  place;  but  in  taking  orders  you  must  in  all  cases 
remember  the  fact  that  the  market  may  have  changed  without 
your  having  received  an  advice,  and  that  in  all  cases  your  price 
is  subject  to  revision.  The  refiners’  rules  are  absolute  in  this 
respect  and  cannot  be  varied  under  any  circumstances  whatever. 
In  case  your  customers  send  orders  direct  to  the  house,  either  by 
mail,  telegraph,  telephone  or  otherwise,  they  should  in  all  cases 
date  their  order  with  the  hour  and  minute  of  time.  Please 
explain  this  to  them  thoroughly;  it  is  a matter  in  which  we  have 
not  the  slightest  discretion,  and  must  be  exactly  followed  out  to 
the  letter. 

2d.  The  cartage  allowance  of  five  cents  per  barrel  may  be 
allowed  in  jobbing  towns,  as  heretofore.  For  a list  of  such  towns 
in  your  territory,  if  you  are  not  thoroughly  informed,  write  us 
at  once. 


1078  [Senate, 

3d.  Under  no  circumstances  are  you  allowed  to  take  an  order 
for  sugars  to  be  billed  at  a future  date.  All  orders  taken  to  be 
filled  at  a future  date  must  be  billed  on  the  day  order  is  received, 
and  at  the  price  ruling  the  hour  and  minute  the  order  is  taken. 

4th.  Sugars  must  not  be  sold  on  longer  time  than  thirty  days, 
nor  with  a greater  discount  than  1 per  cent,  for  cash  within  ten 
days  sharp  from  date  of  invoice. 

5th.  All  sugars  must  be  billed  by  us  on  invoices  separate  from 
other  goods,  on  which  invoices  the  terms  will  be  plainly  printed 
or  stamped,  and  the  hour  at  which  the  sale  was  effected  will  be 
noted  on  the  invoice. 

6th.  On  sales  of  100-barrel  lots  or  more,  which  are  sold,  charged 
and  billed  to  one  purchaser,  at  one  time,  a trade  discount  of  1 per 
cent,  will  be  allowed. 

7th.  No  shipment  will  be  made  without  a bona  fide  order.  Any 
shipment  made  or  order  taken  on  account  of  any  anticipated 
change  in  price  will  be  considered  by  the  refiners  and  by  us  as  a 
direct  violation  of  the  factor  plan  of  selling  sugars. 

8th.  We  are  not  permitted  to  consign  sugars  to  any  point  what- 
ever, and  cannot  do  so  under  any  circumstances.  This  practice 
is  expressly  prohibited. 

9th.  All  refined  sugars  must  be  graded  and  sold  on  the  basis 
of  refiners’  New  York  card  price  for  corresponding  grade,  except- 
ing in  that  portion  of  the  country  tributary  to  and  rates  upon 
New  Orleans,  where  the  card  price  of  the  American  Sugar  Refin- 
ing Company,  of  New  Orleans,  shall  govern. 

10th.  We  are  permitted  to  sell  factors  of  the  American  Sugar 
Refining  Company  at  refiners’  prices  and  terms,  but  we  are 
obliged  to  see  that  purchasing  factors  maintain  full  list  prices. 

11th.  In  making  bids  for  the  supply  of  either  national,  State, 


No.  40.] 


1079 


county  or  city  institutions,  we  are  permitted  to  name  a net  cash 
price,  which  is  the  equality  price,  less  1 per  cent,  in  less  than  100- 
barrel  lots,  or  less  1 per  cent.,  and  1 per  cent,  in  lots  of  100  barrels 
or  more.  Bear  in  mind  that  this  is  a net  cash  price,  and  that 
the  public  institutions  in  remitting  for  the  invoice  shall  not  be 
allowed  to  deduct  a cash  discount.  If  the  institution  referred  to 
above  is  located  at  a jobbing  point  outside  the  limits  of  the  city 
where  the  jobber  making  the  bid  is  located,  a further  allowance 
of  five  cents  per  barrel  drayage  may  be  allowed ; but  this  allow- 
ance shall  only  be  deducted  from  the  face  of  the  invoice,  and 
not  from  the  price  at  which  the  bid  is  made. 

12th.  In  selling  sugars  you  will,  as  heretofore,  add  the  rate  of 
freight,  as  per  equality  rate  book,  to  the  New  York  price  card, 
whether  the  purchaser  is  located  on  or  off  the  railroad.  If  he  is 
situated  off  the  railroad  he  must  be  sold  at  the  rate  given  for  the 
nearest  regular  shipping  point,  and  from  his  invoice  we  will 
deduct  the  lowest  local  rate  of  freight  allowed. 

13th.  Where  sugars  are  shipped  in  carloads,  shipment  being 
made  direct  from  the  refiners,  our  invoices  will,  in  every  case,  be 
dated  the  date  the  sugar  is  shipped  from  the  refinery. 

It  is  essential  that  every  point  in  these  rules  that  we  have 
given  you  above  be  carefully  noted  and  studied  by  you  and 
thoroughly  understood,  as  ignorance  of  the  rules  will  not  excuse 
errors. 

These  rules  have  been  made  by  the  refiners,  and  as  far  as  our 
house  is  concerned  they  must  be  implicitly  obeyed. 

Respectfully  yours, 


1080  [ Senate,. 

ROOM  20,  CITY  HALL,  NEW  YORK,  FEBRUARY  25,  1897r 
2.30  P.  M. 

Wisner,  Clinton  W.,  being  duly  sworn,  testified  as  follows: 
Examined  by  Mr.  Bedell: 

Q.  Where  do  you  reside?  A.  In  Warwick,  N.  Y. 

Q.  Are  you  connected  with  the  Stevens  Coal  Company  of  West 
Pittson,  Pa.?  A.  Yes,  sir;  I am  its  vice-president  and  treasurer.. 

Q.  Your  company  is  known  as  an  individual  operator?  A.  Yes, 

sir.  , j ;j  ■ 

Q.  By  that  term,  what  do  you  mean?  A.  The  coal  roads,  many 
of  them,  are  also  operators;  and  those  companies  not  connected 
with  the  road  are  known  as  individual  operators. 

Q.  That  is  the  character  of  you  company?  A.  Yes,  sir. 

Q.  What  proportion  of  the  entire  output  of  anthracite  coal 
does  your  company  produce?  A.  I could  not  say  what  propor- 
tion our  company  produces;  the  proportion  that  individual  oper- 
ators produce  is  about  20  per  cent,  of  the  entire  output  of  anthra- 
cite. 

Q.  And  the  mines  that  are  controlled  by  the  railroad  compa- 
nies produce  the  other  80  per  cent.?  A.  Yes,  sir. 

Q.  Do  these  individual  operators  own  the  lands  or  do  they 
operate  under  a lease?  A.  I think,  as  a rule,  they  are  leased  and 
operate  under  a “ Royalty.” 

Q.  About  how  many  men  do  you  employ  in  your  coal  company? 
A.  I think  about  400. 

Q.  What  is  the  basis  of  payment  to  these  men?  A.  Do  you 
mean  the  miners? 

Q.  Yes,  sir.  A.  They  are  paid  in  different  ways;  some  by 
“ yardage  ” and  others  by  “ cars.” 


No.  40.] 


1081 


Q.  By  cars?  A.  So  much  a car. 

Q.  Containing  a specific  amount  of  coal?  A.  So  many  cubia 
feet;  yes,  sir. 

Q.  To  whom  do  you  sell  your  coal?  A.  We  sell  our  coal  to  the 
Lehigh  Valley  Coal  Company. 

Q.  Under  contract?  A.  Yes,  sir. 

Q.  Generally,  what  are  the  terms  of  that  contract?  A.  Our 
contract  is  similar  to  that  of  most  individual  operators;  that  is, 
the  operator  gets  60  per  cent,  of  what  the  coal  brings  at  tide- 
water and  the  railroads,  or  the  company,  that  we  sell  it  to,  gets 
the  balance,  40  per  cent. 

Q.  That  40  per  cent,  represents  to  the  railroad  company  its 
profit  upon  the  hauling  of  the  coal?  A.  Yes,  sir;  their  freight. 

Q.  Their  freight?  A.  Yes,  sir. 

Q.  Aside  from  that  they  have  to  pay  the  salaries  of  their  sales 
agents?  A.  Yes,  sir. 

Q.  And  they  pay  a percentage  to  the  sales  agents  on  each  ton 
of  coal  sold?  A.  So  I understand. 

Q.  How  do  they  arrive  at  what  you  call  tidewater  price?  A. 
I don’t  know  that  I can  answer  that;  but  I have  a general  un- 
derstanding of  how  they  arrive  at  it. 

Q.  Give  your  best  knowledge  on  the  subject?  A.  The  larger 
coal-carrying  roads  compare  their  price,  as  I understand,  in  Feb- 
ruary, for  instance,  for  the  month  of  January;  the  prices  then  are 
averaged  and  the  settlement  to  the  operator  is  made  on  the  basis 
of  the  average  price  received  by  the  coal-carrying  roads  at  tide- 
water. 

Q.  Is  a provision  for  the  averaging  of  prices  contained  in  your 
agreement?  A.  I don’t  remember  just  how  that  is;  we  take  the 
Lehigh  Valley  prices,  as  that  is  our  contract. 


1082  [Senate, 

Q.  The  prices  that  they  sell  the  entire  output  not  only  of  the 
individual  operator  but  of  their  mines?  A.  Yes,  sir. 

Q.  By  tidewater  you  don’t  mean  necessarily  sold  at  tidewater? 
A.  No,  sir. 

Q.  But  the  price  at  which  coal  is  sold  at  tidewater  fixes  the 
price  as  to  all  the  coal  that  you  sell  to  the  company?  A.  Yes, 
sir. 

Q.  Supposing  the  railroad  company  should  ship  that  coal  west 
as  far  as  the  city  of  Buffalo,  how  would  that  effect  you  as  an 
individual  operator?  A.  It  has  an  ill  effect. 

Q.  In  what  way?  A.  In  this  way;  the  “ rail  ” prices  at  Buffalo, 
or  what  are  known  as  “ line  ” prices,  are  considerably  better  than 
tidewater  prices;  and  while  our  coal  may  be  sold  at  Buffalo  for 
20  cents  a ton  more  than  it  would  bring  at  New  York,  we  have 
to  take  a tidewater  basis  of  settlement. 

Q.  Then  the  carrying  company  makes  an  additional  profit?  A. 
In  that  way,  yes. 

By  Mr.  Mazet: 

Q.  Does  it  cost  any  more  to  send  it  to  Buffalo  than  to  tide- 
water? A.  I cannot  answer  that. 

By  Mr.  Bedell: 

Q.  Now,  Mr.  Wisner,  in  1895  the  price  of  coal  was  very  low? 
A.  Yes,  sir. 

Q.  Are  you  acquainted  with  any  of  the  facts  that  led  up  to  the 
increase  in  price?  A.  Since  1895? 

Q.  Yes,  sir.  A.  I know  that  the  market  was  in  a very  demoral- 
ized state  in  1895  and  operators  were  all  losing  heavily;  the 
prices  have  been  a little  better  and  were  getting  better  up  te 
December;  since  then  they  have  fallen  some. 


No.  40.] 


1083 


Q.  Do  you  know  what  the  difference  in  the  price  of  coal  is  now 
as  compared  with  1895?  A.  I think  that  our  advances  during 
the  year  1896  were  about  75  cents  per  ton. 

Q.  That  advance  was  fixed  by  whom;  by  you  as  an  operator  or 
by  the  railroad  companies?  A.  We  have  to  take  the  railroad 
companies’  prices. 

Q.  Supposing  you  should  refuse  as  an  individual  operator  to 
sell  your  output  to  the  railroad,  in  what  position  would  you 
be  placed?  A.  We  have  a right  to  do  it  and  can  market  our  own 
coal.  I 

Q.  Can  you  do  that  at  an  advantage,  considering  the  freight 
fates?  A.  Not  always;  there  is  some  difference  of  opinion  in 
regard  to  that;  the  object  in  selling  to  a coal  road  is  that  the 
payments  are  sure  and  prompt  and  guaranteed;  while  in  market- 
ing your  own  coal  in  small  lots  over  a scattered  territory  you 
have  to  take  your  own  chances  of  collection;  so  there  is  some 
advantage  in  having  your  coal  go  to  a coal-carrying  road. 

Q.  Now,  Mr.  Wisner,  about  what  does  it  cost  to  produce  a ton 
of  coal  at  the  mine  ready  to  be  delivered  over  to  the  carrying 
company?  A.  It  would  be  impossible  to  answer  that  closely, 
because  the  cost  of  operating  varies  from  month  to  month,  and 
there  are  different  factors  and  conditions  in  working  mines. 

Q.  Could  you  give  it  approximately?  A.  I should  say  that 
?1  .80  is  below  the  average,  if  anything,  for  producing  anthracite 
coal  in  the  cars. 

Q.  At  what  does  that  coal  sell  for  at  tidewater  at  present?  A„ 
It  sells  at  different  prices,  according  to  size. 

Q.  Stove  coal — does  it  cost  as  much  to  produce  one  class  as 
it  does  another?  A.  It  costs  more  to  produce  some;  if  you  take 
stove  coal  as  a standard — it  is  the  highest  priced  coal  that  come* 
to  our  market. 


1084  [Senate, 

Q.  What  would  that  cost  per  ton  at  the  mine?  A.  As  I say, 
probably  $1.80  per  ton. 

Q.  What  does  that  sell  for  according  to  tidewater  price?  A. 
I think  we  realize  for  stove  coal  $3.87. 

Q.  You  realize;  do  you  mean  at  tidewater?  A.  If  sold  at  tide- 
water, $3.87. 

Q.  Then  you  would  receive  $3.32  per  ton  for  the  coal  and  the 
carrying  company  would  receive  $1.55  per  ton  for  the  coal,  is 
that  correct?  A.  I have  not  figured. 

Q.  Will  you  figure  and  see  if  that  is  correct;  we  are  now  speak- 
ing of  one  size  of  coal?  A.  It  would  figure  that  as  a basis  from 
the  fact  that  it  is  charged  us  by  other  lines  of  coal  on  which  they 
sell  very  close  and  which  costs  different  prices  to  mine  and  pre- 
pare. 

Q.  I want  to  follow  out  on  the  line  of  one  particular  kind  of 
coal  to  see  what  the  cost  of  production  is;  that  is  the  most  ex- 
pensive kind  that  you  have?  A.  No,  sir;  it  brings  the  largest 
price  in  the  market;  it  has  to  be  very  pure. 

Q.  Assuming  that  it  cost  $1.80,  you  receive  $3.87  for  it  at  tide- 
water; you  would  then  have  $2.32,  would  you  not — $1.55?  A. 
That  is  on  the  basis  of  60  per  cent,  and  40  per  cent.,  and  $3.87 
for  that  kind. 

Q.  You  as  the  miner  of  the  coal  make  a profit  of  about  50 
cents  per  ton?  A.  No,  sir;  we  do  not. 

Q.  On  this  particular  kind?  A.  On  that  figuring. 

Q.  The  carrying  company  receives  $1.55  per  ton  for  whatever 
portion  of  the  work  it  attends  to  in  carrying  and  distributing 
to  the  consumer.  A.  Yes,  sir;  you  have  not  figured  on  the 
royalty. 

Q.  But  you  have  the  50  cents  per  ton  yourself  with  which  to 


No.  40.] 


1085 


pay  the  royalties.  A.  Not  on  the  present,  because  there  is  40 
cents  per  ton  to  be  added. 

Q.  That  leaves  only  a profit  of  about  12  cents  per  ton?  A. 
Yes,  sir. 

Q.  The  railroad  company  pays  no  portion  of  that  royalty?  A. 
No,  sir. 

Q.  They  receive  the  full  40  per  cent,  of  tidewater  price?  A. 
Yes,  sir.  ) 

Q.  And  as  the  price  of  coal  is  increased  or  decreased  by  the 
railroad  company  they  receive  the  largest  per  cent,  of  the  benefit 
or  meet  with  the  largest  loss?  A.  Its  tariff  is  governed  entirely 
by  the  price  that  it  gets  for  coal  at  tidewater. 

Q.  Was  there  a large  tonnage  of  coal  in  1895?  A.  Yes,  sir; 
I think  the  largest  tonnage  ever  produced  in  anthracite  was  in 
the  year  1895. 

Q.  Can  you  explain  that?  A.  I think  I can  give  the  causes 
that  led  to  that  ; in  1S95,  the  Philadelphia  and  Reading,  the  larg- 
est producer  of  anthracite  was  in  the  hands  of  a receiver;  they 
were  making  strenuous  efforts  to  show  that  they  could  produce 
22  per  cent,  of  the  entire  output  of  coal;  it  naturally  caused  the 
other  roads  to  look  after  their  laurels,  I presume,  and  it  resulted 
in  a very  large  output,  the  market  was  largely  overstocked  and 
the  price  consequently  very  low;  so  that  a great  deal  of  money 
was  lost. 

By  Mr.  Lexow: 

Q.  That  was  the  year  46,000.000  tons  were  marketed?  A. 
Forty-six  million  seven  hundred  thousand  tons;  that  year  a great 
deal  of  money  was  lost  by  operators  and  consequently  the  rail- 
roads in  proportion  owing  to  the  low  price  of  coal. 


1086 


[Senate, 


By  Mr.  Bedell: 

Q.  Does  your  company,  as  an  individual  operator,  in  any  way 
fix  the  price  of  coal  to  the  consumer  or  the  price  at  tidewater? 
A.  No,  sir. 

Q.  That  is  solely  within  the  control  of  the  carrying  companies? 
A.  Yes,  sir;  the  company  that  we  sell  it  to. 

Q.  You  have  to  abide  by  the  price  as  arbitrarily  fixed  by  them? 

A.  After  once  having  signed  a contract  with  them;  yes,  sir. 

- 

By  Mr.  Lexow: 

Q.  You  are  not  under  obligation  with  them,  are  you?  A.  No, 
sir. 

Q.  What  other  choice  is  left?  A.  You  market  your  own  coal. 

Q.  Directly  to  the  consumer,  do  you  mean?  A.  Yes,  I pre- 
sume. 

Q.  Is  that  a practically  feasible  plan?  A.  In  some  instances; 
in  our  case  it  would  not  be,  from  the  fact  that  part  of  our  coal 
is  leased  from  the  Lehigh  Valley  Coal  Company  who  operate  and 
are  practically  the  same  as  the  Lehigh  Valley  Railroad;  and 
under  our  contract  the  Lehigh  Valley  Railroad  Company  is  to 
have  a proportion  of  our  coal;  so  it  would  necessitate  our  selling 
coal  only  along  the  lines  reached  by  the  Lehigh  Valley  Com- 
pany. 

Q.  With  other  words,  you  could  not  reach  tidewater?  A.  Yes, 
sir;  we  could  reach  tidewater  by  the  Lehigh  Valley;  it  goes 
there. 

By  Mr.  Bedell: 

Q.  But  only  by  the  medium  of  that  railroad?  A.  Yes;  over 
any  other  line  that  has  our  contract,  or  rather  our  lease. 


No.  40.] 


1087; 


By  Mr.  Mazet: 

r, 

Q.  Under  the  terms  of  your  lease  you  are  obliged  to  ship  your 
coal  over  the  lines  of  that  company?  A.  Yes;  they  retain  the 
transportation. 

Q.  You  know  approximately  what  the  cost  is  per  ton  to  ship 
coal  from  your  mines  to  tidewater?  A.  No,  sir;  I do  not,  because 
I am  not  in  the  railroad  business. 

Q.  Have  you  shipped  coal  independently?  A.  No,  sir. 

Q.  Have  you  no  idea  of  what  it  costs  other  independent  miners 
to  ship  coal  per  ton;  you  said  a little  while  ago  you  might  with 
advantage,  or  perhaps,  with  advantage,  ship  direct;  on  what 
figures  do  you  base  that  estimate?  A.  That  probably  would  be 
in  case  we  were  not  bound  as  we  are  to  transport  our  coal  over 
some  one  given  line. 

Q.  Are  there  independent  miners  who  are  not  so  bound  by 
agreement?  A.  Yes,  sir. 

Q.  Are  you  in  a position  to  state  what  it  costs,  approximately, 
for  them  to  ship  coal  to  tidewater?  A.  No,  sir;  I am  not. 

Q.  Have  you  any  idea  as  to  the  price?  A.  No,  sir;  I have  not. 

Q.  What  is  the  rate  of  wages  paid  to  miners  now  as  compared 
to  that  paid  in  1895?  A.  I don’t  think  that  there  is  any  difference 
at  all  that  I know  of.  1 

Q.  So  that  any  increase  in  the  selling  price  of  coal  inures  en- 
tirely to  the  benefit  of  the  railroad  companies  and  not  to  the 
miners;  is  that  true?  A.  I don’t  know  how  that  is;  I don’t  know 
that  any  change  has  been  made  since  1895. 

Q.  No  material  change  either  one  way  or  the  other?  A.  No, 
sir. 

Q.  Is  the  price  paid  to  the  miners  for  mining  coal  dependent 
at  all  on  the  selling  price  of  the  coal?  A.  Necessarily. 


1088  [Senate, 

Q.  It  is?  A.  If  coal  has  to  go  very  low  yon  would  necessarily 
have  to  cut  your  miners  in  time. 

Q.  If  I understand  you  correctly  the  wages  were  not  affected 
by  the  increase  from  1895  to  the  present  time?  A.  No;  because 
during  the  year  1895  wages  were  fully  maintained;  however,  I 
can  not  speak  intelligently  on  that  as  it  does  not  come  under  our 
department. 

Q.  But  your  general  knowledge  on  the  subject  is  that  prices 
are  substantially  the  same?  A.  Yes,  sir;  I think. 

Dixon,  Joseph  B.,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  What  is  your  full  name?  A.  Joseph  B.  Dixon. 

Q.  Your  residence?  A.  Morristown,  N.  J. 

Q.  Your  business?  A.  Wholesale  coal  business. 

Q.  Do  you  represent  any  coal  carrying  company  in  an  official 
capacity?  A.  The  New  York,  Ontario  and  Western  Railroad 
Company. 

Q.  And  have  represented  that  road  how  long?  A.  Since  1890. 

Q.  As  its  general  sales  agent?  . A.  Yes,  sir. 

Q.  You  represent  that  road  in  such  capacity  from  the  1st  of 
February  on,  don't  you?  A.  Yes,  sir. 

Q.  Have  you  any  knowledge  of  a conference  of  the  presidents 
of  the  various  coal  carrying  companies  centering  in  New  York 
city  or  vicinity  that  took  place  about  the  1st  of  February,  1896? 
A.  I think  that  such  a conference  was  held. 

Q.  Do  you  know  the  aliquot  proportions  of  the  business  appor 
tinned  to  each  company  in  the  conference?  A.  About. 

Q.  Your  own  road,  the  New  York,  Ontario  and  Western,  was 
credited  with  a percentage  of  3.10?  A.  Three  and  ten  hun- 
dredths. 


No.  40.] 


1089 


Q.  That  is  to  say,  of  the  business  to  be  done  during  the  current 
year,  your  conference  agreement  expiring  within  one  year  from 
its  date,  your  company  was  supposed  to  contribute  a business 
amounting  to  3.10  per  cent,  of  the  whole?  A.  Apportioned  upon 
that  basis;  yes,  sir. 

Q.  Simply  as  transportation  or  as  coal  from  the  mine?  A. 
Transportation  company  solely. 

Q.  Who  represented  your  company  at  that  presidents’  confer- 
ence? A.  I think  the  president  was  there  part  of  the  time  and 
the  general  manager  part  of  the  time. 

Q.  Did  you  receive  official  information  from  him  of  the  per- 
centage allowed  by  that  conference  to  your  road?  A.  I was  told 
simply  that  the  percentage  allowed  was  3.10. 

Q.  By  him?  A.  Yes,  sir. 

Q.  In  any  official  way?  A.  I cannot  tell  you  whether  it  is 
official  or  conversation. 

Q.  He  communicated  in  his  official  capacity  as  president  of  the 
company?  A.  Yes,  sir. 

Q.  Did  you  live  up  to  that  percentage?  A.  Not  wholly;  no,  sir. 

Q.  Did  you  live  up  to  it  within  reasonable  limits?  A.  The  per- 
centage was  about  the  usual  percentage  which  we  always  pro- 
duced. 

Q.  About  the  same  as  was  produced  by  you  a year  or  so  pre- 
vious to  the  conference?  A.  Just  about. 

Q.  It  was  fixed  on  that  basis?  A.  Yes,  sir. 

Q.  It  came  to  you  officially,  didn’t  it,  that  the  other  roads  had 
their  percentage  fixed  on  the  same  general  equality  plan?  A. 
With  one  exception,  the  Schuylkill  company. 

Q.  Which  is  a producing  road?  A.  I think  all  producing  — I 
think  they  all  protested,  Mr.  Chairman. 

69 


1090 


[Senate, 


Q.  Others  protested?  A.  Yes,  sir. 

Q.  That  led  the  rest  of  the  roads;  the  Schuylkill  company  abso- 
lutely refused?  A.  Yes,  sir. 

Q.  And  adhered  to  that  refusal?  A.  Yes,  sir. 

Q.  You  figure,  don’t  you,  the  output  of  your  road,  or  did  figure 
the  output  of  your  road  monthly  during  the  year  1896;  was  it 
upon  that  figure  that  the  output  that  was  apportioned  to  your 
road  during  the  year  1896  was  based?  A.  No,  sir. 

Q.  Upon  whose  figures?  A.  Upon  the  figures  of  the  general 
manager  of  the  road. 

Q.  What  is  his  name?  A.  Mr.  Childs. 

Q.  He  made  the  figuring  and  handed  it  over  to  you?  A.  He 
figured  about  what  our  percentage  would  entitle  us  to. 

Q.  And  communicated  that  fact  to  you?  A.  Yes,  sir. 

Q.  When  you  received  the  figures  from  him  it  was  upon  the 
principle  that  the  figures  given  represented  the  percentage  to 
which  you  were  entitled  under  the  terms  of  that  conference  of 
February,  1896?  A.  Yes,  sir. 

Q.  To  sell?  A.  Yes,  sir. 

Q.  Had  you  had  anything  beyond  selling  the  coal  product  ap- 
portioned? A.  Yes,  sir;  we  handled  some  coal  over  the  Penn- 
sylvania railroad. 

Q.  Then  you  don’t  sell  entirely  the  New  York,  Ontario  and 
Western?  A.  No,  sir. 

Q.  Did  you  have  a conference  with  the  sales  agents  employed 
by  other  companies  from  month  to  month  during  the  year  1896? 
A.  No,  sir. 

Q.  When  I speak  of  conferences,  I mean  informal  as  well  as 
formal.  A.  No,  sir;  I don’t  think  that  I discussed  the  question 
twice  in  1896,  the  question  of  price. 


No.  40.] 


1091 


Q.  With  anybody?  A.  With  any  of  the  companies. 

Q.  But  you  fixed  the  price?  A.  We  are  a very  small  factor  and 
we  try  to  get  as  large  a price  as  possible. 

Q.  Do  you  send  out  circulars  to  your  customers  stating  the 
price  for  a certain  period  of  time?  A.  No,  sir;  we  do  not  send 
any  circulars;  we  don’t  issue  anything. 

Q.  Do  you  issue  anything  in  the  way  of  notice  to  your  custom- 
ers? A.  No,  sir. 

Q.  Stating  the  price  of  coal?  A.  No,  sir. 

Q.  Do  you  hang  anything  in  your  office,  any  statement  of  the 
price?  A.  No-,  sir. 

Q.  What  is  your  system  upon  which  the  price  is  carried  to  your 
customers?  A.  The  system  is  generally  through  salesmen  who 
cover  a different  territory;  the  coal  is  sold  very  largely  through 
salesmen  who  cover  different  territories  and  who'  come  in  contact 
with  customers,  unless  a customer  should  come  to  the  office. 

Q.  What  system  do  you  follow  in  notifying  your  salesmen  of 
the  price  at  which  your  coal  shall  be  marketed?  A.  Merely  on 
the  supply  and  demand. 

Q.  But  how  do  you  convey  to  your  customers  that  figure  which 
the  law  of  supply  and  demand  fixes  for  a particular  time?  A.  We 
never  make  changes,  except  for  extended  delivery;  it  is  from  day 
to  day;  1 think  it  is  generally  understood  that  way. 

Q.  Is  it  not  true  that  in  the  month  of  February,  1896,  you  added 
twenty-five  cents  per  ton  to  the  four  grades  known  as  grate, 
stove,  egg  and  chestnut?  A.  We  may  have  tried  to,  but  we  did 
not  realize  the  advance. 

Q.  Did  you,  as  a matter  of  fact,  whether  you  succeeded  in  real- 
izing the  figure  — did  you  add  twenty-five  cents  per  ton  to  those 

grades  of  coal  during  that  year?  A.  If  we  could  obtain  it;  yes. 


1092 


[Senate,. 


Q.  Didn't  you,  as  a matter  of  fact?  A.  Xo,  sir. 

Q.  Didn’t  you  add  twenty-five  cents,  whether  you  obtained  it 
or  not;  didn’t  you  add  that  figure  to  the  price  of  coal  during  that 
month?  A.  There  was  no  fixed  price  during  1895. 

Q.  I am  asking  about  1896?  A.  During  1S95  everybody  in- 
sisted upon  getting  the  best  results  he  could;  in  1896  it  was  recog- 
nized that  the  operators  and  the  companies  had  they  continued 
for  twelve  months  they  would  have  to  go  into  bankruptcy,  which 
led  to  this  Presidents’  Agreement  or  Presidents’  Conference,  and 
from  that  time  the  price  gradually  advanced;  in  some  ways,  as 
you  are  able  to  understand,  we  can  get  more  money  in  certain 
sections  than  we  can  in  others  on  account  of  the  locality  and  the 
means  of  getting  there,  although  the  distance  may  be  greater; 
in  the  Boston  market,  for  instance,  with  a low  water  transporta- 
tion, we  can  realize,  as  a general  thing,  a better  price  than  in 
Buffalo,  where  there  is  long  railroad  transportation  of  300  miles, 
as  compared  with  150  miles  from  the  mines  to  tidewater. 

Q.  The  experience  of  1895  was  that  free  competition  among  the 
companies  resulted  in  reducing  the  price  of  coal  below  the  figure 
which,  in  your  judgment,  was  a fair  price  for  coal  or  as  remun- 
eration to  the  companies?  A.  It  was  below  absolute  cost. 

Q.  That  is  true,  is  it  not?  A.  Yes,  sir;  to  the  best  of  my 
knowledge. 

Q.  And  the  effort  was  then  made,  in  February,  1896,  to  secure 
some  harmonious  action  between  the  coal-carrying  roads  whereby 
the  price  of  coal  could  be  raised  again  to  such  prices  as  would, 
in  the  judgment  of  the  companies  represented,  be  a fair  value 
for  the  coal  they  handle?  A.  Yes,  sir. 

Q.  And  acting  upon  that,  in  the  months  of  February,  May,  July 
and  September,  of  that  year,  they  did  advance,  whether  they" 


No.  40.] 


10931 


realized  it  or  not,  the  price  of  coal  25  cents  per  ton  for  the  four 
standard  sizes  of  coal  that  I have  mentioned?  A.  They  tried  to; 
yes,  sir. 

Q.  You  did  so  far  as  you  could?  A.  Yes,  sir. 

By  Mr.  McCarren: 

Q.  You  say  they  asked  it?  A.  The  actual  result  showed  that 
the  advance  was  not  an  actual  advance  over  1895  of  over  25  or 
35  cents  per  ton  to  be  divided  between  the  transportation  com- 
pany and  the  miner. 

By  Mr.  Lexow: 

Q.  You  figure,  therefore,  that  owing  to  the  cuts  among  those 
companies,  notwithstanding  the  conference,  instead  of  an  ad- 
vance of  one  dollar  all  along  the  line  with  reference  to  these 
four  grades  of  coal,  there  was  an  advance  which  only  netted 
35  cents  per  ton  for  these  four  standard  grades?  A.  I don't 
think  it  was  as  much  as  that;  from  25  to  35  cents. 

By  Mr.  Bedell: 

Q.  If  the  price  of  coal  in  New  York  in  1896  was  raised  one 
dollar  per  ton  the  average  small  dealer  raised  his  price  one  dol- 
lar per  ton  to  the  consumer,  did  he  not?  A.  No,  sir;  during  the 
year  1S95  there  was  a very  low  price;  in  fact,  the  retailer  did 
not  reduce  his  price  in  proportion  to  the  reduction  in  the  whole- 
sale price. 

Q.  If  there  was  an  advance  the  retailer  advanced  the  price  of 
coal  to  the  consumer  in  the  same  proportion  that  the  wholesaler 
advanced  it?  A.  No,  sir;  a 25  cent  raise  by  the  wholesaler  is  not 
wery  apt  to  cause  an  increase  by  the  retailer. 


1094 


[Senate, 


Q.  What  about  an  advance  of  a dollar?  A.  It  was  a paper 
advance  of  a dollar. 

Q.  A quoted  price  over  your  coal  of  a dollar;  didn't  that  affect 
the  price  almost  to  the  extent  of  a dollar  to  the  consumer?  A. 
I don’t  think  so. 

Q.  How  do  you  arrive  at  that  conclusion?  A.  You  take  any 
large  dealer  in  this  town  and  he  can  buy  coal  to-day  on  the  aver- 
age of  fully  50  or  60  less  than  what  you  call  circular  price;  I 
don't  remember  that  there  has  been  any  advance  in  the  retailer’s 
price;  I think  about  the  advance  25 — 

Mr.  Bedell  (interrupting) : Was  there  an  advance  in  1896?  A. 
I think  there  was;  perhaps  one  or  two. 

Q.  Was  not  an  advance  made  according  to  the  advances  made 
by  the  coal  companies?  A.  They  undoubtedly  have  to  get  more 
money  than  in  1895. 

Q.  Then  the  consumer  was  charged  practically  a dollar  more 
per  ton?  A.  No,  sir. 

Q.  Would  you  say  that  he  was  charged  only  35  cents?  A. 
Thirty-five  or  50  cents. 

Q.  Limited  to  that?  A.  Yes,  sir;  I say  the  actual  cost  to  the 
consumer  was  not  over  35  or  50  cents  more  than  in  1S95. 

Q.  Is  there  any  bulletin  here  in  New  York  city  upon  which  the 
price  of  the  retailer  is  fixed  or  quoted?  A.  No,  sir. 

Q.  Each  man  has  his  individual  bulletin?  A.  Yes,  sir. 

By  Mr.  Lexow: 

Q.  Will  you  explain  to  the  committee  how  it  was  after  you 
had  made  the  first  advance  of  25  cents  per  ton,  then  made  the 
second  advance  of  25  cents,  making  50  cents  altogether,  and  you 
found  from  experience  that  you  were  only  getting  an  advantage 


No.  40.] 


1095 


of  35  cents  per  ton,  you  still  went  further  and  advanced  the  price 
25  cents  in  June,  same  in  July,  and  then  again  in  September? 
A.  We  did  not  make  those  advances;  I don’t  know  as  I can  ex- 
plain why  those  -were  made. 

Q.  What  I mean  is  this;  why  were  these  advances  continued 
after  it  had  been  demonstrated  as  the  result  of  the  second  ad- 
vance that  you  were  not  even  getting  the  price  charged  on  the 
second?  A.  I think  with  the  idea  that  the  advance  in  the  price 
would  strengthen  the  active  price. 

Q.  Did  it  have  that  effect?  A.  No,  sir. 

Q.  The  fact  was  that  you  only  got  10  cents  more  per  ton  after 
making  the  first  advance;  if  you  got  35  cents  per  ton  more  you 
only  got  10  cents  of  the  second  advance  added  to  the  25  cent* 
of  the  first  advance,  so  that  the  whole  of  the  second  two  advances 
were  thrown  away  and  15  cents  of  the  second  advance?  A.  The 
average  advance  in  the  price  as  made  through  all  the  year  I 
think  was  25  or  35  cents;  I cannot  say  in  what  proportion  they 
were,  whether  10,  15  or  20,  in  February,  March,  July  or  Septem- 
ber; the  average  price  received  for  anthracite  coal  in  the  year 
1896  does  not  show  that  we  have  obtained  more  than  25  or  35 
cents  per  ton  over  1895. 

Q.  Do  you  know  Mr.  Williams,  the  selling  agent  of  the  New 
York,  Lake  Erie  and  Western?  A.  Yes,  sir. 

Q.  Did  you  meet  him  during  the  year  1896  with  reference  to 
the  sale  of  coal?  A.  No,  sir. 

Q.  Or  price  of  coal?  A.  No,  sir. 

Q.  Were  you  not  in  any  of  the  so-called  informal  conference* 
that  he  has  testified  to  with  reference  to  the  price  of  coal?  A. 
I was  not;  no,  sir. 

’ Q.  He  has  stated  that  as  the  result  of  conferences  between  sales 


1098  [Senate, 

agents  acting  under  the  authority  of  this  president’s  conference 
of  February,  four  advances  were  made  during  the  year  for  the 
months  of  February,  May,  July  and  September  of  25  cents  each; 
and  that  the  advances  were  made  by  general  consent  of  these 
coal-carrying  companies;  do  you  dispute  the  accuracy  of  that 
statement?  A.  I do  not,  sir;  I know  nothing  whatever  about  it; 
I was  not  present  at  the  meetings;  if  Mr.  Williams  says  so,  it  is 
so;  I was  not  present  and  cannot  testify  as  to  the  correctness 
of  it. 

Q.  Do  you  know  whether  or  not  the  gentleman  who  handed 
you  the  figures  constituting  the  prospective  output  of  your  road, 
or  the  transportation  of  your  road,  was  in  the  conferences  upon 
this  question?  A.  He  was  not;  to  the  best  of  my  knowledge. 

Q.  In  making  your  sales,  however,  did  you  keep  in  line  with 
the  general  understanding  that  was  had  at  the  February  con- 
ference of  the  presidents  of  the  roads?  A.  I don’t  think  that  the 
presidents  took  action  on  the  price  at  all. 

Q.  No,  not  price,  but  amount  of  output?  A.  The  amount  of 
output  was  fairly  Avell  conformed  to  during  the  year  1896,  al- 
though it  was  accidental. 

By  Mr.  Mazet : 

Q.  Is  there  any  association  of  coal  dealers  in  the  city?  A.  I 
think  there  is. 

Q.  What  are  the  general  terms  of  the  association,  the  objects? 
A.  That  I cannot  tell;  I don't  think  that  association  to-day 
amounts  to  anything;  in  fact,  it  is  a dead  letter;  there  has  been 
no  uniformity  of  action  between  them  for  over  a year. 

Q.  Was  the  object  of  the  association  to  regulate  the  price  of 
coal  at  retail,  the  selling  price?  A.  I think  partly  so  when  it  was 
formed. 


No.  40.] 


1097 


Q.  And  has  it  been  successful  in  maintaining  it?  A.  No,  sir; 
it  was  a failure. 

Q.  So  that  to-day,  so  far  as  you  know,  each  retailer  sells  for 
the  best  price  he  can  get?  A.  Best  profit  he  can  get  above  cost; 
the  best  he  can  obtain. 

Q.  There  is  no  concerted  action  as  to  the  price  at  which  coal 
shall  be  sold  by  the  dealer  to  the  consumer?  A.  No,  sir. 

By  Mr.  Lexow: 

Q.  The  Retailers’  Association  that  you  have  mentioned  as  being 
a dead  letter  was  in  life  to  the  extent  that  it  voted  formally  to 
increase  to  the  consumer  the  price  of  coal  in  exact  proportion 
as  it  had  been  increased  by  the  coal-carrying  companies  during 
the  year  1896?  A.  If  that  is  so,  I have  never  been  advised  of  it. 

Q.  You  don’t  know  about  it?  A.  No,  sir. 

By  Mr.  Mazet: 

Q.  In  selling  coal  you  have  no  transactions  except  with  the  in- 
dividual to  whom  you  sell;  I mean  no  transaction  with  any  asso- 
ciation or  dealers?  A.  No,  sir;  we  sell  to  whoever  comes  into 
the  office — whoever  we  consider  a desirable  person. 

Heilner,  P.  B.,  being  duly  sworn,  testified  as  follows: 

Examined  by  Mr.  Lexow: 

Q.  Where  do  you  reside?  A.  Elizabeth,  N.  J. 

Q.  What  is  your  occupation?  A.  I am  sales  agent  for  the 
Lehigh  & Wilkesbarre  Coal  Company. 

Q.  How  long  have  you  been  such  sales  agent?  A.  Four  years. 

Q.  Do  you  know  of  the  conference  of  presidents  of  the  coal 
transportation  companies  centering  in  the  city  of  New  York  and 


1098 


[Senate, 


vicinity,  held  about  the  1st  day  of  February,  1896?  A.  Not  to 
my  knowledge. 

Q.  Had  no  notice  come  to  you  in  an  official  way  of  the  holding 
of  that  conference?  A.  No,  sir. 

Q.  Or  of  the  percentage  to  which  you  would  be  entitled  in 
pursuance  of  the  conclusions  of  that  conference?  A.  Well,  no, 
eir. 

Q.  You  seem  a little  doubtful  about  that?  (Question  repeated.) 
A.  What  do  you  mean? 

Q.  I mean  about  February,  1896?  A.  I was  told  by  my  su- 
perior officers  what  our  percentage  would  be. 

Q.  You  were  told  about  the  first  of  February,  1896,  what  the 
percentage  would  be  by  your  superior  officers?  A.  Yes,  sir. 

Q.  Do  you  remember  the  percentage  now?  A.  The  percentage 
of  the  company  would  be  6 per  cent. 

Q.  Are  you  part  of  the  Lehigh  system?  A.  No,  sir;  I am  the 
sales  agent  for  the  Lehigh  & Wilkesbarre. 

Q.  Is  that  a transportation  company  as  well  as  a producing 
company?  A.  Only  a producing  company. 

Mr.  Lexow:  This  will  conclude  the  testimony  taken  by  this 
committee  unless  it  shall  appear  to  the  committee  hereafter  that 
further  testimony  may  be  necessary. 

As  a matter  of  form  I will  again  call  the  names  of  Mr.  John- 
son, of  the  United  States  Rubber  Company,  and  Mr.  Elverson,  of 
the  Liberty,  of  Setaubet.  The  committee  is  surprised  that,  not- 
withstanding the  promises  made  that  those  gentlemen  would 
be  produced,  they  have  not  been  produced,  and  the  inference  to 
be  drawn  from  their  absence  must  necessarily  not  be  very  favor- 
able to  the  company. 

The  stenographer  will  note  upon  the  minutes  that  by  unani- 


No.  40.] 


1099 


mous  vote  the  committee  extends  its  thanks  to  the  common  coun- 
cil for  the  use  of  its  rooms,  and  to  the  city  court  for  the  use  of 
this  room  and  the  other  court  room  which  we  used  the  other  day. 

The  committee  also  desires  to  express  its  thanks  to  the  press 
for  the  cooperation  which  they  have  manifested  in  this  investi- 
gation. 

The  following  form,  contained  in  printed  case  of  National  Wall 
Paper  Company  against  Robert  F.  Hobbs,  1895,  papers  on  ap- 
peal from  order  of  Justice  Lawrence,  continuing  injunction  was 
marked 


“ EXHIBIT  6,  FEBRUARY  18,  1897.  E.  S.” 

“ A.” 

Referred  to  in  the  foregoing  complaint  and  forming  part  there- 
of.— Robert  S.  Hobbs  & Co.,  Robert  S.  Hobbs,  Robert  F.  Hobbs. 

National  Wall  Paper  Company  and  Charles  R.  Flint  and  Oliver 
S.  Carter,  trustees. 

AGREEMENT  OF  SALE  AND  CONVEYANCE. 

(Guggenheimer  & L'ntermever.  attorneys,  46  Wall  street,  N.  Y.) 

An  agreement  made  this  seventeenth  day  of  June,  in  the  year 
one  thousand  eight  hundred  and  ninety-two,  between  Robert  S. 
Hobbs  and  Robert  F.  Hobbs,  individually  and  together  compos- 
ing the  firm  of  Robert  S.  Hobbs  & Co.,  of  the  city  of  Brooklyn, 
and  State  of  New  York  ('hereinafter  called  the  vendors),  parties 
of  the  first  part.  National  Wall  Paper  company,  a corporation  or- 
ganized under  the  Laws  of  the  State  of  New  York  (hereinafter 
called  the  company),  party  of  the  second  part,  and  Charles  R. 
Flint  and  Oliver  S.  Carter,  as  trustees  (hereinafter  called  the 
trustees),  of  the  city  of  New  York,  parties  of  the  third  part. 


noa 


[Senate, 


Whereas,  The  vendors  are  engaged  in  the  conduct  of  the  busi- 
ness of  manufacturing,  buying,  selling  and  dealing  in  wall  paper, 
decorations,  furnishings  and  merchandise  of  a like  character, 
having  their  factory  and  salesrooms  at  Nos.  131-135  Columbia 
street,  extending  through  to  14-18  Tiffany  place;  their  color  fac- 
tory at  No.  20  Tiffany  place,  and  storage  and  shipping  rooms 
at  24-26  Tiffany  place,  in  the  city  of  Brooklyn,  and  State  of  New 
York,  and  other  places  of  business  elsewhere;  and 

Whereas,  The  business  so  conducted  by  the  vendors  has,  by 
reason  of  the  superior  and  distinctive  character  of  their  goods 
and  through  their  business  skill,  acquired  a reputation  through- 
out the  United  States  which  gives  the  good-will  of  such  business 
a substantial  value;  and 

Whereas,  The  vendors  are  the  owners  of  a lease  of  their  color 
factory  and  storage  and  shipping  rooms,  which  lease  will  expire 
May  1,  1893,  and  also  own  all  the  machinery,  chattels  and  fixtures 
and  every  other  manner  of  property  and  assets  now  in  or  upon 

the  premises  at  which  their  business  is  conducted  or  elsewhere 

l 

used  in  or  connected  with  their  business,  including  labels,  trade- 
marks and  other  devices,  and  stock  of  merchandise  manufac- 
tured, unmanufactured  and  in  process  of  manufacture,  and  of 
the  book  accounts  and  bills  receivable  as  the  same  appear  on 
their  books;  and 

Whereas,  The  company  is  desirous  of  purchasing  from  the 
vendors  the  leases  owned  by  them  upon  the  aforementioned  color 
factory  and  storage  and  shipping  rooms,  together  with  the  fixed 
plant  and  machinery  contained  therein,  or  in  and  upon  the  fac- 
tory property,  and  the  fixed  plant  and  machinery  elsewhere 
located  and  owned  by  the  vendors  in  connection  with  their  busi- 


No.  40.] 


1101 


ness,  together  with  all  the  chattels,  merchandise,  book  accounts 
and  all  other  property  and  assets  used  in  or  connected  with  the 
said  business,  and  the  gaod-will  of  the  business,  with  the  ex- 
clusive right  to  the  use  of  the  firm  name  of  “ Eobert  S.  Hobbs 
& Co.”  or  any  part  thereof,  or  any  similar  name  in  connection 
with  the  business  of  manufacturing,  selling  and  dealing  in  wall 
paper,  decorations  or  business  of  a like  character,  or  of  any  other 
name  by  which  the  said  firm  or  its  product  has  been  known;  and 

Whereas,  The  vendors  are  willing  to  sell  their  said  property, 
business  and  effects  as  a going  concern,  and  to  assure  unto  tne 
company  the  good  will  thereof  upon  the  terms  hereinafter  pre- 
scribed; and 

Whereas,  The  vendor  is  the  owner  of  the  land  upon  which  the 
factory  building  above  described  is  located,  and  is  also  the  owner 
of  said  factory  building,  and  the  company  is  desirous  of  acquiring 
the  right  to  purchase  said  real  property  with  the  buildings  and 
improvements  thereon,  if  the  same  can  be  had  upon  terms  satis- 
factory to  the  company;  and 

Whereas,  The  company  has  an  authorized  share  capital  of 
$14,000,000.  divided  in  140.000  shares  of  common  stock  of  the  par 
value  of  $100  per  share,  and  has  authority  under  its  charter  to 
issue  a form  of  security  in  the  nature  of  certificates  of  indebted- 
ness, known  as  debeuture  stock,  to  the  extent  of  $6,000,000; 

Now,  therefore,  in  consideration  of  the  foregoing  recitals  and 
for  other  good  and  valuable  consideration,  it  is  hereby  covenanted 
and  agreed  by  and  between  the  parties  hereto,  and  each  of  them, 
and  by  and  between  each  of  the  vendors  with  the  other,  and  with 
the  company  and  their  respective  successors,  legal  representa- 
tives and  assigns,  as  follows: 

I.  The  vendors  hereby  sell,  assign,  transfer  and  set  over  unto 


1102 


[Senate, 


the  company,  and  the  latter  hereby  purchases  all  the  leasehold 
rights,  fixed  plant  and  machinery  contained  in  or  connected  with 
the  premises  Nos.  20,  24  and  2G  Tiffany  place,  and  all  of  the  fixed 
plant  and  machinery  contained  in  or  connected  with  premises 
Nos.  131-135  Columbia  street,  in  the  city  of  Brooklyn,  and  State 
of  New  York,  and  all  the  leasehold  rights,  fixed  plant  and  ma- 
chinery used  in  or  connected  with  the  business  of  the  vendors, 
and  all  fixtures,  chattels,  merchandise,  book  accounts,  patented 
process  and  apparatus,  trade-marks,  copyrights,  signs,  labels  and 
every  other  manner  of  right,  property,  assets  and  effects  owned 
by  the  vendors  as  a part  of  or  used  in  connection  with  their  said 
business  of  manufacturing,  selling  and  dealing  in  wall  paper, 
decorations,  furnishings  and  goods  of  a like  character,  together 
with  all  materials  on  hand,  whether  manufactured,  unmanufac- 
tured or  in  process  of  manufacture,  and  the  good  will  of  the  said 
business,  and  the  exclusive  right  to  the  use  of  the  name  of  Robert 
S.  Hobbs  & Co.,  or  any  part  thereof,  or  any  other  name  or  device 
which  has  heretofore  been  employed  by  the  vendors  or  their 
predecessors  in  said  business,  or  in  connection  therewith,  the  in- 
tent hereof  being  to  include  every  manner  of  property,  assets  and 
effects,  proper  or  necessary  in  the  judgment  of  the  company  to 
assure  unto  it  the  said  property  and  business  as  a going  concern 
and  to  preserve  the  continued  value  of  the  good  will  thereof  in 
the  hands  of  the  company,  except  the  real  property,  which  is  to 
be  dealt  with  as  hereinafter  described. 

II.  The  vendors  being  the  owners  of  the  real  property  upon 
which  the  factory  building  occupied  by  the  vendors  in  their 
business  is  located,  do  hereby  jointly  and  severally  grant  unto  the 
company  an  option  to  purchase  said  real  property.  If  the  com- 
pany conclude  to  make  such  purchase,  it  shall  so  notify  the 


No.  40.] 


1103 


vendor  on  or  before  the  1st  day  of  September,  1892,  and  in  that 
event  the  real  property  shall  be  valued  in  the  manner  hereinafter 
prescribed  with  respect  to  the  valuation  of  the  property  and 
assets  acquired  from  the  vendors  hereunder,  except  that  the 
valuation  of  such  property  shall  be  taken  for  the  purpose  of  a 
factory  for  the  manufacture  and  sale  of  wall  paper,  decorations, 
furnishings  and  articles  of  a like  character  and  not  solely  in 
accordance  with  its  intrinsic  value  as  real  estate,  independent 
of  that  business.  If  the  company  shall  conclude  not  to  exericse 
the  option  hereby  granted  with  respect  to  any  part  of  the  above- 
described  real  property,  it  shall  lease  such  property  for  a term 
not  longer  than  ten  years,  with  the  option  of  renewing  such 
i -ase  for  an  extended  term  of  an  additional  ten  years,  at  a yearly 
cental  for  the  first  of  said  terms  to  be  fixed  by  the  persons  and 
in  the  manner  hereinafter  provided  with  respect  to  the  valuations 
of  the  property  herewith  transferred  to  the  vendors,  except  that 
the  leasehold  value  of  such  property  shall  also  be  fixed  upon  the 
basis  of  its  use  for  purposes  of  the  wall  paper  business,  and  not 
solely  in  accordance  with  its  intrinsic  value  as  real  estate,  inde- 
pendent of  that  business;  and  if  the  vendors  or  the  company  shall 
be  dissatisfied  with  the  rental  value  fixed  for  the  purpose  of 
leasing  there  shall  be  no  obligation  upon  any  of  them  to  enter  into 
such  lease,  but  the  failure  of  the  parties  to  reach  an  agreement 
with  respect  to  said  real  property  shall  in  nowise  affect  or  impair 
the  binding  force  of  this  instrument,  with  respect  to  any  of  the 
other  property  or  business  herewith  transferred.  The  lease,  if 
made,  shall  provide  for  the  fixing  of  the  rental  for  any  renewal 
term  by  arbitration  and  appraisal  upon  the  basis  of  a return  to 
the  owners  of  the  property  of  6 per  cent,  per  annum  upon  the 
then  appraised  value  thereof.  t 


1104  [Senate, 

III.  The  leasehold  interests  hereby  conveyed  are  agreed  to  be 
of  no  greater  value  than  the  obligations  assumed  by  the  company, 
with  respect  to  the  payment  of  the  rent  reserved  by  such  leases, 
and  such  leases  shall  be  transferred  upon  the  company  assuming 
the  obligations  thereof.  The  value  of  the  fixed  plant,  machinery, 
fixtures,  chattels,  merchandise,  book  accounts  and  other  assets 
hereby  transferred  shall  be  fixed  by  Messrs.  Theodore  C.  Carey, 
William  H.  Mairs,  John  J.  Lindsay,  Henry  Burn  and  George  D. 
Mcllvaine,  who  are  hereby  designated  as  the  appraisers  for  that 
purpose,  and  who  shall  be  paid  by  the  vendors  for  the  services 
rendered  by  them  at  the  rate  of  $10  for  each  and  every  day,  be- 
sides their  necessary  traveling,  hotel  and  other  expenses  certified 
by  them  as  having  been  actually  occupied  and  incurred  in  the 
work  of  appraisal ; provided,  however,  that  if,  and  when  the  pos- 
session of  the  property  shall  have  been  transferred  to  the  com- 
pany hereunder,  the  latter  will  repay  to  the  vendors  the  outlay 
for  such  appraisal;  and  provided,  further,  that  if  the  parties 
hereto  shall  eventually  elect  to  abandon  or  rescind  this  agree- 
ment by  mutual  consent,  the  total  charge  against  the  vendors  for 
such  appraisal  shall  not  exceed  the  sum  of  $250. 

The  decision  of  the  majority  of  the  persons  hereby  selected  to 
value  the  property  and  assets  of  the  vendors  shall  be  final  and 
conclusive  upon  each  and  all  of  the  parties,  provided  that  the 
valuation  so  fixed  shall  be  reduced  to  writing  in  duplicate  and 
signed  by  such  majority  of  the  persons  herein  named  as  valuers, 
one  of  such  duplicates  being  delivered  to  the  vendors  and  the 
other  to  the  company. 

The  persons  so  selected  shall  have  the  right  to  make  such  in- 
dependent investigation  and  to  take  such  advice  as  they  may 
deem  proper,  and  shall  have  access  to  the  books  of  account  and 
vouchers  of  the  vendors  to  assist  them  in  their  determination. 


1105 


No.  10.] 

IV.  The  company  hereby  agrees  to  pay,  and  the  vendors  agree 
to  accept,  for  the  business,  property,  assets  and  good  will  here- 
with transferred,  debenture  stock  and  common  stock  of  the  com- 
pany. to  be  issued  as  soon  hereafter  as  may  be  practicable,  as 
follows: 

(a)  There  shall  be  issued  to  the  vendors  in  payment  for  the 
property  and  assets  acquired  hereunder  the  obligation  of  the 
company  in  the  nature  of  one  or  more  certificates  of  indebtedness 
to  be  known  as  “ debenture  stock,”  in  an  amount  equal  to  the  ap- 
praised value  of  the  property  and  assets  hereby  transferred,  to 
be  fixed  in  the  manner  hereinbefore  provided.  The  debenture 
stock  so  to  be  issued  shall  be  part  of  an  authorized  issue  of 
$6, 000, 000  of  such  stock  and  shall  be  and  remain  an  obligation 
of  the  company,  repayable  at  the  expiration  of  the  corporate 
existence  and  entitled  meantime  to  interest  at  the  rate  of  8 per 
cent,  per  annum,  payable  quarter  yearly,  as  an  expense  of  the 
business  from  and  out  of  the  profits  of  the  company  before  any 
dividend  can  be  declared  or  paid  on  the  common  stock  or  share 
capital.  The  debenture  stock  shall  be  issued  pursuant  to  proper 
resolutions  providing  that  no  payment  of  interest  shall  be  made 
on  such  debenture  stock  which  will  impair  the  capital  of  the 
company,  nor  unless  the  amount  paid  shall  have  been  actually 
earned  by  the  company,  and  that  the  holders  of  debenture  stock 
shall  not  be  entitled  to  demand  or  sue  for  the  interest  payable 
upon  the  obligations  held  by  them  unless  such  interest  was  actu- 
ally earned  by  the  company,  in  which  event  the  amount  earned 
shall  be  distributed  amongst  and  paid  to  the  different  holders 
of  debenture  stock  in  the  proportion  of  their  holdings,  but  such 
unpaid  interest  shall,  notwithstanding,  become  and  remain  an 
obligation  of  the  company,  payable  out  of  any  future  profi  s to  the 


1106  [Senate, 

full  extent  of  such  unpaid  interest  before  any  dividend  can  be 
declared  or  paid  on  the  stock  or  share  capital.  The  holders  of 
debenture  stock  shall  furthermore  be  entitled,  in  the  event  of 
the  dissolution  or  winding  up  of  the  company,  to  rank  pari  passu 
with  other  unsecured  creditors  of  the  corporation  and  shall  be 
entitled  to  receive  in  full  out  of  the  assets  of  the  company  the 
amounts  represented  by  the  outstanding  certificates  of  indebted- 
ness before  any  payment  is  made  on  account  of  the  share  capital 
of  the  company. 

(b)  There  shall  be  further  issued  and  paid  to  the  vendors  for 
the  good  will  of  the  business  hereby  transferred  and  in  consider- 
ation of  the  execution  by  them  of  this  agreement,  and  of  further 
contracts  assuring  the  continued  good  will  of  such  business  to 
the  company  in  such  form  as  may  be  approved  by  the  counsel 
for  the  company,  an  amount  of  common  stock  equal  at  par  to 
sixteen  times  the  net  earnings  of  the  vendors  in  their  business 
for  the  eleven  months  commencing  July  1,  1891,  and  ending  May 
31,  1892,  less  the  appraised  value  of  the  property  hereinbefore 
agreed  to  be  transferred  to  the  company,  but  the  issue  of  such 
common  stock  shall  be  subject  to  the  conditions  and  restrictions 
hereinafter  contained. 

For  the  purpose  of  fixing  the  amount  of  the  common  stock 
of  the  company  to  which  the  vendors  shall  be  entitled  (subject 
to  the  conditions  and  restrictions  hereinafter  contained)  as  pay- 
ment for  the  good  will  of  the  business  so  to  be  transferred  and 
for  the  assurance  of  such  good  will  to  the  company  by  several  and 
separate  contracts  by  each  of  the  parties  of  the  first  part,  Messrs. 
Deloitte,  Dever,  Griffiths  & Co..  English  chartered  accountants. 
No.  69  Wall  street,  in  the  city  of  New  York,  shall  investigate  the 
books  of  account  of  the  vendors  on  behalf  of  all  of  the  parties 


2>To.  40.] 


1107 


hereto  and  shall  certify  to  the  net  profits  earned  in  said  business 
for  the  period  from  July  1,1891, to  May 31, 1892.  The  vendors  shall 
permit  the  said  accountants  to  have  full  access  to  their  books  of 
account  and  to  all  vouchers  and  other  papers  relating  to  their 
business  and  the  report  of  or  certificates  of  said  accountants 
shall,  except  as  hereinafter  provided,  be  conclusive  upon  the  par- 
ties as  to  the  net  profits  of  the  vendors  during  the  term  embraced 
in  said  investigation.  The  certificate  of  the  accountants  fixing 
the  profits  of  the  vendors  shall  be  delivered  to  Mr.  Henry  Burn, 
as  chairman  of  the  appraisers,  and  each  certificate  shall  there- 
upon be  and  become  the  conclusive  finding  as  to  the  profits  for 
the  above-stated  period  unless  the  appraisers  or  the  vendors  shall 
discover  some  error  in  such  certificate.  In  any  such  event  the 
appraisers  shall  notify  the  vendors  and  shall  hear  such  testimony 
as  the  vendors  may  desire  to  submit  with  respect  to  a change  in 
the  certificate.  After  hearing  all  the  testimony  produced  before 
them  the  appraiser  shall  have  the  power  which  is  hereby  dele- 
gated to  them  by  the  vendors,  by  a majority  vote,  to  modify  the 
certificate  of  the  accountants  as  they  may  deem  proper  and  the  cer- 
tificate, as  thus  modified,  shall  be  deemed  and  taken  as  the  con- 
clusive statement  of  profits  for  the  term  covered  by  the  investi- 
gation and  as  the  sole  basis  for  the  issuance  of  common  stock  to 
the  vendors  in  payment  for  good  will  hereby  transferred. 

As  soon  after  the  delivery  of  the  report  of  the  accountants  as 
modified  by  the  appraisers  as  may  be  practicable,  the  company 
shall  issue  to  and  in  the  name  of  the  vendors,  subject  to  the 
conditions  and  restrictions  hereinafter  contained,  and  the  vend- 
ors shall  accept  an  amount  of  common  stock,  part  of  an  author- 
ized issue  of  $14,000,000  of  stock  to  be  held  and  transferred  as 
hereinafter  provided,  equal  to  sixteen  times  the  net  profits  of  the 


1108  [Senate, 

vendors  in  tlieir  said  business  during  the  period  covered  by  such 
investigation  less  the  par  value  of  the  debenture  stock  herein- 
before provided  to  be  issued.  In  determining  the  net  profits 
earned  in  the  business  of  the  vendors  the  accountants  shall  allow 
for  and  credit  all  interest  charged  on  the  capital  actually  invested 
in  the  business  at  the  beginning  of  the  term  for  which  the  profits 
are  to  be  calculated,  but  only  the  interest  on  the  capital  so  in- 
vested. In  valuing  the  assets  for  which  the  debenture  stock  shall 
be  issued,  tangible  assets  only  shall  be  considered,  and  all  other 
rights  and  assets,  such  as  patents,  or  application  therefor,  copy- 
rights and  trade-marks,  shall  be  regarded  as  part  of  the  good 
will. 

The  common  stock  so  to  be  issued  shall  be  full  paid  and  unas- 
sessable. 

V.  The  book  accounts  and  bills  receivable  shall  be  valued  at 
the  face  value  thereof,  and  the  vendors  hereby  guarantee  the 
collection  of  such  book  accounts  and  bills  receivable  herewith 
transferred  to  the  company  at  the  face  value  thereof,  on  or  before 
the  1st  day  of  July,  1893.  If  at  that  time  any  such  accounts  or 
bills  receivable  shall  remain  uncollected,  the  same  shall  be  re- 
turned by  the  corporation  to  the  vendors  and  shall  be  the  prop- 
erty of  the  latter,  and  the  vendors  shall  thereupon  surrender  and 
pay  back  to  the  company  an  amount  of  debenture  stock  equal  at 
par  to  the  face  value  of  the  accounts  and  bills  receivable  so  un- 
collected, the  trustees  shall  surrender  to  the  company  an  amount 
of  common  stock,  part  of  the  shares  of  such  stock  hereby  agreed 
to  be  conditionally  paid  for  the  good  will  of  the  business  of  the 
vendors,  equal  at  par  to1  sixteen  times  the  face  value  of  such 
uncollected  book  accounts  and  bills  receivable,  less  the  amount 
of  debenture  stock  returned;  that  is  to  say,  the  debenture  stock 
and  common  stock  to  be  returned  in  that  event  shall,  together 


No.  40.] 


1109 


be  equal  to  sixteen  times  the  amount  of  such  uncollected  book 
accounts  and  bills  receivable. 

The  vendors  hereby  agree  with  the  company  that  in  the  taking 
of  their  inventory  as  of  May  31,  1S92,'  and  in  the  balancing  of 
their  books  for  the  purpose  of  determining  the  profits  earned 
in  the  business  for  the  eleven  months  ending  May  31,  1S92,  the 
assets  shall  be  taken  upon  precisely  the  same  basis  as  was 
adopted  in  the  taking  of  the  inventory  and  closing  of  the  books 
for  the  preceding  business  year,  to  the  end  that  there  shall  be 
no  undue  enhancement  of  the  profits  of  the  current  year  caused 
by  increases  in  valuation  of  assets. 

The  above-named  appraisers  are  hereby  empowered  by  a ma- 
jority vote  to  investigate  the  manner  in  which  the  vendors  took 
their  inventory  for  the  eleven  months  ending  May  31,  1892,  and 
to  determine  the  valuation  at  which  the  assets  should  have  been 
taken  for  the  purpose  of  fairly  determining  the  profits  for  the 
eleven  months,  and  such  determination  shall  be  without  prejudice 
to  the  decision  of  the  appraisers  as  to  the  value  of  the  assets 
for  the  purpose  of  the  issuance  of  debenture  stock.  If  it  shall 
be  determined  by  the  appraisers  that  the  profits  certified  by  the 
accountants  have  been  enhanced  by  the  valuation  of  assets  by  the 
vendors  on  a basis  different  from  that  adopted  at  the  close  of 
the  preceding  business  year,  the  amount  of  such  enhanced  profits 
shall  be  deducted  and  the  amount  of  common  stock  to  be  issued 
to  the  vendors  shall  be  based  only  on  the  profits  determined 
after  making  such  deduction  and  such  other  changes  as  the  ap- 
praisers may  have  made  in  the  exercise  of  the  powers  hereby 
vested  in  them. 

VI.  For  the  purpose  of  more  effectually  assuring  unto  the  com- 
pany the  good-will  of  the  business  hereby  transferred  and  the 


1110  [Senate, 

continued  value  of  its  trade  name,  copyrights,  trade  marks  and 
other  assets,  the  vendors  hereby  severally  covenant  and  agree 
that  they  will,  whenever  thereunto  requested  by  the  company, 
institute  and  prosecute  such  proceedings  as  may  be  necessary 
to  secure  unto  the  company  the  continued  use  of  the  firm  name 
of  “ Robert  S.  Hobbs  Co.”  as  a part  of  the  good-will  hereby  sold, 
and  that  neither  they  nor  any  of  them  will  directly  or  indirectly 
engage  in  or  become  associated  with  any  business  of  manufactur- 
ing, buying  or  selling  wall  paper,  decorations  or  furnishings,  or 
merchandise  of  a similar  character,  as  principals,  agents,  em- 
ployes, or  in  any  other  relation  or  capacity,  or  as  stockholders, 
directors,  trustees,  agents,  officers  or  employes  of  any  corpora- 
tion, other  than  the  company,  engaged  in  the  business  of  manu- 
facturing, buying  or  selling  wall  paper,  decorations,  furnishings 
or  merchandise  of  a similar  character,  or  in  any  like  business 
in  any  State  or  Territory  of  the  United  States,  east,  northeast, 
south  or  southeast  of  the  State  of  Washingon,  it  being  expressly 
agreed  that  the  business  of  the  vendors  extends  throughout  the 
United  States  and  that  the  prohibition  herein  contained  is  neces- 
sary to  assure  unto  the  company  good-will  of  the  business  pur- 
chased by  it,  and  that  such  prohibition  is  co-extensive  only  with 
the  interest  transferred  and  does  not  exceed  in  territory  the  limi- 
tations of  the  business  of  which  the  good-will  is  hereby  pur- 
chased. 

VII.  The  said  Robert  S.  Hobbs  and'  Robert  F.  Hobbs  hereby 
severally  agree  that  they  or  either  of  them  will  act  as  director  of 
Ihe  company  if  and  so  long  as  they  or  either  of  them  may  be 
elected  to  that  office  and  shall  be  eligible  thereunto.  And  that 
they  will  so  long  as  they  or  either  of  them  may  be  employed  by 
the  company  devote  their  or  his  exclusive  time  and  attention  to 


So.  40.] 


1111 


its  business,  at  and  for  a compensation  to  be  fixed  by  the  board 
of  directors  of  the  company. 

VIII.  The  property  and  business  hereby  purchased  are  here- 
with taken  over  and  the  exclusive  possession  thereof  surren 
dered  to  the  company  as  and  from  the  said  1st  day  of  June,  1892 
and  from  and  after  that  date  the  business  shall  be  deemed  to 
have  been  conducted  for  the  benefit  of  and  at  the  risk  of  the  com- 
pany, the  latter  hereby  agreeing  that  the  interest  upon  the  de- 
benture stock  shall  be  payable  from  the  first  day  of  June,  1892, 
and  that  the  company  assumes  the  burdens  and  receives  the 
benefit  of  all  outstanding  contracts  from  and  after  that  date. 

IX.  The  vendors  hereby  warrant  the  title  to  all  the  property 
and  assets  herewith  transferred,  free  from  debts,  claims,  de- 
mands and  encumbrances,  except  such  as  are  expressly  assumed 
by  the  company  in  writing,  and  they  jointly  and  severally  cove- 
nant and  agree  with  the  company,  its  successors  and  assigns, 
that  they  or  any  of  them  will  at  any  time,  upon  the  request 
of  the  company,  its  successors,  nominees  or  assigns,  make,  exe- 
cute and  deliver  to  it,  or  them  such  further  acts,  deeds,  trans- 
fers, assignments  and  assurances  in  law  as  may  be  reasonable 
or  which  may  be  advised  by  the  counsel  of  the  company  to  be 
necessary  or  proper  for  effecting  the  true  intent  and  purpose  of 
this  agreement  and  for  the  better  assuring  and  confirming  unto 
the  company,  its  successors  and  assigns,  the  business,  property 
and  good-will  hereby  sold. 

X.  The  vendors  hereby  assign,  release,  surrender,  transfer  and 
set  over  unto  the  trustees  and  the  survivors  or  them  for  the  term 
of  ten  years  from  the  1st  day  of  June,  1892  (but  in  no  event  be 
yond  the  lives  of  the  trustees  or  the  survivor  of  them),  all  shares 
of  common  stock  of  the  company  receivable  by  them  hereunder  in 


1112  [Senate, 

payment  for  the  good-will  of  the  business  herewith  transferred 
unto  the  company,  and  of  the  covenants  and  agreements  entered 
into  by  the  vendors  with  the  company,  and  all  certificates  that 
may  hereafter  be  issued  representing  such  stock,  to  be  held, 
owned  and  used  by  the  trustees  and  the  survivor  of  them  upon 
the  following  trusts  and  for  the  following  purposes: 

(a)  If  the  said  Robert  S.  Hobbs  and  Robert  F.  Hobbs,  or  either 
one  of  them,  shall  at  any  time  hereafter  directly  or  indirectly 
engage  in  or  become  associated  with  any  business  of  manufac- 
turing, buying,  selling  or  dealing  in  wall  paper,  decorations,  fur- 
nishings or  merchandise  of  a like  character  other  than  that  of 
the  Company,  as  principals,  agents,  employes,  or  in  any  other 
relation  or  capacity,  or  as  stockholders,  directors,  trustees,  agents, 
officers  or  employes  of  any  corporation  other  than  the  company 
engaged  in  the  business  of  manufacturing,  buying,  selling  or 
dealing  in  wall  paper,  decorations,  furnishings,  or  in  any  busi- 
ness similar  to  that  herewith  sold  by  the  vendors,  in  any  State 
or  Territory  of  the  United  States,  east,  northeast,  south  or  south- 
east of  the  State  of  Washington,  or  if  the  said  Robert  S.  Hobbs 
and  Robert  F.  Hobbs,  or  either  of  them,  shall  fail,  omit,  neglect 
or  refuse  to  act  as  directors  of  the  company,  if  and  so  long  as 
they,  or  either  of  them,  may  be  elected  to  that  office  and  shall  be 
eligible  thereto,  or  if  they  or  either  of  them  shall  fail,  omit, 
neglect  or  refuse  to  devote  their  or  his  exclusive  time  and  atten- 
tion to  the  business  of  the  company,  if  and  so  long  as  such  vendor 
shall  be  employed  by  the  company  at  a salary  fixed  by  its  di- 
rectors, or  if  either  of  the  vendors  shall  sell,  hypothecate  or 
otherwise  dispose  of  any  of  the  shares  of  common  stock,  payable 
hereunder,  or  any  certificate  representing  the  same,  or  attempt 
so  to  do,  or  if  either  of  the  vendors  shall  violate  or  fail,  omit, 


Xo.  40.] 


1113 


neglect  or  refuse  to  promptly  perform  any  agreement  made  by 
him  Tsitli  the  company,  upon  the  purchase  by  the  company  of 
the  property,  business  and  good  will  of  the  vendors,  then  and 
upon  the  happening  of  any  such  event  all  the  shares  of  the  stock 
of  the  party  in  default  shall  belong  to  and  be  the  absolute  prop- 
erty of  the  company,  and  the  trustees  shall  accordingly,  and  they 
are  hereby  directed  by  the  vendors,  in  any  such  event  to  deliver 
and  surrender  the  certificates  representing  such  shares  of  com- 
mon stock  into  the  treasury  of  the  company,  and  the  same  shall 
thereupon  be  canceled. 

It  is  expressly  agreed  that  the  debenture  stock,  payable  here- 
under as  the  purchase  price  of  the  property  of  the  vendors  and 
of  each  of  them,  and  of  which  the  vendors  have  the  unrestricted 
right  of  disposal,  is  a full  and  substantial  consideration  for  the 
tangible  property  acquired  by  the  company,  and  that  the  pro- 
visions contained  in  this  agreement  are  not  in  the  nature  of  a 
penalty,  and  are  essential  to  secure  and  assure  unto  the  com- 
pany the  good-will  of  the  business  for  which  the  common  stock 
was  agreed  to  be  issued,  subject  to  the  restrictions  herein  con- 
tained. The  transfer  of  stock  hereby  made  to  the  trustees  for 
the  benefit  and  security  of  the  company  is,  however,  not  inclusive 
of,  and  is  without  prejudice  to,  the  right  of  the  company  to  apply 
for,  and  secure  relief  from,  a court  of  equity,  by  injunction,  to 
restrain  either  of  the  vendors  from  entering  into  or  upon  any  busi- 
ness of  a character  similar  to  that  sold  by  the  vendors  unto  the 
company,  and  the  title  hereby  reserved  to  the  company  in  the 
shares  of  common  stock  transferred  to  the  trustees  hereunder, 
is  in  addition  to  the  right  hereby  expresly  retained  by  the  com- 
pany to  restrain  the  violation  of  any  covenant  made  by  either 
of  the  vendors  with  the  company  against  engaging  in  any  busi- 


1114 


[Senate, 


ness  of  a character  similar  to  that  sold  by  the  vendors  to  the 
company. 

(b)  If  it  shall  hereafter  appear  that  the  obligations  of  the  ven- 
dors on  the  1st  day  of  June,  1892,  were  in  excess  of  the  amount 
appearing  on  their  books,  and  the  company  be  compelled  to  pay 
or  shall  elect  to  pay  such  excess,  or  if  the  vendors  shall  for  any 
reason  fail  to  refund  to  the  company  the  amount  of  debenture 
stock  hereinbefore  provided  to  be  repaid  for  uncollected  book 
accounts  or  bills  receivable,  then  and  in  any  such  event  upon 
the  failure  of  the  vendors  to  refund  and  make  good  to  the  com- 
pany the  amount  expended  in  payment  of  such  obligations  for 
the  shares  of  debenture  stock  repayable  with  respect  to  such  un- 
collected book  accounts  or  bills  receivable  (as  the  case  may  be) 
within  thirty  days  after  the  service  by  mail  by  the  company  on 
the  vendors,  or  either  of  them,  of  a notice  specifying  the  amount 
payable  to  the  company,  and  upon  proof  by  the  company  to  the 
satisfaction  of  the  trustees  or  the  survivor  of  them  of  such  pay- 
ment of  obligations,  or  of  the  amount  of  debenture  stock  repay- 
able with  respect  to  the  uncollected  book  acounts  or  bills  re- 
ceivable (as  the  case  may  be),  the  trustees  shall  sell  at  private 
sale,  to  any  then  registered  owner  of  the  common  stock,  at  such 
prices  and  upon  such  terms  as  the  trustees  may  deem  proper, 
all  or  such  part  of  the  shares  of  the  stock,  to  be  transferred  to 
the  trustees  under  this  agreement,  as  may,  in  the  judgment  of 
the  trustees,  or  the  survivor  of  them,  be  proper  or  necessary 
to  satisfy  the  claims  of  the  company.  In  the  event  of  one  or  more 
sales  by  the  trustees  of  parts  of  the  stock  for  the  satisfaction 
of  the  claims  of  the  company,  under  this  subdivision  of  the  agree- 
ment, the  vendors  shall  be  liable  to  contribute  from  their  respec- 
tive holdings  toward  the  shares  so  sold,  in  the  proportion  of 
their  holdings  as  defined  between  themselves,  and  the  balance 


No.  40.] 


1115 


of  said  shares  of  stock  shall,  in  such  event,  remain  in  the  hands 
of  the  trustees  until  the  termination  of  the  trust  hereunder,  sub- 
ject to  the  same  conditions  as  if  no  part  thereof  had  been  sold. 

The  company  shall  be  under  no  duty  to  defend  any  suit  that 
may  be  instituted  against  it  by  reason  of  having  assumed  the 
obligation  of  the  vendors,  and  it  may  suffer  judgment  to  be  en- 
tered against  it  by  default  and  resort  to  the  security  of  this 
agreement,  unless  fully  indemnified  by  the  vendors  to  its  entire 
satisfaction  against  all  the  costs,  charges  and  expenses  of  such 
suit,  and  against  any  judgment  that  may  be  rendered  therein. 

The  foregoing  provisions,  with  respect  to  the  proportionate 
contribution  by  the  vendors  towTard  any  sale  of  the  shares  of 
stock  by  the  trustees,  are  without  prejudice  to  such  rights  and 
remedies  as  may  exist  in  favor  of  any  of  the  vendors  against  any 
of  the  others  by  reason  of  such  enforced  contribution. 

(c)  Upon  the  continued  performance  by  the  vendors  of  all  the 
covenants  contained  in  this  instrument  for  the  period  ending 
June  1, 1902,  or  upon  the  death  of  the  trustees  prior  to  that  time, 
the  shares  of  stock  herewith  transferred,  or  such  part  thereof  as 
may  remain  in  the  hands  of  the  trustees  unapplied  under  the 
trusts  hereof,  shall  be  returned  and  retransferred  to  the  vendors, 
provided  they  shall  execute  and  deliver  to  the  company  such  fur- 
ther agreements  and  undertakings,  with  such  security  as  may  be 
reasonably  required  to  assure  unto  the  company  the  continued 
performance  of  the  covenants  entered  into  by  the  vendors  with 
the  company  for  the  assuring  unto  the  latter  of  the  good  will  of 
the  business  herewith  transferred  to  the  satisfaction  of  the 
company. 

XI.  The  shares  of  stock  to  be  transferred  to  the  trustees  here- 
under shall  be  conveyed  bythe  usual  form  of  assignments  of  certif- 


1116  [Senate, 

icates  of  stock  with  accompanying  power  of  attorney  in  accord- 
ance with  the  regulations  of  the  New  York  Stock  Exchange,  and 
the  vendors  do  hereby  grant  unto  the  trustees  power  of  attorney 
for  that  purpose,  except  that  said  transfers,  besides  being  made  to 
the  trustees  as  “ Trustees,”  shall  contain  the  following  words: 

“ The  transfer  of  the  shares  of  stock  represented  by  the  within 
certificate  is  made  pursuant  to  the  terms  and  conditions  of  a 
certain  agreement  between  the  holders  of  the  common  stock 
allotted  to  vendors  of  property  to  the  company  of  the  first  part, 
‘ National  Wall  Paper  Company  ’ of  the  second  part,  and  Charles 
R.  Flint  and  Oliver  S.  Carter,  as  trustees,  of  the  third  part  (a  copy 
of  which  agreement  is  on  file  and  may  be  inspected  at  the  offices 
of  the  company)  and  is  to  be  held  and  disposed  of  by  the  trustees 
in  accordance  with  the  terms  of  that  agreement.” 

XII.  In  the  event  of  the  death  or  insanity  of  either  of  the 
vendors,  his  interest  in  the  shares  of  stock  hereby  transferred 
shall  be  and  remain  subject  to  all  the  terms  and  conditions  of 
this  agreement  until  the  termination  of  the  trust  hereby  created. 

XIII.  The  shares  of  stock  herewith  transferred  to  the  trustees 
above  specified,  or  any  part  thereof,  may  be  wholly  or  partially 
relieved  from  the  conditions  of  such  trusts  or  any  of  them  prior 
to  the  time  above  designated  for  the  termination  of  such  trusts 
on  the  written  consent,  duly  acknowledged,  of  the  registered  own- 
ers of  common  stock  of  the  company  owning  not  less  than  75  per 
cent,  of  such  common  stock  upon  the  books  of  the  company,  but 
no  such  waiver  or  release  shall  be  deemed  valid,  unless  the  same 
be  in  writing  subscribed  by  the  then  registered  owners  of  at  least 
75  per  cent,  of  the  then  outstanding  common  stock  of  the  com- 
pany; and  it  is  expressly  agreed  that  the  vendors  will  not,  nor 
will  either  of  them,  urge  or  claim  any  such  waiver  or  release, 


No.  40.] 


1117 


unless  the  same  be  evidenced  by  such  writing  duly  acknowledged. 
Either  of  the  vendors  may  sell  or  dispose  of  his  reversionary  in- 
terest in  the  shares  of  stock  hereby  transferred  to  the  trustees, 
provided  such  sale  be  in  express  terms  subject  to  the  conditions 
of  this  agreement,  and  be  made  to  a person  who  is  at  the  date 
of  this  instrument  a registered  owner  of  common  stock  of  the 
company,  but  not  otherwise.  No  such  transfer  shall  be  of  any 
force,  effect  or  validity  unless  the  purchaser  shall,  at  the  time 
of  such  purchase,  notify  the  company  and  the  trustees  of  the 
transaction,  and  shall  join  in  the  execution  of  this  agreement. 

XIV.  The  vendors  shall  continue,  notwithstanding  the  trust 
hereof  and  the  transfer  hereby  made,  to  receive  all  dividends  that 
may  be  paid  with  respect  to  the  shares  hereby  transferred,  so 
long  as  the  conditions  hereof  shall  be  kept  and  performed. 

The  trustees  shall  grant,  and  they  do  hereby  grant,  unto  the 
vendors  such  proxies  as  may  be  required  to  enable  the  vendors 
to  vote  on  the  shares  of  stock  transferred  to  them  respectively 
until  default  in  the  condition  of  this  agreement,  whereupon  all 
proxies  so  issued  and  granted  shall  be  and  become  revoked. 

XV.  Either  of  the  trustees  may  resign  the  trust  hereby  dele- 
gated to  him  by  a previous  notice  of  three  months  in  writing, 
addressed  to  the  company,  and  thereupon  he  shall  be  relieved 
from  all  further  duties  with  respect  to  the  trust.  Either  trustee 
hereof  may  be  removed,  and  a new  trustee  appointed  in  his  place, 
upon  the  consent  in  writing  of  a majority  of  the  then.registered 
owners  of  the  common  stock  of  the  company.  In  the  event  of  the 
death,  resignation  or  removal  of  any  trustee,  the  majority  of  the 
then  registered  owners  of  the  common  stock  of  the  company  may 
designate  a new  trustee  in  the  place  of  the  person  so  displaced. 


1118  [Senate, 

and  thereupon  such  new  trustee  shall  be  vested  with  the  same 
powers  as  though  he  had  been  named  in  this  agreement.  In  the 
event  of  the  failure  of  the  stockholders  to  designate  a new  trustee 
within  sixty  days  after  the  death,  resignation  or  removal  of  trus- 
tee, the  maining  trustee  shall  designate  such  new  trustee,  and 
thereupon  the  person  so  designated  shall  be  vested  with  all  the 
trusts  and  powers  hereby  reposed  in  the  trustees  named  in  this 
instrument  as  though  he  had  been  one  of  the  original  trustees 
hereof.  The  word  “ trustee  ” shall  be  deemed  to  apply  to  any 
substituted  trustee,  except  that  the  duration  of  the  trust  hereby 
created  shall  be  limited  to  the  lives  of  the  persons  named  herein 
as  parties  of  the  third  part. 

XYI.  This  agreement  and  all  the  covenants  and  conditions 
hereof  shall  bind  the  executors,  administrators,  legal  representa- 
tives and  assigns  of  the  vendors  and  the  successors  and  assigns 
of  the  company,  but  no  personal  liability  shall  in  any  event  be 
claimed  against  the  trustees  or  their  successors,  except  that 
each  trustee  shall  be  liable  for  his  personal  fraud  or  misconduct 
with  respect  to  the  trust  hereby  delegated  to  him,  but  not  for 
the  fraud  or  misconduct  of  a co-trustee,  and  every  trustee  hereof 
shall  be  indemnified  out  of  the  trust  estate  in  priority  to  all 
other  claims  against  all  loss,  costs,  charges,  expenses,  or  liability 
which  he  may  incur  in  or  about  the  premises,  or  by  reason  of  any 
act  done,  omitted,  conferred,  or  otherwise,  and  every  discretion 
expressed  to  be  given  to  a trustee  shall  be  exercisable  by  him 
free  from  any  fetter  or  liability  whatever. 

In  witness  whereof,  the  vendors  and  each  of  them  have  here- 
unto set  their  hands  and  seals  and  the  company  has  caused  this 
instrument  to  be  executed,  and  its  official  seal  to  be  hereunto 


No.  4U.] 


1119 


attached  by,  and  pursuant  to  resolution  of  its  board  of  directors, 
the  day  and  year  first  above  written. 

(Signed)  ROBERT  S.  HOBBS  & CO. 

By  Robt.  S.  Hobbs. 

[l.  s.]  ROBERT  S.  HOBBS. 

ROBERT  F.  HOBBS. 

(Corporate  Seal)  NATIONAL  WALL  PAPER  CO. 

By  James  Y.  Corey,  President. 

Attest : 

Jno.  W.  D.  Dobler,  Secretary. 

(Signed)  CHARLES  R.  FLINT. 

[l.  s.]  OLIVER  S.  CARTER. 

City  and  County  of  New  York. 

STATE  OF  NEW  YORK,  SS" 

On  this  1st  day  of  August,  in  the  year  1892,  before  me  person- 
ally appeared  Robert  S.  Hobbs  and  Robert  F.  Hobbs,  to  me 
known  and  known  to  me  to  be  the  individuals  described  in  and 
who  executed  the  foregoing  instrument  as  parties  of  the  first  part, 
and  they  severally  acknowledged  to  me  that  they  executed  the 
6ame. 

(Signed)  W.  H.  HORSMAN, 

[l.  s.]  Notary  Public,  No.  304,  New  York  County. 

CERTIFICATE  OF  ORGANIZATION  OF  THE  UNITED 
STATES  RUBBER  COMPANY. 

We,  the  undersigned,  William  Barbour,  of  Paterson,  N.  J., 
and  William  L.  Trenholm,  J.  Edward  Simmons,  John  P.  Town- 
send and  John  I.  Waterbury,  of  the  city  of  New  York,  N.  Y.,  do 
hereby  associate  ourselves  into  a company  under  and  by  virtue 
of  the  provisions  of  an  act  of  the  Legislature  of  the  State  of 


1120  [Senate, 

New  Jersey,  entitled  “ An  act  concerning  corporations,”  approved 
April  7,  1875,  and  the  several  supplements  thereto,  and  acta 
amendatory  thereof,  for  the  purposes  hereinafter  mentioned,  and 
we  do  hereby  assume  to  and  for  said  company,  all  the  rights, 
powers  and  privileges  granted  to  and  conferred  upon  corpora- 
tions by  the  laws  of  said  State  of  New  Jersey,  and  do  hereby  cer- 
tify and  set  forth,  as  follows: 

1.  The  name  assumed  to  designate  such  company  and  be  used 
in  its  business  and  dealings,  is  United  States  Rubber  Company. 

2.  The  places  in  the  State  of  New  Jersey  where  the  business 
of  said  company  is  to  be  conducted,  are  the  city  of  New  Bruns- 
wick, in  the  county  of  Middlesex,  and  also  those  other  cities, 
towns  and  villages  in  said  State  in  which  said  company  may 
hereafter  deem  it  expedient  to  conduct  its  business,  and  the  city 
and  county  in  which  the  principal  part  of  the  business  of  said 
company  within  said  State  is  to  be  transacted  and  conducted, 
is  the  said  city  of  New  Brunswick,  in  the  county  of  Middlesex. 
The  part  of  the  business  of  the  said  company  to  be  carried  on 
without  the  said  State  of  New  Jersey,  is  as  hereinafter  stated. 
The  city,  county  and  State  in  which  the  principal  office  or  place 
of  business  of  said  company  out  of  the  State  of  New  Jersey  is 
to  be  situated  is  the  city,  county  and  State  of  New  York,  and 
the  said  company  also  proposes  to  have  a business  office  in  the 
city  of  Boston,  Mass.,  and  one  in  the  city  of  Chicago,  111.,  and 
carry  on  operations  in  all  of  the  States  and  Territories  of  the 
United  States  and  in  foreign  countries. 

t 

The  objects  for  which  the  said  company  is  formed  are  the 
making,  purchasing  and  selling  rubber  boots  and  shoes  and  all 
goods  of  which  rubber  is  a component  part,  and  the  various  ma- 
terials entering  into  the  manufacture  of  any  and  all  such  goods, 


No.  40.] 


1121 


and  also  the  acquiring  and  disposing  of  rights  to  make  and  use 
any  and  all  such  goods  and  materials,  and  the  doing  and  trans- 
acting all  acts,  business' and  things  incident  to  or  relating  to  or 
convenient  in  carrying  out  its  business  as  aforesaid,  which  are 
authorized  by  law,  including  the  purchasing  of  the  stock  of  any 
company  or  companies  owning,  mining,  manufacturing  or  pro- 
ducing materials  or  other  property  necessary  for  its  business, 
or  of  any  other  company  whose  shares  it  may  lawfully  purchase 
and  exercising  wdth  relation  thereto  all  rights,  powers  and  privi- 
leges of  individual  owmers  of  the  shares  of  such  stock. 

The  portion  of  said  company’s  business  which  is  to  be  carried 
on  out  of  the  State  of  New  Jersey  is  its  financial  business  gen- 
erally, and  as  well  such  portion  of  its  manufacturing  business 
and  the  business  of  buying  and  selling  as  it  may  from  time  to  time 
find  convenient. 

3.  The  total  amount  of  capital  stock  of  said  company  is  $50,- 
000,000.  The  number  of  shares  into  which  the  same  is  divided 
is  500,000,  and  the  par  value  of  each  share  is  $100.  The  stock 
of  the  said  company  is  to  be  of  two  kinds,  to  wit:  general  stock 
and  preferred  stock.  The  amount  of  the  preferred  stock  shall  at 
no  time  exceed  one-half  of  the  total  outstanding  capital  stock  of 
the  company.  The  holders  of  the  preferred  stock  shall  be  enti- 
tled to  receive  semi-annually  all  net  earnings  of  the  company 
determined  and  declared  as  dividends  in  each  fiscal  year  up  to 
but  not  exceeding  8 per  cent,  per  annum  upon  all  outstanding 
preferred  stock  before  any  dividend  shall  be  set  apart  or  paid 
on  the  general  stock,  but  such  dividend  upon  the  preferred  stock 
shall  not  be  cumulative,  and  the  preferred  stock  shall  not  be 
entitled  to  participate  in  any  other  or  additional  earnings  or 


1122  [Senate, 

profits.  In  case  of  liquidation  or  dissolution  of  the  company,  the 
holders  of  preferred  stock  shall  be  entitled  to  receive  cash  to  the 
amount  of  their  preferred  stock  at  par,  before  any  payment  in 
liquidation  is  made  upon  the  general  stock,  and  shall  not  there- 
after participate  in  any  of  the  property  of  the  company  or  pro- 
ceeds of  liquidation. 

The  amount  of  capital  stock  with  which  the  said  company  is 
to  commence  business  is  the  sum  of  $100,000,  divided  into  1,000 
shares  of  the  par  value  of  $100,  of  which  500  shares  are  to  be 
preferred  and  the  remaining  500  shares  general  stock. 

Additional  issues  on  account  of  the  total  authorized  capital 

r 

stock  may  be  made  from  time  to  time  either  in  preferred  or  gen- 
eral stock,  or  both,  in  such  sums  and  in  such  manner  as  the 
board  of  directors  of  the  company  may  determine,  and  in  accord- 
ance with  law  and  this  certificate. 

4.  The  names  and  residences  of  the  stockholders  and  the  num- 
ber of  shares  held  by  each  are  as  follows: 


Number  of  shares. 

P |*A  m 

Names  and  Residences.  General.  ferred 

William  Barbour,  Paterson,  N.  J 100  100 

William  L.  Trenholm,  New  York  city,  N.  Y 100  100 

J.  Edward  Simmons,  New  York  city,  N.  Y 100  100 

John  P.  Townsend,  New  York  city,  N.  Y 100  100 

John  I.  Waterbury,  New  York  city,  N.  Y 100  100 


Total  shares  500  500 


5.  The  period  at  which  the  said  company  shall  commence  shall 
be  the  30th  day  of  March,  1892,  and  the  said  company  shall 
terminate  on  the  30th  day  of  March,  1942. 


N o.  40.] 


1123 


In  witness  whereof,  we  have  hereunto  affixed  our  hands  and 
seals,  respectively,  this  29th  day  of  March,  in  the  year  1892. 

(Signed)  WM.  BARBOUR, 

W.  L.  TRENHOLM, 

[l.  s.]  J.  EDWARD  SIMMONS, 

JOHN  P.  TOWNSEND, 
JOHN  I.  WATERBURY. 

4 

STATE  OF  NEW  JERSEY,  ss.: 

Be  it  remembered  that,  on  the  29th  day  of  March,  1892,  before 
me,  the  subscriber,  a master  in  chancery  of  the  State  of  New 
Jersey,  personally  appeared  William  Barbour,  William  L.  Tren- 
holm,  J.  Edward  Simmons,  John  P.  Townsend,  and  John  I.  Water- 
bury,  who,  I am  satisfied,  are  the  incorporators  in  the  foregoing 
instrument  named,  and  I having  first  made  known  to  them  the 
contents  thereof,  they  did  each  acknowledge  that  they  signed, 
sealed  and  delivered  the  same  on  their  voluntary  act  and  deed  for 
the  uses  and  purposes  therein  expressed. 

In  witness  whereof,  I have  hereunto  set  my  hand. 

(Signed)  RANDOLPH  PARMLY, 

(Seal)  Master  in  Chancery  of  New  Jersey. 

Indorsed:  Received  in  the  clerk’s  office,  Middlesex  county, 
March  30,  A.  D.  1892,  at  8.40  o’clock  in  the  forenoon  and  re- 
corded in  Book  “ C ” of  Incorporated  Societies,  page  175,  etc. 

P.  CONOVER,  Clerk 

Indorsed:  Filed  March  30,  1892. 

Henry  C.  Kelsey, 

Secretary  of  State. 


r 


1124  [Senate, 

STATE  OF  NEW  JERSEY, 

Department  op  State. 

I,  Henry  C.  Kelsey,  Secretary  of  State  of  the  State  of  New 
Jersey,  do  hereby  certify  that  the  foregoing  is  a true  copy  of 
the  certificate  of  organization  of  the  United  States  Rubber  Com- 
pany and  the  indorsements  thereon  as  the  same  is  taken  from 
and  compared  with  the  original  filed  in  my  office  on  the  30th 
day  of  March,  A.  D.  1892,  and  now  remaining  on  file  therein. 

In  testimony  whereof,  I have  hereunto  affixed  my  official  seal 
at  Trenton,  this  30th  day  of  March,  A.  D.  1892. 

(Seal)  HENRY  C.  KELSEY, 

Secretary  of  State. 


EXHIBIT  “A,”  FEBRUARY  15,  1897. 


NEW  YORK  EQUALITY  FREIGHT  RATES. 


Effective^,  August  17,  1896. 

Supersedes  all  previous  issues. 

Sugar  Factors’  Code  of  Rules  for  the  guidance  of  factors  in  the 
sale  of  refined  sugar  in  all  the  territory  east  of  the  Rocky 
Mountains. 

In  view  of  the  necessity  for  uniform  rules  governing  the  sale 
of  refined  sugar  under  the  factor  plan,  the  following  is  ordered 
as  effective  on  and  after  the  1st  day  of  June,  1896,  in  all  the 
territory  above  mentioned.  A strict  compliance  with  the  follow- 
ing rules,  and  any  others  that  may  hereafter  be  adopted,  is 
essential  on  the  part  of  every  factor  in  order  to  make  the  plan 
efficient.  To  the  end  that  it  may  be  perpetuated,  violations  will 


No.  40.] 


1125 


be  subject  to  tbe  rigid  enforcement  of  the  conditions  of  the  plan 
without  favor. 

First.  All  sales  of  refined  sugars  must  be  made  strictly  accord- 
ing to  the  equality  plan  and  in  accordance  with  these  rules. 

Second.  In  order  to  equalize  cost  to  buyers  in  towns  where 
local  jobbers  deliver  free  of  cartage  to  customer’s  store,  outside 
jobbers  may,  if  they  choose,  allow  to  their  customers  5 cents  a 
barrel  to  cover  cartage  from  the  railroad  station  to  store. 

Third.  Changes  in  the  price  of  sugars  shall  take  effect  as 
follows:  In  that  district  known  as  the  Eastern  Time  District,  the 
price  shall  take  effect  at  the  same  moment  that  the  American 
Sugar  Refining  Company  makes  the  change  in  price.  Factors 
in  the  Central  Division  of  Time  shall  make  change  of  price  thirty 
minutes  later  than  that  of  points  in  the  Eastern  Division.  Fact- 
ors in  the  Western  Division  shall  make  change  one  hour  later 
than  that  of  price  in  the  Eastern  Division.  (Example:  If  the 
market  changes  at  refining  points  at  10  o’clock  a.  m.,  eastern 
standard  time,  at  points  in  the  Central  Division  change  shall 
take  place  at  9.30  o’clock  a.  m.,  central  standard  time,  and  at 
points  in  the  Western  Division  prices  shall  change  at  9 o’clock 
a.  m.,  western  standard  time.) 

Fourth.  All  orders  for  sugar,  whether  taken  by  salesmen  or 
sent  direct  by  customers  by  mail,  telephone,  telegraph  or  other- 
wise, shall  and  must  be  billed  at  the  price  ruling  at  the  hour 
and  minute  of  time  the  order  is  so  taken  or  sent,  the  time  of 
taking  or  forwarding  the  order  being  stated  on  same,  and  no 
order  shall  be  taken  to  be  billed  at  a future  date. 

Fifth.  Sugars  must  not  be  sold  on  longer  time  than  thirty 
days,  nor  with  a greater  discount  than  1 per  cent,  for  cash  within 
ten  days  sharp  from  date  of  invoice.  When  remittance  is  re- 


1126 


[Senate,, 


ceived  later  than  the  tenth  day,  the  cash  discount  must  not  exceed 
6 per  cent,  per  annum  for  unexpired  time.  If  invoice  is  not  paid 
at  maturity,  interest  must  be  charged  to  purchaser’s  account  for 
all  time  over  thirty  days. 

Sixth.  All  sugars  must  be  billed  on  separate  invoices  from 
other  goods,  and  terms  printed  or  stamped  plainly  on  same. 

Seventh.  A trade  discount  of  1 per  cent,  may  be  allowed  on 
sales  of  100-barrel  lots  or  more,  which  must  be  sold,  charged  or 
billed  at  one  time  and  to  one  purchaser. 

Eighth.  No  shipment  shall  be  made  without  a bona  fide  order. 
Any  shipment  made  on  account  of  an  anticipated  change  in  price 
shall  be  considered  a direct  violation  of  the  factor  plan  of  selling: 
sugars. 

Ninth.  In  billing  sugars,  the  actual  date  and  time  order  was 
taken  or  sent  must  be  plainly  stamped  or  written  on  all  invoices. 

Tenth.  As  the  equality  plan  enables  competing  markets  to 
equalize  the  freight  to  all  selling  points,  thus  placing  all  upon 
an  equal  footing  as  to  delivery,  it  is  contrary  to  the  plan  for 
factors  to  consign  sugars  to  any  point  whatever,  and  this  prac- 
tice is  expressly  prohibited. 

Eleventh.  Factors  selling  through  brokers  can  allow  no  more 
than  the  customary  brokerage  of  10  cents  per  barrel,  which  can 
not  and  shall  not  be  divided  with  the  purchaser.  No  dealer 
acting  as  a broker  can  be  credited  with  brokerage  on  sugar 
bought  for  his  own  account. 

Twelfth.  All  refined  sugars  must  be  graded  and  sold  on  the 
basis  of  refiners’  New  York  card  price  for  corresponding  grade, 
except  in  that  portion  of  the  country  tributary  to  and  rated  upon 
New  Orleans,  which  shall  use  the  card  price  of  the  American 
Sugar  Refining  Company,  New  Orleans: 


No.  40.] 


1127 


Thirteenth.  Factors  may,  if  they  choose,  sell  to  one  another 
at  refiners’  prices  and  terms,  provided  purchasing  factors  main- 
tain full  list  prices. 

Fourteenth.  In  making  sales  of  sugar  to  national,  State,  county 
or  city  institutions,  when  bids  are  requested  and  submitted,  the 
prices  prevailing  on  the  date  bids  are  made  shall  govern  regard- 
less of  advances  or  declines  in  the  market  date  bids  are  accepted 
or  orders  received  by  factors.  Factors  are  privileged  to  name 
net  cash  bids  to  such  institutions,  which  are  the  equality  prices, 
less  1 per  cent,  in  less  than  100-barrel  lots,  or  less  1 per  cent, 
and  1 per  cent,  in  lots  of  100  barrels  or  more.  If  delivery  is 
made  at  a jobbing  point  where  the  five  cents  per  barrel  drayage 
is  allowed,  this  allowance  can  only  be  deducted  from  the  face  of 
the  invoice,  and  not  from  prices  when  bids  are  made. 

Fifteenth.  Factors  must  add  the  rate  of  freight  as  per  equality 
rate  book  to  point  of  shipment.  Whether  the  purchaser  is 
located  on  or  off  the  point,  whether  he  hauls  the  sugar  or  has  it 
shipped,  and  the  lowest  local  rate  of  freight  allowed. 

Sixteenth.  Where  sugars  are  shipped  in  carloads,  shipments 
being  made  direct  from  refiners,  the  factors’  invoices  must,  in 
every  case,  be  dated  the  day  the  sugar  is  shipped  by  the  refiners. 

AMENDMENT  TO  RULE  14. 

The  cancellation  of  decimals  extending  beyond  the  third  deci- 
mal is  permissible,  as  per  example: 


Equality  prices 5.37 

Less  1 per  cent • 0537 

5.3163 

Less  1 per  cent .53163 

I 

Net  cash 5.263 

i = 


1128  [Senate, 

Here  follows  a tabulated  list  of  all  distributing  points  in  the 
State  of  New  York,  alphabetically  arranged,  about  1,700  in  num- 
ber. • 

Bureau  of  Labor  Statistics, 
Albany,  N.  Y.,  February  24,  1897. 

Hon.  Clarence  Lexow,  Chairman,  etc.,  Albany,  N.  Y.: 

Dear  Sir. — I beg  leave  to  acknowledge  the  receipt  of  your  favor 
of  February  22d,  requesting  a detailed  statement,  from  1887  down 
to  the  present  time,  of  the  number  of  workmen  employed  by  the 
sugar  companies  in  this  State,  the  average  annual  wages  paid  to 
such  employes,  designating  in  the  report,  if  possible,  the  names 
of  the  companies  to  which  such  figures  apply. 

In  reply  permit  me  to  say  that  the  only  information  that  I can 
find  in  the  Bureau  bearing  upon  this  subject  is  contained  in  the 
Sixth  Annual  Report  for  the  year  1888,  a transcript  of  which  I 
have  caused  to  be  made,  and  which  I send  herewith. 

Last  year  I sent  out  blanks  to>  every  firm  and  corporation  en- 
gaged in  manufacturing,  to  any  great  extent,  in  this  State.  I 
sent  out  5,111  blanks,  calling  for  the  number  of  employes,  the 
wages  paid  each  year  for  five  years,  and  also  for  the  cost  of 
stock  and  materials  used  during  that  period,  and  the  total  market 
value  of  the  manufactured  materials. 

I also  send  herewith  a copy  of  this  blank.  Three  thousand 
seven  hundred  and  forty-three  establishments  sent  returns  to  the 
blank;  but  many  neglected  or  refused  to  answer;  some  of  them 
alleging  that  the  information  sought  would  compel  them,  in 
answering,  to  reveal  their  private  affairs. 

Section  3 of  chapter  205  of  the  Laws  of  1886,  relating  to  this 
Bureau,  provides  that  no  witness  shall  be  compelled  to  answmr 


No.  40.] 


1129 


any  question  respecting  his  private  affairs,  and  in  view  of  this 
provision  of  law,  and  it  not  being  the  policy  of  the  Bureau  to  pry 
into  private  affairs,  where  a return  was  not  made  and  the  excuse 
was  given  that  to*  make  such  a return  would  be  a revelation  of 
private  affairs,  the  Bureau  thought  it  wiser  not  to  take  the  matter 
into  the  courts  with  a view  of  compelling  answers  to  the 
questions. 

One  of  the  establishments  that  objected  to  answering  the  ques- 
tions was  the  American  Sugar  Refining  Company,  and  hence  the 
Bureau  is  unable  to  give  the  statement  requested. 

Yours  very  respectfully, 

john  t.  McDonough. 

A TRANSCRIPT  FROM  THE  SIXTH  ANNUAL  REPORT 
OF  BUREAU  OF  STATISTICS  OF  LABOR. 

Sugar  Refineries. 

Eleven  firms  reported  2,728  employes.  Wages  per  day:  Boys, 
50  cents  to  91  2-3  cents;  miscellaneous  workers,  $1.45  to  $5,  the 
latter  engineers  and  skilled  labor.  Wages  per  month:  $50  to 
$125;  superintendent,  $250.  Rates  per  hour:  14£  cents  to  21 
cents.  Hours  per  day,  9 to  12;  on  Saturday,  6 to  12. 

“ There  are  at  present  in  Brooklyn  eight  refineries  closed,  that 
used  to  employ  1,300  men;  1,200  men  are  at  present  employed  in 
Brooklyn.  The  New  York  refineries  are  small  with  one  exception; 
the  smaller  ones  pay  15  cents  per  hour,  but  are  only  in  operation 
from  three  to  four  months  in  the  year.  The  largest  one  in  New 
York  pays  only  13|  cents  per  hour.  There  is  no  evidence  of 
organization  among  the  sugar-house  employes  at  present  either 
in  Brooklyn  or  New  York.” 


1130 


[Senate, 


SUGAR  REFINERIES. 


CLASSIFICATION. 

Number  of 

blanks. 

Number  of 

employes. 

Rates  per  Day. 

Hours  for 
first  five 
days. 

Hours  on 
Saturday. 

Lowest. 

Highest. 

Blacksmiths 

5,843 

1 

$2  50 

$1  75 

10 

10 

Blacksmiths,  carpen- 

ters,  etc 

5,851 

7 

2 50 

3 50 

10 

10 

Blacksmiths  and 

5,700 

13 

2 00 

2 50 

10 

5 '843 

5 

2 35 

Boys  

5^851 

5 

50 

913$ 

10 

10 

Carpenters 

248 

1 

2 20 

10 

10 

Engineers  . 

4,129 

] 

2 00 

9-10 

6-8 

Engineers  

5;  849 

24 

1 95 

3 3314 

10 

9-10 

5,843 

3 

al25  00 

10 

10 

Engineers  and  machin- 

ists 

5,848 

27 

1 95 

3 334 

10 

9-10 

Firemen „ . 

5,843 

4 

1 75 

10 

10 

Firemen . . 

5 '851 

8 

1 80 

12 

12 

Firemen 

5' 849 

42 

2 20 

2 474 

10 

10 

Firemen 

5,848 

20 

1 70 

3 00 

10 

10 

Firemen’s  helpers 

5,848 

19 

1 50 

10 

10 

Firemen’s  helper* ...... 

5^849 

19 

1 65 

10 

10 

Firemen 

5^843 

21 

2 05 

10 

10 

Firemen,  watchmen, 

etc 

5,851 

8 

50 

a75  00 

10 

10 

Helpers  

5,848 

23 

1 50 

1 90 

10-12 

10-12 

Laborers  

5,706 

16 

...... 

144 

10 

9-10 

Laborers  

5,700 

160-260 

bl5 

bl6 

10 

13 

Laborers  

5,706 

75-95 

bl7 

bl9 

10 

12 

Laborers 

5,851 

285 

1 45 

1 60 

10-12 

10-12 

Laborers 

4,129 

3-4 

1 50 

1 664 

9-10 

6-8 

Laborers 

2 firms 

1370 

1 50 

2 00 

10 

10 

Laborers 

5,848 

35 

1 70 

2 50 

10 

10 

Laborers 

5,849 

45 

2 00 

5 00 

10 

10 

Machinists 

5,843 

6 

...... 

1 90 

10 

10 

Machinists  aud  carpen- 

5,706 

6 

2 75 

3 00 

10 

Machinists  and  copper- 

smith 

...... 

....  .... 

...... 

....  .... 

...... 

Pipe  fitters,  etc 

5,851 

31 

2 25 

3 00 

10-12 

10-12 

Machinists’  helpers 

5,849 

14 

1 50 

1 70 

10 

9-10 

Mechanics 

5,849 

55 

2 00 

5 00 

10 

8-10 

Mechanics  

5,848 

14 

2 00 

5 00 

10 

8-10 

Mechanics’  helpers 

5,849 

23 

1 60 

2 50 

10 

8-10 

Shipper 

4,129 

1 

...... 

2 164 

9-10 

6-8 

Superintendent _ _ _ 

5,843 

1 

250  00 

10 

10 

Watchman  

'248 

2 

1 85 

10 

10 

a Per  month.  6 Per  hour. 
Kates  for  1886.  Kates  for  1887. 


No.  40.] 


1131 


WAGES  AND  NUMBER  OF  WORKING  HOURS  OF  THE 
SUGARHOUSE  EMPLOYES  OF  BROOKLYN  FOR  FIYE 
YEARS,  1883-1887. 

Sugar  Boilers. 


TEARS. 

"Wages  Pee  Month. 

Houbs. 

Highest. 

Lowest. 

Eor  first  fire  days 
of  week. 

On  Saturday. 

1883  

$90  00 

$75  00 

12 

12 

1884  

90  00 

75  00 

12 

12 

1885  

90  00 

75  00 

12 

12 

1886  

90  00 

75  00 

8 

8 

1887  

90  00 

75  00 

8 

8 

Inside  Men  Laborers. 


1883 

1884 

1885 

1886 
1887 


.13* 

10  to  12 

.13* 

10  to  12 

.12* 

10  to  12 

-14* 

10  to  12 

.14* 

10  to  12 

10 

to 

12 

10 

to 

12 

10 

to 

12 

10 

to 

12 

10 

to 

12 

Truckmen. 


1883  

14  00 

12  00 

12 

1884  

14  00 

12  00 

12 

1885  

14  00 

12  00 

12 

1886  

14  00 

12  00 

12 

1887  

14  00 

12  00 

12 

THE  FOLLOWING  ARE  COPIES 


OF  SO-CALLED 

Anti-Trust  Laws  and  Laws  to  Prevent  Combina- 
tions in  Restraint  of  Trade 

ENACTED  BY 


CONGRESS  AND  THE  DIFFERENT  STATES  (EXCEPT 
NEW  YORK). 

AS  FAR  AS  THE  SAME  COULD  BE  ASCERTAINED  BY  YOUR  COMMITTEE. 


UNITED  STATES  ACTS. 


UNITED  STATES  STATUTES  AT  LARGE.  CHAPTER  647. 
AN  ACT  TO  PROTECT  TRADE  AND  COMMERCE 
AGAINST  UNLAWFUL  RESTRAINTS  AND  MONOPO- 
LIES. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  assembled : 

Section  1.  Every  contract,  combination  in  the  form  of  trust 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce 
among  the  several  states,  or  with  foreign  nations,  is  hereby  de- 
clared to  be  illegal.  Every  person  who  shall  make  any  such 
contract,  or  engage  in  any  such  combination  or  conspiracy,  shall 
be  deemed  guilty  of  a misdemeanor,  and,  on  conviction  thereof, 
shall  be  punished  by  a fine  not  exceeding  five  thousand  dollars, 
or  by  imprisonment  not  exceeding  one  year,  or  by  both  said  pun- 
ishments, in  the  discretion  of  the  court. 

§ 2.  Every  person  who  shall  monopolize,  or  attempt  to  monopo- 
lize, or  combine  or  conspire  with  any  other  person  or  persons, 
to  monopolize  any  part  of  the  trade  or  commerce  among  the  sev- 
eral states,  or  with  foreign  nations,  shall  be  deemed  guilty  of 
a misdemeanor,  and,  on  conviction  thereof,  shall  be  punished 
by  fine  not  exceeding  five  thousand  dollars,  or  by  imprisonment 
not  exceeding  one  year,  or  by  both  said  punishments,  in  the  discre- 
tion of  the  court. 

§ 3.  Every  contract,  combination  in  form  of  trust  or  otherwise, 
or  conspiracy,  in  restraint  of  trade  or  commerce  in  any  territory 


1136  [Senate, 

of  the  United  States  or  of  the  District  of  Columbia,  or  in  restraint 
of  trade  or  commerce  in  any  such  territory  and  another  or  be- 
tween any  such  territory  or  territories  and  any  state  or  states 
or  the  District  of  Columbia  and  any  state  or  states  or  foreign 
nations,  is  hereby  declared  illegal.  Every  person  who  shall  make 
any  such  contract  or  engage  in  any  such  combination  or  con- 
spiracy shall  be  deemed  guilty  of  a misdemeanor,  and,  on  con- 
viction thereof,  shall  be  punished  by  fine  not  exceeding  five  thou- 
sand dollars,  or  by  imprisonment  not  exceeding  one  year,  or 
by  both  said  punishments,  in  the  discretion  of  the  court. 

§ 4.  The  several  circuit  courts  of  the  United  States  are  hereby 
invested  with  jurisdiction  to  prevent  and  restrain  violations  of 
this  act;  and  it  shall  be  the  duty  of  the  several  district  attorneys 
of  the  United  States,  in  their  respective  districts,  under  the  direc- 
tion of  the  attorney-general,  to  institute  proceedings  in  equity 
to  prevent  and  restrain  such  violations.  Such  proceedings  may 
be  by  way  of  petition,  setting  forth  the  case,  and  praying  that 
such  violation  shall  be  enjoined  or  otherwise  prohibited.  When 
the  parties  complained  of  shall  have  been  duly  notified  of  such 
petition,  the  court  shall  proceed,  as  soon  as  may  be,  to  the  hear- 
ing and  determination  of  the  case;  and  pending  such  petition, 
and  before  final  decree,  the  court  may,  at  any  time,  make  such 
temporary  restraining  order  or  prohibition  as  shall  be  deemed 
just  in  the  premises. 

§ 5.  Whenever  it  shall  appear  to  the  court  before  which  any 
proceedings  under  section  four  of  this  act  may  be  pending,  that 
the  ends  of  justice  require  that  other  parties  should  be  brought 
before  the  court,  the  court  may  cause  them  to  be  summoned, 
whether  they  reside  in  the  district  in  which  the  court  is  held 
or  not ; and  subpoenas  to  that  end  may  be  served  in  any  district 
by  the  marshal  there^ 


Ao.  40.] 


1137 


§ 0.  Any  property  owned  under  any  contract,  or  by  any  com- 
bination, or  pursuant  to  any  conspiracy  (and  being  the  subject 
thereof),  mentioned  in  section  one  of  this  act,  and  being  in  the 
course  of  transportation  from  one  state  to  another,  or  to  a foreign 
country,  shall  be  forfeited  to  the  United  States,  and  may  be  seized 
and  condemned  by  like  proceedings  as  those  provided  by  law  for 

the  forfeiture,  seizure  and  condemnation  of  property  imported 

♦ 

into  the  United  States  contrary  to  law. 

§ 7.  Any  person  who  shall  be  injured  in  his  business  or  prop- 
erty by  any  person  or  corporation  by  reason  of  anything  forbid- 
den or  declared  to  be  unlawful  by  this  act,  may  sue  therefor  in 
the  circuit  court  of  the  United  States  in  the  district  in  which  the 
defendant  resides  or  is  found,  without  respect  to  the  amount  in 
controversy,  and  shall  recover  three-fold  the  damages  by  him 
sustained,  and  the  costs  of  the  suit,  including  a reasonable  attor- 
ney’s fee. 

§ 8.  That  the  word  “ person  ” or  “ persons  ” wherever  used  in 
this  act  shall  be  deemed  to  include  corporations  and  associations 
existing  under  or  authorized  by  the  laws  of  either  the  United 
States,  the  laws  of  any  of  the  territories,  the  laws  of  any  state 
or  the  laws  of  any  foreign  country. 

Approved,  July  2, 1896. 

Chapter  349  of  the  Laws  of  1894,  entitled  “An  act  to  reduce 
taxation  and  provide  revenue  for  the  government  and  for  other 
purposes.” 

Section  73.  That  every  combination,  conspiracy,  trust,  agree- 
ment or  contract  is  hereby  declared  to  be  contrary  to  public  pol- 
icy, illegal  and  void,  and  the  same  is  made  by  or  between  two  or 
more  persons  or  corporations  thereof  who  is  engaged  in  importing 
any  article  from  any  foreign  country  into  the  United  States,  and 
72 


1138  [Senate, 

when  such  combination,  conspiracy,  trust,  agreement  or  contract 
is  intended  to  operate  in  restraint  of  lawful  trade,  or  from  com- 
petition in  lawful  trade  or  commerce  or  to  increase  the  market 
price  for  any  part  of  the  United  States  of  any  article  or  articles 
imported  or  intended  to  be  imported  into  the  United  States,  or 
of  any  manufacture  into  which  such  imported  article  is  intended 
to  enter.  Every  person  who  is,  or  shall  be  hereafter,  engaged 
in  the  importation  of  goods  or  any  commodity  from  any  foreign 
country  in  violation  of  this  section  of  this  act,  or  who'  shall 
combine  or  conspire  with  another  to  violate  the  same,  is  guilty 
of  a misdemeanor,  and  on  conviction  thereof  in  any  court  of  the 
United  States  such  person  shall  be  fined  in  a sum  not  less  than 
one  hundred  dollars  and  not  exceeding  five  thousand  dollars,  and 
shall  be  further  punished  by  imprisonment,  in  the  discretion  of 
the  court,  for  a term  not  less  than  three  months  nor  exceeding 
twelve  months. 

§ 74.  That  the  several  circuit  courts  of  the  United  States  are 
hereby  invested  with  jurisdiction  to  prevent  and  restrain  viola- 
tions of  section  seventy-three  of  this  act,  and  it  shall  be  the  duty 
of  the  several  district  attorneys  of  the  United  States,  in  their 
respective  districts,  under  the  direction  of  the  attorney-general, 
to  institute  proceedings  in  equity  to  prevent  and  restrain  such 
violations,  et  cetera. 

§ 76.  That  any  property  owned  under  any  contract  or  by  any 
combination  or  pursuant  to  any  conspiracy  (and  being  the  subject 
thereof)  mentioned  in  section  seventy-three  of  this  act,  and  being 
in  the  course  of  transportation  from  one  state  to  another,  or  to 
or  through  a territory  or  the  District  of  Columbia,  shall  be  for- 
feited to  the  United  States  and  may  be  seized  and  condemned  by 
like  proceedings  as  those  provided  by  law  for  the  forfeiture, 


No.  40.] 


1139 


seizure  and  condemnation  of  property  imported  into  the  United 
States  contrary  to  law. 

§ 77.  That  any  person  who  shall  be  injured  in  his  business  or 
property  by  any  other  person  or  corporation  by  reason  of  any- 
thing forbidden  or  declared  to  be  unlawful  by  this  act  may  sue 
therein  in  any  circuit  court  of  the  United  States,  in  the  district 
in  which  the  defendant  resides  or  is  found,  without  respect  to 
the  amount  in  controversy,  and  shall  recover  three-fold  damages 
by  him  sustained  and  the  costs  of  suit,  including  a reasonable 
attorney’s  fee. 


ALABAMA. 


No.  634.  H.  521. 

AN  ACT 

To  more  effectively  protect  tho  people  against  combinations, 
conspiracies  and  agreements  between  insurers  whereby  rates  of 
insurance  are  raised  or  fixed.  Whereas,  existing  laws  have 
proved  inadequate  to  protect  the  people  against  combinations, 
conspiracies  and  agreements  between  insurers  whereby  rates 
of  insurance  are  raised  or  fixed  by  such  practices,  therefore,  in 
order  to  suppress  such  combinations,  conspiracies  and  agree- 
ments to  the  end  that  competition  in  business  shall  alone  make 
such  rates,  i 

Section  1.  Be  it  enacted  by  the  general  assembly  of  Alabama, 
that  every  contract  or  policy  of  insurance  made  or  issued  after 
the  passage  of  this  act  shall  be  construed  to  mean  that  in  the 
event  of  loss  or  damage  thereunder,  the  assured  or  beneficiary 
thereunder  may,  in  addition  to  the  actual  loss  or  damage  suffered, 


1140,  [Senate, 

recover  twenty-five  per  centum  of  the  amount  of  such  actual 
loss,  any  provision  or  stipulation  in  such  contract  or  policy  to 
the  contrary  notwithstanding;  provided,  at  the  time  of  the  mak- 
ing of  such  contract  or  policy  of  insurance,  or  subsequently 
before  the  time  of  trial  the  insurer  belonged  to,  or  was  a member 
of,  or  in  any  way  connected  with,  afiy  tariff  association  or  such 
like  thing  by  whatever  name  called,  or  who  had  any  agreement 
or  had  any  understanding  with  any  other  person,  corporation  or 
association  engaged  in  the  business  of  insurance  as  agent  or 
otherwise  about  any  particular  rate  of  premium  which  should  be 
charged  or  fixed  for  any  kind  or  class  of  insurance  risk;  and 
provided  further,  no  stipulation  or  agreement  in  such  contract 
or  policy  of  insurance  to  arbitrate  loss  or  damage  nor  to  give 
notice  to  make  proofs  of  loss  or  damage  shall  in  any  such  case 
be  binding  on  the  assured  or  beneficiary,  but  right  of  action 
accrues  immediately  upon  loss  or  damage. 

§ 2.  Be  it  further  enacted,  that  if  it  is  shown  to  the  reasonable 
satisfaction  of  the  jury  by  a preponderance  of  the  weight  of  the 
testimony  that  such  assurer  at  the  time  of  the  making  of  such 
agreement  or  policy  of  insurance  or  subsequently  before  the  time 
of  trial  belonged  to,  or  was  a member  of,  in  any  way  connected 
with,  any  tariff  association  or  such  like  thing  by  whatever  name 
called,  either  in  or  out  of  this  state,  or  had  made  any  agreement 
or  had  any  understanding  either  in  or  out  of  this  state,  with  any 
person,  corporation  or  association  engaged  in  the  busi- 
ness of  insurance  as  agent  or  otherwise  about  any  par- 
ticular rate  of  premium  which  should  be  charged  or  fixed  for 
any  risk  of  insurance  on  any  person  or  property,  or  on  any  kind 
or  class  of  insurance  risk,  they  must,  if  they  find  for  the  assured 
or  beneficiary,  in  addition  to  his  actual  damages,  assess  and  add 


No.  40.] 


1141 


twenty-five  per  centum  of  the  amount  of  such  actual  loss,  and 
judgment  shall  be  rendered  accordingly. 

§ 3.  Be  it  further  enacted,  that  this  act  shall  be  liberally  con- 
strued to  accomplish  its  object. 

Approved,  February  18,  1897. 


CONNECTICUT. 


The  constitution  of  the  state  contains  a provision  against 
monopolies. 


DELAWARE. 


There  is  no  law  upon  the  statute  boohs  of  this  state,  nor  any  pro- 
vision in  its  constitution  against  combinations,  but  a proposed 
amendment  to  the  constitution,  which  h!as  not  yet  been  adopted, 
makes  it  the  duty  of  the  legislature  to  enact  laws  prohibiting  com- 
binations designed  to  produce  fictitious  prices  for  commodities. 


GEORGIA. 


A BILL 

To  be  entitled.  An  act  to  declare  unlawful  and  void  all  arrange- 
ments, contracts,  agreements,  trusts,  or  combinations  made  with  a 


1142  [Senate, 

view  'to  lessen,  or  which  tend  to  lessen,  free  competition  in  the  im- 
portation or  sale  of  articles  imported  into  this  state;  or  in  the  manu- 
facture or  sale  of  articles  of  domestic  growth  or  of  domestic  raw 
material;  to  declare  unlawful  and  void,  all  arrangements,  contracts, 
agreements,  trusts  or  combine  tin  ns,  between  persons  or  corpora- 
tions designed,  or  which  tend  to  advance,  reduce  or  control  the 
pried  of  isuch  product  or  article  to  producer  or  consumer  of  any  such 
product  or  article;  to  provide  for  forfeiture  of  the  charter  and  fran- 
chise of  any  corporation  organized  under  the  laws  of  this  state,  vio- 
lating any  of  the  provisions  of  this  act;  to  prohibit  every  foreign 
corporation,  violating  any  of  the  provisions  of  this  act  from  doing 
business  in  this  state;  to  require  the  attorney-general  of  this  state 
to  institute  legal  proceedings  against  any  such  corporation  violating 
the  provisions  of  this  act,  and  to  enforce  the  penalties  prescribed; 
to  prescribe  penalties  for  any  violations  of  this  act;  to  authorize  any 
person  or  corporation,  damaged  by  any  such  trust,  agreement  or 
combination,  to  isue  for  the  recovery  of  such  damage,  and  for  other 
purposes. 

Section  1.  Be  it  enacted  by  the  general  assembly  of  G-eorgia,  and 
it  is  hereby  enacted  by  the  authority  of  the  same,  that,  from  and 
after  the  passage  of  this  act,  all  arrangements,  contracts,  agree- 
ments, trusts  or  combinations  between  persons  or  corporations 
made  with  a view  to  lessen,  or  which  tend  to  lessen,  full  and  free 
competition  in  the  importation  or  sale  of  articles  imported  into 
this  state,  or  in  the  manufacture  or  sale  of  articles  of  domestic 
growth,  or  of  domestic  raw  material,  and  all  arrangements,  con- 
tracts, agreements,  trusts  or  combinations,  between  persons  or 
corporations  designed,  or  which  tend  to  advance,  reduce  or  con- 
trol the  price  or  the  cost  to  the  producer,  or  to  the  customer  of 
any  such  product  or  article,  are  hereby  declared  to  be  against 
public  policy,  unlawful  and  void. 


No.  40.] 


1143 


§ 2.  Be  it  further  enacted  by  'the  authority  aforesaid,  that  any 
corporation,  chartered  under  the  laws  of  this  state,  which  shall 
violate  any  of  the  provision®  of  this  act,  shall  thereby  forfeit  its 
charter  and  its  franchise,  and  its  corporate  existence  shall  thereupon 
cease  and  determine.  Every  foreign  corporation  which  ishiall  vio- 
late any  of  the  provisions  of  this  act,  is  hereby  denied  the  right  to 
do,  and  isi  prohibited  from  doing,  business  in  this  state.  It  is  hereby 
made  the  duty  of  the  attorney-general  of  this  state  to  enforce  this 
provision  by  due  process  .of  law.  / 

§ 3.  Be  it  further  enacted  by  the  authority  aforesaid,  that  any 
violation  of  the  provisions  of  this  act  shall  be  deemed  and  is  hereby 
declared  to  be  destructive  of  full  and  free  competition,  and  a con- 
spiracy against  'trade,  and  any  person  or  persons  who  may  engage 
in  any  such  conspiracy,  or  who  shall,  as  principal,  manager,  director 
or  agent,  or  in  any  other  capacity,  'knowingly  carry  out  any  of  the 
stipulations,  purposes,  prices,  rates  or  orders  made  in  furtherance 
of  such  conspiracy,  shall,  on  conviction,  be  punished  by  a fine  of  not 
less  than  one  hundred  dollars,  or  more  than  five  thousand  dollars, 
and  by  imprisonment  in  the  penitentiary  not  less  than  one  year  or 
not  more  than  ten  years;  or,  in  the  judgment  of  the  court,  by  either 
guch  fine  or  such  imprisonment. 

§ 4.  Be  it  further  enacted  by  the  authority  aforesaid,  that  the  pro- 
visions of  this  act  shall  njot  apply  to  agricultural  products,  or  live 
stock,  while  in  the  possession  of  the  producer  or  raiser. 

§ 5.  Be  it  further  enacted  bv  the  authority  aforesaid,  that  any 
person  or  persons  or  corporation  that  may  be  injured  or  damaged  by 
any  such  arrangements,  contract,  agreement,  trust  or  combination, 
described  in  section  one  of  this  act,  may  sue  for  and  recover,  in  any 
court  of  competent  jurisdiction  in  this  state,  of  any  person,  persons 
or  corporations,  operating  such  trust  or  combination,  the  full  con- 


1144  [Senate, 

sideration  or  sum  paid  by  him  or  them  for  any  goods,  wares,  mer- 
chandise, or  articles,  the  sale  of  which  is  controlled  by  such  com- 
bination or  trust.  , 

§ 6.  Be  it  further  enacted  by  the  authority  aforesaid,  that  it  shall 
be  the  duty  of  the  judges  of  the  superior  courts  of  this  state  specially 
to  instruct  the  grand  juries  as  to  the  provisions  of  thiis  act. 

§ 7.  Be  it  further  enacted  by  the  authority  aforesaid,  that  all  laws 
and  parts  of  laws  )in  conflict  with  the  provisions  of  this  act  be,  and 
the  same  are  hereby  repealed. 

Approved,  December  23, 1896.  , 


ILLINOIS. 


TRUSTS  AND  COMBINES. 

Pools,  trusts  and1  combines  prohibited. 

An  Act  to  provide  for  the  punishment  of  persons,  co-partnerships, 
or  corporations  forming  pools,  trusts  and  combines,  and  mode  of 
procedure  and  rules  of  evidence  in  such  cases. 

-Section  1.  Be  it  enacted  by  the  people  of  the  -state  of  Illinois,  re- 
presented in  the  General  Assembly:  If  any  corporation  organized 
underthe  lawso-f  this  or  any  other  state  or  country, for  transacting 
or  conducting  any  kind1  of  business  in  this  -state,  or  any  partnership 
or  individual  or  other  association  of  persons  whosoever,  shall  create, 
enter  into-,  become  a member  of  or  a party  to  any  pool,  trust,  agree- 
ment, combination,  confederatipn  or  understanding  with  any  other 
corporation,  partnership,  individual,  or  any  other  person  or  associa- 
tion of  persons  to  regulate  or  fix  the  price  of  any  article  of  merchan- 


No.  40. J 


1145 


dise  or  commodity,  or  shall  enter  into,  become  a.  member  of  or  a 
party  to  any  pool,  agreement,  contract,  combination  or  confedera- 
tion to  fix  or  limit  the  amount  or  quantity  of  any  article,  commodity 
or  merchandise  to  be  manufactured*  mined,  produced  or  sold1  in  this 
state,  such  corporation,  partnership,  or  individual  or  other  associa- 
tion of  persons,  shall  be  deemed  and  adjudged  guilty  of  a conspiracy 
to  defraud,  and  be  subject  to  indictment,  and'  punished  as  provided 
in  this  act. 

§ 2.  It  shall  not  be  lawful  for  any  corporation  to  issue  or  to 
own  trust  certificates,  or  for  any  corporation,  agent,  officer  or 
employes,  or  the  directors  or  stockholders  of  any  corporation, 
to  enter  into  any  combination,  contract  or  agreement  with  any 
person  or  persons,  corporation  or  corporations,  or  with  any  stock- 
holder or  director  thereof,  the  purpose  and  effect  of  which  combi- 
nation, contract,  or  agreement  shall  be  to  place  the  management 
or  control  of  such  combination  or  combinations,  or  the  manufac- 
tured product  thereof,  in  the  hands  of  any  trustee  or  trustees, 
with  the  intent  to  limit  or  fix  the  price,  or  lessen  the  production 
and  sale  of  an  article  of  commerce,  use  or  consumption,  or  to 
prevent,  restrict,  or  diminish  the  manufacture  or  output  of  any 
such  article. 

§ 3.  If  a corporation  or  a company,  firm  or  association  shall 
be  found  guilty  of  a violation  of  this  act,  it  shall  be  punished  by 
a fine  in  any  sum  not  less  than  five  hundred  dollars  ($500)  nor 
more  than  two  thousand  dollars  ($2,000)  for  the  first  offense;  and 
for  the  second  offense,  not  less  than  two  thousand  dollars  ($2,000) 
nor  more  than  five  thousand  dollars  ($5,000),  and  for  the  third 
offense,  not  less  than  five  thousand  dollars  ($5,000)  nor  more  than 
ten  thousand  dollars  ($10,000),  and  for  every  subsequent  offense 
and  conviction  thereof,  shall  be  liable  to  a fine  of  fifteen  thousand 


1146  [Senate, 

dollars  ($15,000);  provided,  that  in  all  cases  under  this  act  either 
party  shall  have  the  right  of  trial  by  jury. 

§ 4.  Any  president,  manager,  director  or  other  officer  or  agent 
or  receiver  of  any  corporation,  company,  firm  or  association  or 
any  member  of  any  company,  firm  or  association,  or  any  indi- 
vidual found  guilty  of  a violation  of  the  first  section  of  this  act 
may  be  punished  by  a fine  of  not  less  than  two  hundred  dollars 
($200)  nor  to  exceed  one  thousand  dollars  ($1,000),  or  to  be  pun- 
ished by  confinement  in  the  county  jail  not  to  exceed  one  year 
or  both,  in  the  discretion  of  the  court  before  which  such  convic- 
tion may  be  had. 

§ 5.  Any  contract  or  agreement  in  violation  of  any  provision 
of  the  preceding  sections  of  this  act  shall  be  absolutely  void. 

§ 6.  Any  purchaser  of  any  article  or  commodity  from  any  indi- 
vidual company  or  corporation  transacting  business  contrary  to 
any  provision  of  the  preceding  section  of  this  act,  shall  not  be 
liable  for  the  price  or  payment  of  such  article  or  commodity,  and 
may  plead  this  act  as  a defense  in  any  suit  for  such  price  or 
payment. 

§ 7.  The  fines  hereinbefore  provided  for  may  be  recovered  in 
an  action  for  debt,  in  the  name  of  the  People  of  the  State  of 
Illinois.  If,  upon  the  trial  of  any  cause  instituted  under  this  act 
to  recover  the  penalties  as  provided  for  in  section  three,  the  jury 
shall  find  for  the  people,  and  that  the  defendant  has  been  before 
convicted  of  a violation  of  the  provisions  of  this  act,  they  shall 
return  such  finding  with  their  verdict,  stating  the  number  of 
times  they  find  defendant  so  convicted,  and  shall  assess  and 
return  with  their  verdict  the  amount  of  the  fine  to  be  imposed 
upon  the  defendant  in  accordance  with  said  section  three.  Pro- 
vided, that  in  all  cases  under  the  provisions  of  this  act  a prepon- 


No.  40.] 


1147 


derance  of  evidence  in  favor  of  the  people  shall  be  sufficient  to 
authorize  a verdict  and  judgment  for  the  people. 

§ 8.  It  shall  be  the  duty  of  the  prosecuting  attorneys  in  their 
respective  jurisdictions,  and  the  attorney-general,  to  enforce  the 
foregoing  provisions  of  this  act,  and  any  prosecuting  attorney 
of  any  county  securing  a conviction  under  the  provisions  of  this 
act,  shall  be  entitled  to  such  fee  or  salary  as  by  law  he  is  allowed 
for  such  prosecution.  When  there  is  a conviction  under  this  act, 
the  informer  shall  be  entitled  to  one-fifth  of  the  fine  recovered, 
which  shall  be  paid  him  when  the  same  is  collected.  All  fines 
recovered  under  the  provisions  of  this  act  shall  be  paid  into 
the  county  treasury  of  the  couuty  in  which  the  suit  is  tried,  by 
the  person  collecting  the  same,  in  the  manner  now  provided  by 
law,  to  be  used  for  county  purposes. 

Approved,  June  11,  1891. 

ENFORCING  TRUST  LAWS. 

An  Act  to  amend  an  act,  entitled  “An  act  to  provide  for  the. 
punishment  of  persons,  copartnerships  or  corporations  forming 
pools,  trusts  and  combines,  and  mode  of  procedure  and  rules 
of  evidence  in  such  cases,  approved  June  11,  1891,  and  in  force 
July  1,  1891,  be  and  the  same  is  hereby  amended  by  adding 
two  new  sections — 7a  and  7b,  respectively — and  making  an  ap- 
propriation for  the  purpose  of  carrying  into  effect  this  act.” 
Section  1.  Be  it  enacted  by  the  People  of  the  State  of  Illinois, 
represented  in  the  General  Assembly:  That  an  act,  entitled  “An 
act  to  provide  for  the  punishment  of  persons,  copartnerships  or 
corporations  forming  pools,  trusts  and  combines,  and  mode  of 
procedure  and  rules  of  evidence  in  such  cases,”  approved  June 
eleventh,  eighteen  hundred  and  ninety-one,  and  in  force  July 


1 148  [ Senate, 

first,  eighteen  hundred  and  ninety-one,  be  and  the  same  is  hereby 
amended  by  two  new  sections,  as  follows: 

§ 7a.  It  shall  be  the  duty  of  the  secretary  of  state,  on  or  about 
the  first  day  of  September  of  each  year,  to  address  to  the  presi- 
dent, secretary,  or  treasurer  of  each  incorporated  company  doing 
business  in  this  state,  whose  post-office  is  known  or  may  be 
ascertained,  a letter  of  inquiry  as  to  whether  the  said  corporation 
has  all  or  any  part  of  its  business  or  interest  in  or  with  any 
trust,  combination  or  association  of  persons,  or  stockholders,  as 
named  in  the  preceding  provisions  of  this  act,  and  to  require 
answer,  under  oath,  of  the  president,  secretary  or  treasurer,  or 
any  director  of  said  company.  A form  of  affidavit  shall  be  in- 
closed in  said  letter  of  inquiry  as  follows: 

AFFIDAVIT. 

V-  ' 

STATE  OF  ILLINOIS,  ) oo  . 

V oo.  « 

County  op ’ 

I, , do  solemnly  swear  that  I am  the 

(president,  secretary,  treasurer  or  director)  of  the  corporation 

known  and  styled duly  incorporated  under 

the  laws  of on  the of , 

18.  . . .,  and  now  transacting  or  conducting  business  in  the  State 
of  Illinois,  and  that  I am  duly  authorized  to  represent  said  cor- 
poration in  the  making  of  this  affidavit,  and  I do  further  sol- 
emnly swear  that  the  said known  and  styled 

as  aforesaid,  has  not,  since  the day  of 

(naming  the  day  upon  which  this  act  takes  effect),  created,  en- 
tered into  or  become  a member  of,  or  a party  to,  and  was  not,  on 

the day  of nor  at  any  day  since  that  time 

and  is  not  now,  a member  of,  or  a party  to,  any  pool,  trust,  agree- 


No.  40.] 


1149 


ment,  combination,  confederation  or  understanding  with  any 
other  corporation,  partnership,  individual  or  any  other  person 
or  association  of  persons,  to  regulate  or  fix  the  price  of  any  arti- 
cle of  merchandise  or  commodity;  and  that  it  has  not  entered  into 
or  become  a member  of,  or  a party  to,  any  pool,  trust,  agreement, 
contract,  combination  or  confederation  to  fix  or  limit  the  amount 
or  quantity  of  any  article,  commodity  or  merchandise  to  be  manu- 
factured, mined,  produced  or  sold  in  this  State;  and  that  it  has 
not  issued  and  does  not  own  any  trust  certificates,  and  for  any 
corporation,  officer  or  employe,  or  for  the  directors  or  stock- 
holders of  any  corporation,  has  not  entered  into  and  is  not  now 
in  any  combination,  contract  or  agreement  with  any  person  or 
persons,  corporation  or  corporations,  or  with  any  stockholder  or 
director  thereof,  the  purpose  and  effect  of  which  said  combina- 
tion, contract  or  agreement  would  be  to  place  the  management  e 
or  control  of  such  combination  or  combinations,  or  the  manufac- 
tured product  thereof  in  the  hands  of  any  trustee  or 
trustees,  with  the  intent  to  limit  or  fix  the  price  or  lessen  the  pro- 
duction and  sales  of  any  article  of  commerce,  use  or  consumption, 
or  to  prevent,  restrict  or  diminish  the  manufacture  or  output 
of  any  such  article. 

•••••••• * J 

(President,  Secretary,  Treasurer  or  Director.) 

Subscribed  and  sworn  to  before  me,  a within  and 

for  the  county  of , this day  of , 

18 

(Seal)  

And  on  refusal  to  make  oath  in  answer  to  said  inquiry,  or  on 
failure  to  do  so  within  thirty  days  from  the  mailing  thereof,  the 
Secretary  of  State  shall  certify  that  fact  to  the  Attorney-Gen- 


1150  [Senate, 

eral,  whose  duty  it  shall  be  to  direct  the  State’s  attorney  of  the 
county  wherein  such  corporation  or  corporations  are  located,  and 
it  is  hereby  made  the  duty  of  the  State’s  attorney,  under  the  di- 
rection of  the  Attorney-General,  at  the  earliest  practicable  mo- 
ment, in  the  name  of  the  people  of  the  State  of  Illinois,  and  at 
the  relation  of  the  Attorney-General,  to  proceed  against  such  cor- 
poration for  the  recovery  of  a penalty  of  fifty  dollars  for  each 
day  after  such  refusal  to  make  oath,  or  failure  to  make  said  oath, 
within  thirty  days  from  the  mailing  of  said  notice.  Or  the  Attor- 
ney-General may,  by  any  proper  proceedings  in  a court  of  law  or 
chancery,  proceed,  upon  such  failure  or  refusal,  to  forfeit  such 
charter  of  such  incorporated  company  or  association  incorpo- 
rated under  the  general  laws,  or  by  any  special  law  of  this  State, 
and  to  revoke  the  rights  of  any  foreign  corporation  located  here- 
in to  do  business  in  this  State. 

§ 7b.  It  shall  be  the  duty  of  the  Secretary  of  State,  at  any  time, 
upon  satisfactory  evidence  that  any  company  or  association  of 
persons,  duly  incorporated  under  the  laws  of  this  or  any  other 
State,  doing  business  in  this  State,  has  entered  into  any  trust, 
combination  or  association  in  violation  of  the  preceding  section 
of  this  act,  to  demand  that  it  shall  make  the  affidavit,  as  above 
set  forth  in  this  act,  as  to  the  conduct  of  its  business.  In  case 
of  failure  of  compliance  on  the  part  of  the  corporation,  then  the 
same  procedure  shall  ensue  as  provided  in  section  7a  of  this 
act.  Provided,  that  no  corporation,  firm,  association  or  individ- 
ual shall  be  subject  to  any  criminal  prosecution  by  reason  of  any- 
thing truthfully  disclosed  by  the  affidavit  required  by  this  act, 
or  truthfully  disclosed  in  any  testimony  elicited  in  the  execution 
thereof. 


No.  40.] 


1151 


The  Secretary  of  State  is  hereby  authorized  and  required  to 
charge  and  collect  of  each  corporation  a fee  of  one  dollar  for 
receiving  and  filing  the  affidavit  herein  provided  for,  to  be  ac- 
counted for  as  other  fees  received  by  him.  Provided,  that  cor- 
porations organized  under  the  building,  loan  and  homestead 
association  laws  of  the  State  are  excluded  from  the  provisions  of 
this  act. 

Approved,  June  20,  1893. 


INDIANA. 


A BILL. 

An  Act  to  prevent  trusts  or  combinations  intended  to  restrain 
trade  or  to  control  the  market  value  or  cost  of  importation  or  , 
transportation  of  merchandise,  produce  or  commodities,  and 
to  promote  free  competition  in  the  state  of  Indiana,  declaring 
all  arrangements,  contracts,  agreements,  trusts  or  combina- 
tions made  with  a view  to  lessen  or  which  tend  to  lessen  free 
competition  in  the  importation,  transportation,  making,  manu- 
facture or  sale  of  any  article  or  commodity  into  or  within  this 
state  unlawful  and  void,  declaring  certain  acts  in  connection 
therewith  criminal,  fixing  penalties  and  punishment  therefor 
and  matters  connected  therewith,  and  providing  mode  of  pro- 
cedure in  such  cases. 

Section  1.  Be  it  enacted  by  the  general  assembly  of  the  state 
of  Indiana,  that  from  and  after  the  passage  of  this  act  all  agree- 
ments, contracts,  arrangements,  trusts  or  combinations  between 
persons,  corporations,  firms  or  associations  made  with  a view 


1152  [Senate, 

to  lessen,  or  which  tend  to  lessen,  full  and  free  competition  in 
the  importation,  transportation,  making,  manufacture  or  sale 
of  any  article  or  commodity,  or  which  tend  to  advance,  reduce 
or  control  the  price  or  the  cost  to  the  producer,  user  or  consumer 
of  any  such  article  or  product,  or  which  create  or  carry  out,  or 
tend  to  create  or  carry  out,  restrictions  in  trade,  or  which  limit 
or  reduce  or  tend  to  limit  or  reduce  the  production  or  increase 
or  reduce,  or  tend  to  increase  or  reduce,  the  price  of  merchandise 
or  commodities,  or  which  fix  any  standard  figure  whereby  its 
price  to  the  public  shall  be  in  any  manner  controlled  or  estab- 
lished upon  any  article  or  commodity  of  merchandise,  produce 
or  manufacture  intended  for  sale,  use  or  consumption  in  this 
case,  or  which  establishes  or  tends  to  establish  an  agency,  pre- 
tended or  real,  wThereby  the  sale  of  any  such  article  or  commod- 
ity shall  be  cornered  up  and  made  to  appear  to  be  for  the  original 
vendor  or  manufacturer,  to  control  the  wholesale  or  retail  price 
of  any  such  article  or  commodity,  after  the  title  to  such  article 
or  commodity  shall  have  passed  from  such  vendor  or  manufac- 
turer, or  which  binds  or  tends  to  bind  the  parties  to  any  such 
arrangements,  contracts,  agreements,  trust  or  combination  not 
to  sell,  dispose  of  or  transport  any  article  or  commodity  or  ar- 
ticle of  trade,  use,  merchandise  or  commerce  or  consumption 
below7  a common  standard  figure  or  card  or  list  price,  or  by  which 
they  shall  agree  in  any  manner  to  keep  the  price  of  such  article 
or  transportation  at  a fixed  or  graduated  figure,  or  by  which  in 
any  manner  establish  or  settle  the  price  of  any  article  or 
commodity  or  transportation  between  them  or  themselves  and 
others,  to  preclude  a free  and  unrestricted  competition  among 
themselves  or  others  in  the  sale  or  transportation  of  any  such 
article  or  commodity,  or  by  which  they  shall  agree  to  pool,  com- 


No.  40.] 


1153 


bine  or  unite  any  interest  they  may  have  in  connection  with 
the  sale  or  transportation  of  any  such  article  or  commodity  that 
its  price  might  in  any  manner  be  affected,  are  hereby  declared 
to  be  unlawful,  against  public  policy  and  void. 

VIOLATIONS  OF  THE  ACT. 

Section  2.  Any  violations  of  either  or  all  of  the  provisions  of 
this  act  shall  be  deemed,  and  is  hereby,  declared  to  be  destructive 
of  full  and  free  competition,  a conspiracy  against  trade  and  a 
crime,  and  any  person  or  persons  who  may  engage  in  any  such 
conspiracy  or  take  part  therein,  or  aid  or  advise  in  its  commis- 
sion, or  who  shall,  as  principal,  manager,  director,  agent,  ser- 
vant or  employe,  or  in  any  other  capacity,  aid  or  advise  or  carry 
out  or  attempt  to  carry  out  any  of  the  stipulations,  purposes, 
prices,  rates  or  orders  made  under  or  in  furtherance  of  such 
conspiracy,  shall,  on  conviction  thereof,  be  punished  by  a fine 
of  not  less  than  one  hundred  dollars  nor  more  than  five  thousand 
dollars,  and  by  imprisonment  in  the  penitentiary  not  less  than 
one  year  nor  more  than  ten  years,  or,  in  the  discretion  of  the 
court,  by  either  such  fine  or  such  imprisonment. 

§ 3.  That  any  corporation  chartered  under  the  laws  of  this  state 
which  shall  violate  any  of  the  provisions  of  this  act  shall  thereby 
forfeit  its  charter  and  franchise,  and  its  corporate  existence  shall 
thereupon  cease  and  determine.  Every  foreign  corporation 
which  shall  violate  any  of  the  provisions  of  this  act  is  hereby 
denied  the  right  to  do,  and  is  prohibited  from  doing  business 
in  this  state.  It  is  hereby  made  the  duty  of  the  attorney-general 
or  prosecuting  attorney,  in  their  respective  capacities  and  juris- 
dictions, upon  his  own  motion,  to  enforce  the  provisions  of  this 


73, 


1154  [Senate, 

act  by  due  process  of  law,  and  there  shall  be  taxed  as  a part 
of  the  costs  in  any  suit  or  proceeding  brought  for  such  purpose 
a fee  of  not  less  than  fifty  dollars  nor  more  than  five  hundred 
dollars,  which  shall  be  a fee  to  such  attorney-general  or  prose- 
cuting attorney  for  his  services  in  such  suit  or  proceeding,  and 
the  same  shall  be  collected  as  a part  of  the  costs  therein. 

§ 4.  In  any  indictment  or  information  for  any  offense  named 
in  this  act  it  is  sufficient  to  state  the  purposes  and  effect  of  the 
arrangement,  contract,  agreement,  trust  or  combination,  and  that 

4 

the  accused  was  a member  of  or  acted  with  or  in  pursuance  of 
it,  without  giving  its  name  or  description  or  how  or  where  it  was 
created.. 

§ 5.  In  prosecutions  under  this  act  it  shall  be  sufficient  to  prove 
that  an  arrangement,  contract,  agreement,  trust  or  combination, 
expressed  or  implied,  exists  or  existed  between  defendant  or  de- 
fendants and  some  other  person,  persons,  firm,  corporation  or 
association,  for  one  or  more  of  the  purposes  set  out  and  enumer- 
ated in  section  one  of  this  act,  and  it  shall  not  be  necessary  to 
make  any  proof  as  to  the  corporate  existence,  partnership  or  asso- 
ciation of  any  party  to  or  participant  in  said  arrangement,  con- 
tract, agreement,  trust  or  combination,  or  that  said  corporate 
existence,  partnership  or  association  is  evidenced  by  any  written 
instrument  or  came  into  existence  by  any  agreement  of  any  kind 
or  character  whatsoever. 

§ 6.  That  any  arrangement,  contract,  agreement,  trust  or  com- 
bination in  violation  of  any  of  the  provisions  of  this  act  shall  be 
absolutely  void. 

§ 7.  The  provision  of  this  act  shall  not  apply  to  agricultural 
products  or  live  stock  while  in  the  hands  of  the  original  producer 


or  raiser. 


No.  40.] 


1155 


§ 8.  Any  purchaser  of  any  article  or  commodity  from  any  per- 
son, firm,  corporation  or  association  of  persons,  or  of  two  or  more 
of  them  violating  any  of  the  provisions  of  this  act,  shall  not  be 
liable  for  the  price  or  payment  of  such  article  or  commodity,  and 
may  plead  this  act  as  a complete  defense  to  any  suit  for  such 
price  or  payment. 

§ 9.  Any  person  who  shall  suffer  any  damage  by  reason  of 
any  other  person,  firm,  association  or  corporation  violating  any 
of  the  provisions  of  this  act,  shall  have  his  right  of  action  there- 
for, and  may  enforce  the  same  in  any  court  of  competent  jurisdic- 
tion, and  he  shall  recover  all  damages  sustained  by  him  and  the 
cost  of  suit,  including  a reasonable  attorney’s  fees. 

§ 10.  It  shall  be  the  duty  of  all  judges  and  courts  of  this  state 
required  by  law  to  instruct  grand  juries  to  instruct  said  juries 
as  to  the  provisions  of  this  act. 


IOWA. 


ANTI-POOL  AND  TRUST  LAW. 

An  act  for  the  punishment  of  pools,  trusts,  combinations  and 
conspiracies,  and  as  to  evidence  in  such  cases. 

Be  it  enacted  by  the  general  assembly  of  the  state  of  Iowa: 

Section  1.  If  any  corporation  organized  under  the  laws  of  this 
or  any  other  state  or  country,  for  transacting  or  conducting  any 
kind  of  business  in  this  state,  or  any  partnership  or  individual 
or  other  association  of  persons  whosoever,  shall  create,  enter  into, 
or  become  a member  of,  or  a party  to,  any  trust,  agreement,  com- 


115G  [Senate, 

bination,  confederation  or  understanding  with  any  other  corpora- 
tion, partnership,  individual,  or  any  person,  or  association  of  per- 
sons, to  regulate  or  fix  the  price  of  any  article  of  merchandise 
or  commodity,  or  shall  enter  into,  become  a member  of  or  party 
to  any  pool,  agreement,  contract,  combination  or  confederation 
to  fix  or  limit  the  amount  or  quantity  of  any  article,  commodity 
or  merchandise  to  be  manufactured,  mined,  produced  or  sold  in 
this  state,  shall  be  deemed  and  adjudged  guilty  of  a conspiracy 
to  defraud,  and  be  subject  to  indictment  and  punishment  as  pro- 
vided in  this  act.  , 

§ 2.  It  shall  not  be  lawful  for  any  corporation  to  issue  or  to  own 
trust  certificates,  or  for  any  corporation,  agent,  officer  or  em- 
ployes, or  the  directors  or  stockholders  of  any  corporation,  to 
enter  into  any  combination,  contract  or  agreement  with  any 
person  or  persons,  corporation  or  corporations,  or  with  any  stock- 
holder or  director  thereof,  the  purpose  and  effect  of  which  com- 
bination, contract  or  agreement  shall  be  to  place  the  manage- 
ment or  control  of  such  combination  or  combinations,  or  the 
manufactured  product  thereof,  in  the  hands  of  any  trustee  or 
trustees,  with  the  intent  to  limit  or  fix  the  price  or  lessen  the 
production  and  sale  of  any  article  of  commerce,  use  or  consump- 
tion, or  to  prevent,  restrict  or  diminish  the  manufacture  or  out- 
put of  any  such  article. 

§ 3.  If  a corporation  or  a company,  firm  or  association,  shall 
be  found  guilty  of  a violation  of  this  act,  it  shall  be  punished 
by  a fine  of  not  less  than  one  per  cent,  of  the  capital  stock  of 
such  corporation  or  amount  invested  in  such  company,  firm  or 
association,  and  not  to  exceed  twenty  per  cent,  of  such  capital 
stock  or  amount  invested.  Any  president,  manager,  director  or 
other  officer  or  agent  or  receiver  of  any  corporation,  company, 


Xo.  40.] 


1157 


firm  or  association,  or  any  member  of  any  company,  firm  or  asso- 
ciation, or  any  individual,  found  guilty  of  a violation  <jf  the 
first  section  of  this  act,  shall  be  punished  by  a fine  of  not  less 
than  five  hundred  dollars,  nor  to  exceed  five  thousand  dollars, 
and  in  addition  thereto  may  be  imprisoned  in  the  county  jail  not 
to  exceed  one  year. 

§ 4.  A contract  or  agreement  in  violation  of  any  provision  of 
the  preceding  sections  of  this  act  shall  be  absolutely  void. 

§ 5.  Any  purchaser  of  any  article  or  commodity  from  any  indi- 
vidual, company  or  corporation  transacting  business  contrary 
to  any  provisions  of  the  preceding  sections  of  this  act  shall  not 
be  liable  for  the  price  or  payment  of  such  article  or  commodity, 
and  may  plead  this  act  as  a defense  to  any  suit  for  such  price 
or  payment. 

§ 6.  Any  corporation  created  or  organized  by  or  under  the  laws 
of  this  state  which  shall  violate  any  provision  of  the  preceding 
sections  of  this  act  shall  thereby  forfeit  its  corporate  right  and 
franchises,  and  its  corporate  existence  shall  thereupon  cease 
and  determine  as  provided  in  this  section,  and  it  shall  be  the 
duty  of  the  secretary  of  state,  after  the  passage  of  this  act,  to 
address  to  the  president,  secretary  or  treasurer  of  each  incorpo- 
rated company  doing  business  in  this  state,  a letter  of  inquiry  as 
to  whether  the  said  corporation  has  merged  all  or  any  part  of  its 
business  or  interest  in  or  with  any  trust,  combination  or  associa- 
tion of  persons  or  stockholders  as  named  in  the  preceding  provis- 
ions of  this  act,  and  to  require  an  answer,  under  oath,  of  the 
president,  secretary,  treasurer  or  any  director  of  said  company; 
a form  of  affidavit  prescribed  by  the  secretary  of  state,  shall  be 
enclosed  in  said  letter  of  inquiry,  and  on  refusal  to  make  oath 
in  answer  to  said  inquiry,  the  secretary  of  state  shall  immedi- 


1158  [Senate, 

ately  case  (cause)  a certified  statement  of  the  facts  to  be  filed 
in  the  office  of  the  attorney-general  of  the  state,  'who  shall  pro- 
ceed or  direct  such  proceedings  by  any  county  attorney  in  the 
state,  to  commence  an  action  in  the  district  court  of  any  county 
in  the  state  of  competent  jurisdiction;  when  said  proceedings 
are  instituted  they  shall  be  conducted  as  ordinary  law  actions 
triable  by  court  or  jury  on  the  final  decision  of  the  same.  Should 
the  defendant  be  found  guilty  of  a violation  of  any  of  the  pro- 
visions of  this  act,  said  court  shall  render  a judgment  and  order 
a revocation  of  the  charter  of  said  company  as  a penalty  for  the 
violation,  or  violation  of  which  the  said  company  shall  be  found 
guilty,  and  the  secretary  of  state  shall  make  publication  of  such 
revocation  in  four  newspapers  in  general  circulation  in  the  four 
largest  cities  of  the  state. 

§ 7.  It  shall  be  the  duty  of  the  secretary  of  state  upon  satis- 
factory edidence  (evidence)  that  any  company  or  association  of 
persons  duly  incorporated  and  operating  under  the  laws  of  this 
state  have  entered  into  any  trust,  combination  or  association  as 
provided  in  the  preceding  provisions  of  this  act,  to  give  notice 
to  such  corporation  that  unless  they  withdraw  from  and  sever 
all  business  connection  with  said  trust,  combination  or  associa- 
tion, their  charter  will  be  revoked  at  the  expiration  of  thirty 
days  from  date  of  such  notice. 

§ 8.  It  shall  be  the  duty  of  the  prosecuting  attorneys  in  their 
respective  jurisdictions,  and  the  attorney-general,  to  enforce  the 
foregoing  provisions  of  this  act,  and  any  prosecuting  attorney, 
or  the  attorney-general,  securing  a conviction  under  the  provis- 
ions of  this  act,  shall  be  entitled,  in  addition  to1  such  fee  or  sal- 
ary as  by  law  he  is  allowed  for  such  prosecution,  to  one-fifth 
of  the  fine  recovered.  When  the  attorney-general  and  prosecut- 


No.  40.] 


1159 


ing  attorney  act  in  conjunction  in  the  prosecution  of  any  case, 
under  the  provisions  of  this  act,  they  shall  be  entitled  to  one- 
fourth  of  the  fine  recovered,  which  they  shall  divide  equally 
between  them,  where  there  is  no  agreement  to  the  contrary,  and 
it  shall  be  the  duty  of  the  grand  jury  to  inquire  into  and  ascer- 
tain if  there  exist  any  pools,  trusts,  combinations  within  their 
respective  counties. 

§ 9.  Chapter  84,  acts  of  the  twenty-second  general  assembly 
and  all  acts  or  parts  of  acts  in  conflict  with  the  provisions  of 
this  act,  are  hereby  repealed. 

§ 10.  Whereas,  great  injustice  is  being  done  to  the  people  of 
this  state  by  the  formation  of  trusts  and  trust  companies,  there- 
fore an  emergency  exists,  and  this  act  shall  take  effect  and  be  in 
force  from  and  after  its  passage  and  publication,  as  required  by 
law,  in  the  Iowa  State  Register  and  Des  Moines  Leader,  news- 
papers published  in  Des  Moines,  Iowa. 

Approved,  May  6,  1890. 

Published,  May  14,  1890. 


KANSAS. 


AN  ACT 

To  declare  unlawful  trusts  and  combinations  in  restraint  of  trade 
and  products,  and  to  provide  penalties  therefor.  (Took  effect 
March  9th,  1889.) 

Be  it  enacted  by  the  Legislature  of  the  State  of  Kansas: 

§ 359.  Trusts. — That  all  arrangements,  contracts,  agreements, 
trusts  or  combinations  between  persons  or  corporations,  made 


1160  [Senate, 

with  a view  or  which  tend  to  prevent  full  and  free  competition 
in  the  importation,  transportation  or  sale  of  articles  imported 
into  this  state  or  in  the  product,  manufacture  or  sale  of  articles 
of  domestic  growth  or  product  of  domestic  raw  material  or  in  the 
loaning  of  money  or  to  fix  attorneys  or  doctors’  fees,  and  all  ar- 
rangements, contracts,  agreements,  trusts  or  combinations  be- 
tween persons  or  corporations  designed  or  which  tend  to  advance 
rates  or  control  the  price  or  the  cost  to  the  producer  or  to  the  con- 
sumer of  any  such  products  or  articles,  or  to  control  the  cost  or 
rate  of  insurance,  or  which  tend  to  advance  or  control  the  rate 
of  interest  for  the  loan  or  use  of  money  to  the  borrower  or  any 
other  services,  are  hereby  declared  to  be  against  public  policy, 
unlawful  and  void.  (Laws  of  1889,  chapter  257,  section  1.) 

§ 360.  Corporations. — It  shall  not  be  lawful  for  any  corporation 

to  issue  or  to  own  trust  certificates  other  than  the  regular  and 

lawfully  authorized  stock  thereof,  or  for  any  corporation,  agent 

or  officer,  or  employes  in  the  board  of  directors  or  stockholders 

of  any  corporation  to  enter  into  any  combination,  contract,  or 

agreement  with  any  person  or  persons,  corporation  or  corpora- 
ls-. 

tions,  or  with  any  stockholder  or  director  thereof,  the  purpose 
and  effect  of  which  combination,  contract  or  agreement,  shall  be 
to  place  the  management  or  control  of  such  combination  or 
combinations,  or  the  manufactured  product  thereof,  in  the  hands 
of  any  trustee  or  trustees,  with  the  intent  to  limit  and  fix  the 
price  or  lessen  the  production  and  sale  of  any  article  of  com- 
merce in  use  or  consumption,  or  to  prevent,  restrict,  or  dimin- 
ish the  manufacture  or  output  of  any  such  article.  (Laws  1889, 
chapter  257,  section  2.) 

§ 361.  That  all  persons  entering  into  any  such  arrangement, 
contract,  agreement,  trust  or  combination,  or  who  shall,  after 


No.  40.] 


1161 


the  passage  of  this  act,  attempt  to  carry  out  or  act  under  such 
arrangement,  contract,  agreement,  trust,  or  combination  de- 
scribed in  sections  one  or  two  of  this  act,  either  on  his  own  ac- 
count, or  as  agent  or  attorney  for  another,  or  as  an  officer,  agent 
or  stockholder  in  any  corporation,  or  as  a trustee,  or  in  any  capa- 
city whatever,  shall  be  guilty  of  a misdemeanor,  and  on  convic- 
tion thereof,  shall  be  subject  to  a fine  of  not  less  than  one  hun- 
dred dollars  and  not  more  than  one  thousand  dollars,  and  an 
imprisonment  of  not  less  than  thirty  days  and  not  more  than  sis 
months,  or  both  such  fine  and  imprisonment,  in  the  discretion  of 
the  court.  (Laws  1889,  chajyter  257,  section  3.) 

§ 362.  Persons  injured. — That  any  person  or  corporation  in- 
jured or  damaged  by  any  such  arrangement,  contract,  agreement, 
trust  or  combination,  described  in  sections  one  or  two  of  this  act, 
may  sue  for  and  recover  in  any  court  of  competent  jurisdiction  in 
this  state,  of  any  person  or  corporation,  the  full  consideration  or 
sum  paid  by  him  for  any  goods,  wares,  merchandise  and  articles 
included  in  the  advance  or  control  in  price  by  said  combination, 
or  the  full  amount  of  money  so  borrowed.  (Laws  1889,  chapter 
257,  section  4.) 

§ 363.  Action;  defense. — That  when  an  action  at  law  or  suit  in 
equity  -shall  be  commenced  in  any  court  of  this  -state  it  shall  be  law- 
ful in  the  defense  thereof  to  plead  in  bar  or  in  abatement,  that  the 
plaintiff  or  any  other  person  interested  in  the  prosecution  of  the 
case  is  a member  or  agent  of  an  unlawful  combination,  as  described 
in  sections  one  and  two  of  this  act,  or  that  the  cause  of  action  grows 
out  of  such  combination  or  out  of  some  business  or  transaction 
thereof.  (Laws  1889,  chap.  257,  § 5.) 

§ 364.  Violation. — That  the  purchase,  sale  or  manufacture  of  any 
goods,  wares,  merchandise  or  other  commodities  of  this  state,  of  any 
person  or  corporation  who  has  entered  into  any  such  arrangements, 
contracts,  agreements,  trusts  or  combinations  in  any  other  state  or 


1162  [Senate, 

territory  as  'described  in  sections  one  and  two  of  this  act,  or  the 
purchase,  sale  or  manufacture  of  any  such  articles  by  any  agent  or 
attorney  for  such  person,  ior  as  an  agent,  officer  or  stockbroker  of 
any  such  corporation,  as  trustee,  committee  or  in  any  capacity  what- 
ever, Shall  constitute  a violation  of  this  act,  and  shall  subject  the 
offender  to  the  aforesaid  liabilities  and  penalties.  (Laws  of  1889, 
chap.  257,  § 6.) 

§ 365.  County  attorney. — It  shall  be  the  duty  of  the  county  attor- 
neys to  diligently  prosecute  any  and  all  persons  violating  any  of  the 
provisions  of  this  act  in  their  respective  counties.  If  any  county 
attorney  shall  fail,  neglect  or  refuse  to  faithfully  perform  any  duty 
imposed  upon  him  by  this  act,  he  shall  be  deemed  guilty  of  a misde- 
meanor, and  upon  conviction  thereof  Shall  be  fined  in  any  sum  not 
less  than  one  hundred  dollars,  nor  more  than  five  hundred  dollars, 
and  be  imprisoned  in  the  county  jail  not  less  than  ten  nor  more  than 
ninety  days,  and  such  conviction  shall  operate  as  a forfeiture  of  his 
office,  and  the  court  before  whom  such  conviction  may  be  had  shall 
order  and  adjudge  such  forfeiture  of  office  in.  addition  to  the  fine 
imposed  as  herein  provided.  That  whenever  the  county  attorney 
shall  be  unable,  or  shall  neglect  or  refuse  to  enforce  provisions  of 
this  act  in  his  county,  or  for  any  reason  whatever  the  provisions  of 
this  act  .shall  not  be  enforced  in  any  county,  it  shall  be  the  duty  of 
the  attorney-general  to  enforce  the  same  in  such  county,  and  for  that 
purpose  he  may  appoint  as  many  assistants  as  he  shall  see  fit,  and  he 
and  his  assistants  shall  be  authorized  to  sign,  verify  and  file  all  such 
complaints,  opinions,  petitions  and  papers  as  the  county  attorney  is 
authorized  to  sign,  verify  or  file,  and  to  do  and  perform  any  act  that 
the  county  attorney  might  lawfully  do  oir  perform  for  such  services, 
and  he  or  his  assistants  shall  receive  the  same  fee  that  the  county 
attorney  would  be  entitled  to  for  like  services,  to  be  taxed  and  col- 
lected in  the  same  manner.  (Laws  of  1889,  chap.  257,  § '3.) 


No.  40.] 


1163 


§ 366.  Sheriffs,  duty  of. — It  shall  be  the  duty  of  all  sheriffs, 
deputy-sberiffs,  constables,  mayors,  marshals,  police  judges  and 
police  officers  of  any  state  or!  town  having  notice  or  knowl- 
edge of  any  violation  of  the  provisions  of  this  act,  tio  notify 
the  county  attorney  of  the  fact  of  such  violation  and  to  furnish 
him  the  names  of  any  witnesses  withih  his  knowledge,  by  whom 
such  violation  can  be  proven.  If  any  such  officer  shall  fail 
to  i1  comply  with  the  provisions  of  this  section,  he  shjall,  upon 
conviction,  be  fined  in  any  sum  not  less  than,  one  hundred  dol- 
lars nor  more  than  five  hundred  dollars.  And  such  conviction 
shall  be  a forfeiture  of  the  office  held  by  such  person,  and  the  court 
by  whom  such  conviction  is  had,  shall,  in  addition  to  the  imposition 
of  the  fine  aforesaid,  order  and  adjudge  the  forfeiture  of  his  said 
Office.  (Law's  of  1889,  chapter  257,  section  8.) 

§ 367.  District  courts,  duty  of. — It  shall  be  the  duty  of  the  dis- 
trict courts  to  instruct  the  grand  juries  especially  as  to  the  pro- 
visions of  this  act.  (Laws  of  1889,  chapter  257,  section  9.) 

All  laws  or  part  of  laws  in  conflict  with  the  provisions  of  this 
act  are  hereby  repealed1  (Id.,  section  10.)  This  act  shall  take  effect 
and  be  enforced  from  and  after  its  publication  in  the  official  state 
paper.  (Id.,  section  10.) 

Approved,  March  2,  1889.  Published,  March  9,  1889. 


KENTUCKY. 


CHAPTER  101. 

(Act  May  20,  1890.) 
POOLS— TRUSTS— CONSPIRACIES. 


Section  3915.  Defined  and  prohibited. — That  if  any  corpora- 
tion under  the  laws  of  Kentucky,  or  under  the  laws  of  any  other 


1164 


[Senate, 


state  or  country,  for  transacting  or  conducting  any  kind  of  busi- 
ness in  this  state,  or  any  partnership,  company,  firm  or  individual, 
or  other  association  of  persons,  shall  create,  establish,  organize 
or  enter  into,  or  become  a member  of.  or  a party  to,  or  in  any  way 
interested  in  any  pool,  trust,  combine,  agreement,  confederation 
or  understanding  with  any  other  corporation,  partnership,  indi- 
vidual or  person,  or  association  of  persons,  for  the  purpose  of 
regulating  or  controlling  or  fixing  the  price  of  any  merchandise, 
manufactured  articles  or  property  of  any  kind,  or  shall  enter  into, 
become  a member  of,  or  party  to,  or  in  any  way  interested  in  any 
pool,  agreement,  contract,  understanding,  combination  or  con- 
federation, having  for  its  object  the  fixing  or  in  any  way  limiting 
the  amount  or  quantity  of  any  article  of  property,  commodity  or 
merchandise  to  be  produced  or  manufactured,  mined,  bought  or 
sold,  shall  be  deemed  guilty  of  the  crime  of  conspiracy  and  pun- 
ished therefor  as  provided  in  the  subsequent  sections  of  this  act. 

§ 3916.  Trust  certificates — when  sale  of  unlawful. — It  shall  not 
be  lawful  for  any  corporation  to  issue  or  to  own,  have  or  sell 
any  trust  certificates  or  stocks,  or  for  any  corporations,  agent, 
officer  or  employe,  agent  or  director,  or  any  corporation  to  enter 
into,  either  verbally  or  in  writing,  any  combination,  contract, 
agreement  or  understanding  with  any  person  or  persons,  corpora- 
tion or  corporations,  or  with  any  director,  agent  or  officer  thereof, 
the  purpose  or  effect  of  which  combination,  contract,  agreement 
or  understanding  would  be  to  place  the  management,  control  or 
any  part  of  the  business  of  such  combination  or  association,  of 
the  manufactured  product  thereof,  in  the  hands  or  under  the 
control,  in  the  whole  or  in  part,  of  any  trustee,  or  trustees,  or 
agents,  or  any  person  whatever,  with  the  intent,  or  to  have  the 
effect  to  limit,  fix,  establish  or  change  the  price  of  the  production 


ATo.  40.]  1165 

or  sale  of  any  article  of  property  or  of  commerce  or  output  of 
any  such  article  or  property. 

§ 3917.  Penalties  imposed  on  corporations  and  officers. — If  any 
corporation,  company,  firm,  partnership  or  person,  or  association 
of  persons,  shall,  by  court  of  competent  jurisdiction,  be  found 
guilty  of  any  violation  of  any  of  the  provisions  of  this  act,  such 
guilty  party  shall  be  punished  by  a fine  of  not  less  than  five  hun- 
dred dollars,  and  not  more  than  five  thousand  dollars.  Any 
president,  manager,  director  or  other  officer  or  agent,  or  receiver 
of  any  corporation,  company,  firm,  partnership  or  any  corpora- 
tion, company,  firm  or  association,  or  member  of  any  corporation, 
firm  or  association,  or  any  member  of  any  company,  firm  or  other 
association,  or.  any  individual  found,  by  a court  of  competent 
jurisdiction  guilty  of  any  violation  of  this  act  shall  be  punished 
by  a fine  of  not  less  than  five  hundred  dollars  nor  more  than 
five  thousand  dollars,  or  may  be  imprisoned  in  the  county  jail 
not  less  than  six  months  nor  more  than  twelve  months,  or  may 
be  both  so  fined  and  imprisoned  in  the  discretion  of  the  court 
or  jury  trying  the  case. 

§ 3918.  Contract  in  violation  of  law  void. — Any  contract  or 
agreement  or  understanding  in  violation  of  the  provisions  of  the 
preceding  sections  of  this  act  shall  be  null  and  void;  and  any 
purchasers  of  property  or  article,  or  of  any  commodity,  from  any 
individual,  firm,  company  or  corporation  transacting  business 
contrary  to  the  preceding  sections  of  this  act,  shall  not  be  liable 
for  the  price  or  payment  of  such  article  or  commodity  or  prop- 
erty, and  may  plead  and  rely  on  this  act  as  a complete  defense 
to  any  suit  for  such  price  or  payment. 

§ 3919.  Charter  of  corporation  forfeited  upon  conviction. — If 
any  corporation  created  or  organized  by  or  under  the  laws  of  this 
state,  shall  be  indicted  and  convicted  for  any  violation  of  any 


1166  [Senate, 

of  the  provisions  of  this  act,  such  indictment,  trial  and  convic- 
tion in  any  court  of  competent  jurisdiction  shall  have  the  effect 
to  forfeit  the  charter  of  such  corporation  without  any  further 
proceedings  on  the  subject  of  the  forfeiture  of  its  charter;  but 
any  corporation  whose  charter  is  so  forfeited  shall  have  the 
right  of  appeal  as  is  provided  in  other  cases,  and  the  filing  of  the 
bond  as  is  required  by  law  shall  suspend  the  judgment  of  for- 
feiture until  same  is  passed  upon  by  the  court  to  which  the  case 
is  appealed. 

§ 3920.  Judges  to  charge  grand  jury  concerning. — It  shall  be 
the  duty  of  the  circuit  judges,  and  other  judges  of  similar  juris- 
diction in  this  state,  to  give  the  provisions  of  this  act  in  charge 
to  the  grand  juries  at  each  term  of  their  courts. 

§ 3921.  Appeals — how  regulated. — The  provisions  of  the  code 
of  practice  regulating  appeals  in  other  cases  shall  apply  to  ap- 
peals under  this  act. 


LOUISIANA. 


AN  ACT 

To  declare  it  illegal  for  any  corporation  or  corporations, 
firms  or  individuals  to  issue  certificates  to  be  known  as  rebate 
certificates,  or  any  evidence  of  indebtedness,  the  contract  upon 
which  said  certificates  are  based  being  to  control  the  business 
of  the  party  or  parties  thereto. 

Section  1.  Be  it  enacted  by  the  general  assembly  of  the  state 
of  Louisiana:  It  shall  be  illegal  for  any  corporation  or  corpora- 
tions, firms  or  individuals,  to  issue  certificates  to  be  known  as 
rebate  certificates,  or  any  evidence  of  indebtedness,  the  contract 
upon  which  said  certificates  are  based  being  to  control  the  busi- 
ness of  the  party  or  parties  thereto. 


No.  40.] 


1167 


§ 2.  Be  it  further  enacted,  etc.,  that  it  shall  be,  and  is  hereby, 
declared  illegal  to  impose  as  a condition  that  said  certificates  or 
evidences  of  indebtedness  shall  be  binding  only  in  event  said 
original  party  to  whom  the  same  were  issued,  shall  make  all 
purchases  from  the  firm  or  firms,  corporation  or  corporations, 
individual  or  individuals  issuing  same  or  connected  in  any  man- 
ner with  the  firm  or  firms,  corporations  or  individuals  issuing 
same. 

§ 3.  Be  it  further  enacted,  etc.,  that  said  firm  or  firms,  corpo- 
tion  or  corporations,  cannot  urge  as  a defense  to  any  certificates 
issued  that  their  liabilities  thereon  are  based  upon  the  exclusive 
trade  of  the  party  to  the  contract. 

G.  W.  BOLTON, 

Speaker  of  the  House  of  Representatives. 

H.  R.  LOTT, 

President  Pro  Tempore  of  the  Senate. 

Approved,  July  12,  1894. 

MURPHY  J.  FOSTER, 
Governor  of  the  State  of  Louisiana. 

A true  copy: 

T.  S.  ADAMS, 

Secretary  of  State. 


AN  ACT 

To  prevent  trusts  or  combinations  intended  to  restrain 
trade  or  to  control  the  market  value  of  merchandise,  produce 
or  commodities,  and  to  provide  for  penalties  and  punishment 
of  persons,  corporations,  firms,  and  associations  of  persons  con- 
nected with  them,  and  to  promote  free  competition  in  the  state 
of  Louisiana. 

Section  1.  Be  it  enacted  by  the  general  assembly  of  the  state 
of  Louisiana:  That  after  the  passage  of  this  act  it  shall  be  un- 


1168  [Senate, 

lawful  for  any  individual,  firm,  company,  corporation  or  associa- 
tion, to  enter  into,  continue  or  maintain  any  combination,  agree- 
ment or  arrangement  of  any  kind,  expressed  or  implied,  with  any 
other  individual,  firm,  company,  association  or  corporation,  for 
any  of  the  following  purposes:  First,  to  create  or  carry  out  re- 
strictions in  trade;  second,  to  limit  or  reduce  the  production,  or 
increase  or  reduce  the  price  of  merchandise,  produce  or  com- 
modities; third,  to  prevent  competition  in  manufacture,  making, 
transporation,  sale  or  purchase  of  merchandise,  produce  or  com- 
modities; fourth,  to  fix  at  any  standard  or  figure,  whereby  its 
price  shall  be  in  any  manner  controlled  or  established,  any  article 
of  merchandise,  produce,  commodity  or  commerce  intended  for 
consumption  in  this  state;  fifth,  to  make  or  enter  into  or  execute 
or  carry  out  any  contract,  obligation  or  agreement  of  any  kind 
or  description  by  which  they  shall  bind  or  have  bound  themselves 
not  to  sell,  dispose  of,  or  transport  any  article  or  commodity  or 
article  of  trade,  use,  merchandise,  commerce,  or  consumption 
below  a common  standard  figure,  or  by  which  they  shall 
agree  in  any  manner  to  keep  the  price  of  such  article,  at 
a fixed  or  graduated  figure,  or  by  which  they  shall  in  any 
manner  establish  or  settle  the  price  of  any  article  or  com- 
modity or  transportation  between  them  or  themselves  and 
others  to  preclude  a free  and  unrestricted  competition  among 
themselves,  or  others,  in  the  sale  or  transportation  of  any 
such  article  or  commodity,  or  by  which  they  shall  agree  to  pool, 
combine  or  unite  any  interest  they  may  have  in  connection  with 
the  sale  or  transportation  of  any  such  article  or  commodity  that 
its  price  might  in  any  manner  be  affected. 

§ 2.  Be  it  further  enacted,  etc.,  that  any  corporation  holding 


No.  40.] 


1169 


a charter  under  the  laws  of  the  state  of  Louisiana,  which  shall  be 
convicted  of  a violation  of  the  provisions  of  this  act  shall  thereby 
forfeit  its  rights  and  franchises,  and  its  corporate  existence  shall 
cease  and  determine,  and  it  shall  be  the  duty  of  the  attorney- 
general  of  his  own  motion  and  without  leave  or  order  of  any  court 
or  judges,  to  institute  an  action  in  the  name  of  the  state  of  Louis- 
iana for  the  forfeiture  of  such  rights  and  franchises  and  the  dis- 
solution of  such  corporate  existence. 

§ 3.  Be  it  further  enacted,  etc.,  that  every  foreign  corporation, 
or  any  corporation  organized  under  or  pursuant  to  the  laws  of 
any  state,  who  shall  be  convicted  of  a violation  of  the  provisions 
of  this  act  is  hereby  denied  the  right  and  prohibited  from  doing 
any  business  within  this  state,  and  it  shall  be  the  duty  of  the 
attorney-general  to  enforce  this  provision  by  injunction  or  other 
proceedings  in  the  name  of  the  state  of  Louisiana. 

§ 4.  Be  it  further  enacted,  etc.,  that  any  violation  of  either  or 
all  the  provisions  of  this  act  shall  be  and  is  hereby  declared  a 
conspiracy  against  trade,  and  any  person  who  may  be  or  may 
become  engaged  in  any  such  conspiracy  or  take  part  therein,  or 
aid  or  advise  in  its  commission,  or  who  shall  as  principal,  mana- 
ger, director  or  agent,  knowingly  carry  out  any  of  the  stipulations 
prices,  rates,  or  orders  thereunder  or  in  pursuance  thereof,  shall 
be  punished  by  a fine  not  less  than  one  hundred  dollars  nor  more 
than  one  thousand  dollars,  and  by  imprisonment  in  the  peniten- 
tiary not  less  than  six  months  nor  more  than  one  year  or  by 
either  such  fine  and  imprisonment  in  the  discretion  of  the  court. 
It  shall  be  the  duty  of  the  district  attorneys  in  their  respective 
jurisdictions  and  the  attorney-general  to  enforce  this  provision 
and  any  district  attorney  of  any  parish  securing  a conviction 
74; 


1170 


[Senate, 


under  this  provision  shall  be  entitled  to  such  fee  or  salary  as  by 
law  he  is  allowed  for  such  prosecution. 

§ 5.  Be  it  further  enacted,  etc.,  that  in  any  indictment  for  an 
offense  named  in  this  act  it  is  sufficient  to  state  the  purposes  or 
effects  of  the  trust  or  combination  and  that  the  accused  was  a 
member  of,  acted  with  or  in  pursuance  of  it,  without  giving  its 
name  or  description,  or  how,  when  or  where  it  was  erected,  pro- 
vided, that  no  contract  or  agreement  or  arrangement  which  does 
not  include,  or  which  cannot  be  held  to  include  a stipulation  be- 
tween the  parties  to  share  in  the  profits  of  any  such  contract, 
agreement  or  arrangement,  or  which  contract,  agreement  or  ar- 
rangement does  not  provide  for  or  does  not  contemplate  a profit 
or  pool  to  be  divided  between  the  parties  to  such  contract,  agree- 
ment or  arrangement,  shall  be  held  or  construed  to  be  in  violation 
of  the  provisions  of  this  act. 

§ 6.  Be  it  further  enacted,  etc.,  that  in  prosecution  under  this 
act,  it  shall  not  be  necessary  to  prove  who  constitute  all  the 
members  belonging  to  the  trust  or  combination. 

§ 7.  Be  it  further  enacted,  etc.,  that  any  contract  or  agreement 
in  violation  of  the  provisions  of  this  act  shall  be  absolutely 
void. 

§ 8.  Be  it  further  enacted,  etc.,  that  the  provisions  of  this  act 
shall  not  apply  to  agricultural  products  or  live  stock  while  in 
the  hands  of  the  producer  or  raiser;  nor  be  so  construed  as  to 
affect  any  combination  or  confederation  of  laborers  for  the  pur- 
pose of  procuring  an  increase  of  their  wages  or  redress  of  griev- 
ances. 

§ 9.  Be  it  further  enacted,  etc.,  that  this  act  shall  take  effect 


No.  40.] 


1171 


from  and  after  its  passage,  and  that  all  laws  and  parts  of  laws 
conflicting  w7ith  same  are  hereby  repealed. 

Gf.  W.  BOLTON, 

Speaker  of  the  House  of  Representatives. 
CHARLES  PARLANGE, 
Lieutenant-Governor  and  President  of  the  Senate. 
Approved,  July  7,  1892. 

MURPHY  J.  FOSTER, 
Governor  of  the  State  of  Louisiana. 

A true  copy  from  the  original. 

T.  S.  ADAMS, 

Secretary  of  State. 


MAINE. 


AN  ACT 

To  prevent  such  formation  of  trusts,  combination  of  business 
firms,  incorporated  and  unincorporated  companies,  or  asso- 
ciation of  persons  or  stockholders,  as  may  be  contrary  to  pub- 
lic policy. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  in 
Legislature  assembled,  as  follows: 

Section  1.  It  shall  be  unlawful  for  any  firm  or  incorporated 
company,  or  any  number  of  firms  or  incorporated  companies,  or 
any  unincorporated  company,  or  association  of  persons  or  stock- 
holders, organized  for  the  purpose  of  manufacturing,  producing, 
refining,  or  mining  any  article  or  product  which  enters  into  gen- 
eral use  and  consumption  by  the  people,  to  form  or  organize  any 


1172 


[Senate, 


trust,  or  to  enter  into  any  combination  of  firms,  incorporated  or 
unincorporated  companies,  or  association  of  stockholders,  or  to 
delegate  to  any  one  or  more  board  of  trustees  of  directors  the 
power  to  conduct  and  direct  the  business  of  the  whole  number 
of  firms,  companies  or  associations  which  may  have,  or  which 
may  propose  to  form  a trust,  combination  or  association  inconsist- 
ent with  the  provision  of  this  section  and  contrary  to  public 
policy. 

§ 2.  No  certificate  of  stock,  or  other  evidence  of  interest,  in  any 
trust,  combination  or  association,  as  named  in  section  one  of  this 
act,  shall  have  legal  recognition  in  any  court  in  this  state,  and 
no  deed  to  real  estate  given  by  any  person,  firm  or  corporation, 
for  the  purpose  of  becoming  interested  in  such  trust,  combination 
or  association,  or  any  mortgage  given  by  the  latter  to  the  seller, 
as  well  as  all  certificates  growing  out  of  such  transaction,  shall 
be  void. 

§ 3.  Any  incorporated  company  now  operating  under  the  laws 
of  this  state,  and  which  at  the  date  of  the  passage  of  this  act, 
may  be  interested  in  any  trust,  combination  or  association, 
named  in  section  one  of  this  act,  or  any  firm,  incorporated  or  un- 
incorporated company,  or  any  association  of  persons  or  stock- 
holders, who  shall  enter  into  or  become  interested  in  such  trusts, 
combination  or  association  after  the  passage  of  this  act, 
shall  be  deemed  guilty  of  a misdemeanor,  and  be  subject  to 
a fine  of  not  less  than  five  nor  more  than  ten  thousand  dollars; 
provided,  that  nothing  in  this  section  shall  be  so  construed  as  to 
apply  to  such  incorporated  companies,  as  shall,  within  ninety  days 
from  the  date  of  the  passage  of  this  act,  withdraw  from  and  sever 
all  such  connections  with  such  trust,  combination  or  association. 

§ 4.  It  shall  be  the  duty  of  the  secretary  of  state,  as  soon  after 


No.  40.] 


1173 


the  passage  of  this  act,  to  forward  to  the  president,  secretary  or 
treasurer  of  each  incorporated  company  organized  for  the  purpose 
of  manufacturing,  producing,  refining  or  mining  any  article  or 
product  which  enters  into  general  use  and  consumption  by  the 
people,  and  doing  business  within  this  state,  a copy  of  this  act, 
and  also  a letter  of  inquiry  as  to  whether  said  corporation  has 
merged  all  or  any  part  of  its  business  or  interests  in  or  with  any 
trust,  combination  or  association  of  persons  or  stockholders  as 
named  in  section  one  of  this  act,  and  to  require  an  answer,  under 
oath,  of  the  president,  secretary,  treasurer  or  director  of  said 
company;  a form  of  affidavit,  together  with  the  questions  to  be 
answered,  shall  be  prescribed  by  the  secretary  of  state,  and  for- 
warded with  said  letter,  and  on  neglect  or  refusal  to  make  an- 
swers under  oath  to  such  questions  for  the  term  of  ninety  days 
from  the  date  of  this  act,  the  secretary  of  state  shall  notify  the 
attorney-general,  whose  duty  it  shall  be  forthwith  to  file  an  in- 
formation in  the  nature  of  a writ  of  quo  warranto,  with  the  su- 
preme judicial  court  against  said  corporation,  and  the  court  may, 
upon  hearing  and  proof  of  such  neglect  or  refusal,  decree  the 
dissolution  of  said  corporation,  and  its  corporate  rights  and 
powers  shall  terminate. 

Approved  in  1889. 


MARYLAND. 


The  only  statute  in  force  in  this  State  in  relation  to  combina- 
tions, is  as  follows:  (Being  chapter  265,  of  the  Laws  of  1884.) 

“An  agreement  or  combination  of  two  or  more  persons  to  be  or 
to  procure  to  be  done  any  act  in  contemplation  or  furtherance  of 


1174  [Senate, 

a trade  dispute  between  employers  and  workmen  shall  not  be 
indictable  as  a conspiracy  if  such  act  committed  by  one  person 
would  not  be  punishable  as  an  offense;  nothing  in  this  section 
shall  affect  the  law  relating  to  riot,  unlawful  assembly,  breach  of 
the  peace  or  any  offense  against  any  person  or  against  property.” 


MASSACHUSETTS. 


The  following  concurrent  resolution  was  adopted  by  the 
Legislature  of  the  State  of  Massachusetts: 

“ In  the  Senate,  May  13th,  1892,  and  in  the  House  of  Represent- 
atives May  19th,  1892.  “Resolution  against  the  mining  and 
transporting  of  anthracite  coal.  Resolved:  That,  Whereas  a 
combination  has  been  formed  which  has  secured  a substantial 
monopoly  of  mining  and  transporting  anthracite  coal  so  that  our 
people  for  this  necessity,  essential  to  their  life  and  prosperity  are 
placed  at  the  mercy  of  a few  individuals  who  have  already  indi- 
cated their  purpose  by  a large  and  unusual  increase  in  the  price 
of  fuel,  we,  therefore,  request  our  Senators  and  Representatives 
in  Congress  to  make  all  reasonable  efforts  to  secure  the  passage 
of  laws  effectually  to  prevent  such  combinations  and  destroy  such 
monopolies  and  put  the  supply  of  fuel  as  nearly  as  may  be  beyond 
the  reach  of  private  speculation.  The  Secretary  of  the  Common- 
wealth is  requested  to  transmit  forthwith  a copy  of  this  resolu- 
tion to  each  of  the  Senators  and  Representatives.” 


No.  40.] 


1175 


MICHIGAN. 


AN  ACT. 

An  act  passed  July  1,  1889,  constituting  a portion  of  chapter 
324  of  the  general  statutes,  entitled  “ Offences  against  the 
Public  Policy.”  Certain  trust  combinations  prohibited. 

The  People  of  the  State  of  Michigan  enact: 

Section  1.  That  all  contracts,  agreements,  understandings  and 
combinations  entered  into  or  knowingly  assented  to  by  and  be- 
tween any  parties  capable  of  making  a contract  or  agreement 
which  would  be  valid  at  law  or  in  equity  for  the  purpose  or  object 
or  intent  of  which  shall  be  to  limit,  control  or  in  any  manner  to 
restrict  or  regulate  the  amount  of  production  or  the  quantity  of 
any  article  or  commodity  to  be  raised  or  produced  by  mining, 
manufacture,  agriculture  or  any  other  branch  of  business  or  labor, 
or  to  enhance,  control  or  regulate  the  market  price  thereof  or  in 
any  manner  to  prevent  or  restrict  free  competition  in  the  pro^ 
duction  or  sale  of  any  such  article  or  commodity  shall  be  utterly 
illegal  and  void  and  every  such  contract,  agreement,  understand- 
ing and  combination  shall  constitute  a criminal  conspiracy,  and 
every  person  who  becomes  personally  or  as  a member  or  in  the 
name  of  a partnership  or  as  a member,  agent  or  officer  of  a corpor- 
ation or  of  any  association  for  business  purposes  of  any  kind,  who 
Shall  enter  into  or  knowingly  consent  to  any  such  void  and  illegal 
contract,  agreement,  understanding,  or  combination,  shall  be 
deemed  a party  to  such  conspiracy.  And  all  parties  so  offending 
shall  on  conviction  thereof  be  punished  by  fine  of  not  less  than 
fifty  dollars  nor  more  than  three  hundred  dollars,  be  imprisoned 


1176 


[Senate, 


in  the  county  jail  not  more  than  six  months  or  by  both  such  fine 
and  imprisonment,  at  the  discretion  of  the  court.  And  the  prose- 
cution for  offenses  under  this  section  may  be  instituted  and  the 
trial  had  in  any  county  where  any  of  the  conspirators  became 
parties  to  such  conspiracy  or  in  which  any  of  the  conspirators 
shall  reside.  Provided,  however,  that  this  section  shall  in  no 
manner  invalidate  or  affect  contracts  for  what  is  known  and  rec- 
ognized at  common  law  and  in  equity  as  contracts  for  the  “ Good 
will  of  a Trade  or  Business,”  but  that  such  contracts  shall  be  left 
to  stand  upon  the  same  terms  and  within  the  same  limitations 
recognized  at  common  law  and  in  equity. 

§ 2.  Every  contract,  agreement,  understanding,  and  combina- 
tion declared  void  and  illegal  by  the  first  section  of  this  act  shall 
be  equally  void  and  illegal  within  this  state  whether  made  and 
entered  into  within  or  without  this  state. 

§ 3.  The  carrying  into  effect  in  law  or  in  trade  of  any  such  ille- 
gal contract,  agreement,  understanding  or  combination  as  men- 
tioned in  the  first  section  of  this  act,  or  if  any  act  shall  be  done 
for  that  purpose  by  any  of  the  parties  or  through  their  agency  or 
the  agency  of  one  of  them  -shall  constitute  a misdemeanor  and  on 
conviction  the  offenders  shall  be  punished  by  imprisonment  in 
the  state  prison  not  more  than  one  year  or  in  the  county  jail  not 
more  than  six  months  or  by  a fine  not  less  than  one  hundred  nor 
more  than  five  hundred  dollars  or  by  both  such  fine  and  imprison- 
ment in  the  discretion  of  the  court. 

§ 4.  Any  corporation  now  or  hereafter  organized  under  the  laws 
of  this  state  shall  enter  into  any  contract,  agreement,  under- 
standing or  combination  declared  illegal  and  criminal  by  the 
first  section  of  this  act,  or  shall  do  any  act  towards  or  for  the 
purpose  of  carrying  the  same  into  effect  in  whole  or  in  part,  and 


No.  40.] 


1177 


who  shall  not  within  thirty  days  from  the  time  this  act  shall  take 
effect  withdraw  its  assent  thereto  and  repudiate  the  same  and 
file  in  the  office  of  the  secretary  of  state  such  refusal  and  repudia- 
tion under  its  corporate  seal  shall  forfeit  its  charter  and  all  its 
rights  and  franchises  thereunder. 

§ 5.  It  shall  he  the  duty  of  the  attorney-general  upon  his  own 
relation  or  upon  the  relation  of  any  private  person  whenever  he 
shall  get  reasons  to  believe)  that  the  same  can  be  established  by 
proofs,  to  file  an  information  in  the  nature  of  a quo  warranto  against 
any  corporation  offending  against  any  of  the  provisions  of  this  act, 
and  thereupon  the  same  proceedings  shall  be  had  as  provided  by 
chapter  298  of  Howell’s  annotated  statutes,  relating  to  proceedings 
of  information  in  the  nature  of  quo  warranto  against  corporations 
offending  against  any  of  the  provisions  of  the  act  or  acts  creating, 
altering  or  renewing  such  corporations  in  other  cases. 

§ 6.  The  provisions  of  this  act  shall  not  apply  to  agricultural  pro- 
ducts or  live  stock  while  in  the  hands  of  the  producer  or  raiser  nor 
to  the  services  of  laborers  or  artisans  who  are  formed  into  societies 
or  organizations  for  the  benefit  and  protection  of  their  members. 

§ 7.  It  shall  be  the  duty  of  the  secretary  of  state  to  cause  this  act 
to  be  published  for  four  successive  weeks  in  some  daily  paper  in 
each  of  the  cities  of  Lansing,  Detroit,  Grand  Rapids  and  Marquette, 
within  ten  'days  after  this  act  shall  take  effect,  and  he  shall  also 
within  the  same  time  cause  to  be  mailed  to  the  corporations,  whose 
articles  of  hssociation  are  on  file  in  his  office,  a printed  copy  of  this 
act,  with  a notice  calling  special  attention  thereto. 


1178 


[Senate, 


MINNESOTA. 


Tlie  following  portion  of  chapter  99  of  the  General  Statutes  of 
Minnesota,  entitled,  “ Offences  Against  Public  Policy,”  passed  in 
1891.  “ Pools  and  Trusts.”  Prohibition. — If  any  corporation 

organized  under  the  laws  of  this  -state  or  any  other  state  or  country 
for  transacting  or  conducting  any  hind  of  business  in  this  state  or 
any  partnership  or  individual  shall  create,  enter  into,  become  mem- 
ber or  a party  to  any  pool,  trust, agreement,  combination  or  confed- 
eration, with  any  other  corporation,  partnership  or  individual  to 
regulate  or  fix  the  price  of  oil,  lumber,  coal,  grain,  flour,  provisions 
or  any  other  commodity  or  article  whatever,  or  shall  create,  enter 
into,  become  a member  or  a party  to  any  pool,  agreement,  combina- 
tion or  confederation, and  fix  or  limit  the  quantity  of  any  commod- 
ity or  article  to  be  manufactured,  made,  produced,  or  sold,  in  this 
state,  shall  be  deemed  guilty  of  a conspiracy  to  defraud  and1  be 
subject  to  indictment  and  punishment,  as  provided  in  the  next  sec- 
tion. 

Penalty  for  violation. — 'Any  person  or  corporation  who  is 
guilty  of  a violation  of  this  act  shall  be  punished  by  a fine  of  ’not 
less  than  one  hundred  dollars  nor  to  exceed  one  thousand  dollars 
and  be  imprisoned  in  the  state  prison  for  not  less  than  one  year  nor 
more  than  ten  years;  provided,  however,  that  this  act  shall  not 
affect  nor  shall  the  same  apply  to  any  offense  committed  before 
cuted  and  punished  in  this  manner  and  according  tothis  provisions 
of  said  section  previous  to  the  passage  of  this  act,  shall  be  prose- 
cuted and  punished  in  this  manner  and  according  to  the  provisions 
of  the  statutes  in  force  at  the  time  of  the  commission  of  said 
offense. 


No.  40.] 


1179 


Who  are  competent  witnesses. — Upon  the  trial  of  an  indictment 
against  a corporation  or  as  a copartnership  for  the  violation  of  the 
first  section  of  this  act,  the  officers  and  agents  of  such  corporation 
or  copartnership  shall  be  competent  witnesses  against  the  defend- 
ant on  trial  and  such  officers  and  agents  may  be  compelled  to  testify 
against  such  defemdtant  and  produce  all  books  and1  papers  in  his 
custody  or  under  his  control  pertaining  to  the  issue  in  such  trial, 
and  shall  not  be  excused  from  answering  any  such  question  or  from 
producing  any  books  or  papers  because  the  same  might  tend  to 
criminate  such  witness  ; but  toothing  which  such  witness  shall 
testify  to  and  no  books  and  papers  produced  by  him  shall,  in  any 
manner  be  used  against  him  in  any  suit,  civil  or  criminal  to  which 
he  is  a party. 

CHAPTER  140  OF  THE  GENERAL  LAWS— TRUSTS  AND 

COMBINES. 

Section  4437.  Definition  of  term;  criminal  conspiracy. — A trust 
and  combine  is  a combination,  contract,  understanding,  or  agree- 
ment, express  or  implied,  between  two  or  more  persons,  corpora- 
tions or  firms  or  associations  of  persons,  or  between  one  or  more 
of  either  with  one  or  more  of  the  others: 

(a)  In  restraint  of  trade; 

(b)  To  limit,  increase,  or  reduce  the  price  of  a commodity; 

(c)  To  limit,  increase,  or  reduce  the  production  or  output  of  a 
commodity; 

(d)  Intended  to  hinder  competition  in  the  production,  importa- 
tion, manufacture,  transportation,  sale,  or  purchase  of  a com- 
modity; 

(e)  To  engross  or  forestall  a commodity; 

(f)  To  issue,  own,  or  hold  the  certificates  of  stock  of  any  trust 
or  combine; 


1180  [Senate, 

(g)  To  place  the  control,  to  any  extent,  of  business  or  of  the 
products  or  earnings  thereon,  in  the  power  of  trustees,  by  what- 
ever name  called; 

(h)  By  which  any  other  person  than  themselves,  their  proper 
officers,  agents,  and  employes  shall,  or  shall  have  the  power  to 
dictate  or  control  the  management  of  business;  or 

(i)  To  unite  or  pool  interests  in  the  importation,  manufacture, 
production,  transportation,  or  price  of  a commodity; 

And  is  inimical  to  the  public  welfare,  unlawful,  and  a criminal 
conspiracy.  But  this  shall  not  apply  to  the  associations  of  those 
engaged  in  husbandry  in  their  dealings  with  commodities  in  the 
hands  of  the  producer,  nor  to  the  societies  of  artisans,  employes, 
and  laborers  formed  for  the  benefit  and  protection  of  their  mem- 
bers. 

§ 4438.  Contracts  void. — Every  contract  or  agreement  to  enter 
into  or  pursue  any  trust  and  combine,  and  every  contract  or  agree- 
ment made  by  another  with  any  trust  and  combine,  or  with  any 
member  of  a trust  and  combine,  for  any  purpose  relative  to  the 
business  of  such  trust  and  combine,  is  void,  and  cannot  be  en- 
forced in  any  court. 

§ 4439.  Corporations  forfeit  their  charters. — Every  corporation 
which  shall  enter  into,  be  concerned  in,  or  share  the  profit  or 
loss  of  any  trust  and  combine,  shall  forfeit  its  charter  and  fran- 
chise, and,  if  a foreign  corporation,  shall  forfeit  its  right  to  do 
business  in  this  state. 

§ 4440.  Actions  against  for  damages. — Any  person  injured  or 
damaged  by  a trust  and  combine,  or  by  its  effect,  direct  or  indi- 
rect, may  recover  double  the  amount  paid  by  him  for  any  com- 
modity or  service  whose  price  or  cost  was  affected  by  the  trust 
and  combine,  besides  all  consequential  damages;  and  he  may 


No.  40.] 


1181 


maintain  his  action  therefor  against  one  or  more  of  the  parties 
to  the  trust  and  combine,  their  attorneys,  officers,  agents  and  em- 
ployes, and  that  whether  or  not  all  the  parties  to  the  trust  and 
combine  be  known,  or  whether  or  not  the  trust  and  combine 
were  made  or  shall  exist  in  this  state. 

§ 4441.  To  defraud  in  public  contracts. — If  any  person,  corpora- 
tion, firm,  or  association  of  persons  shall  combine  with  any  other 
person,  corporation,  firm,  or  association  of  persons,  or  if  either 
of  them  combine  with  one  or  more  of  the  other  to  prevent,  by 
pooling,  any  or  either  of  said  persons,  corporations,  firms,  or  as- 
sociations of  persons  from  separately  or  individually  bidding  for 
the  performance  of  a public  work  for  the  state,  or  any  county, 
municipality,  or  levee  board  thereof;  or  if  any  person,  corpora- 
tion, firm  or  association  of  persons  shall  prevent  by  persuasion 
or  reward,  any  other  person,  corporation,  firm,  or  association  of 
persons,  or  any  one  or  more  of  them,  from  bidding  for  the  per- 
formance of  such  public  work,  they  and  each  of  them,  shall  be 
guilty  of  a misdemeanor,  and  shall  be  fined  not  less  than  twenty- 
five  dollars  nor  more  than  one  thousand  dollars. 

§ 4442.  Moneys  not  collectible. — All  sums  of  money  to  be  paid 
on  any  contract  on  behalf  of  the  state,  or  any  county,  municipal- 
ity, or  levee  board  thereof,  when  the  provisions  of  the  last  sec- 
tion have  been  violated,  shall  not  be  collectible,  nor  shall  the 
same  be  paid  by  any  officer  or  board  having  the  payment  thereof. 


1183 


[Senate, 


MISSOURI. 


AN  ACT 

To  repeal  sections  one,  three,  six,  seven,  nine  and  ten  of  an  act 
entitled  “An  act  providing  for  the  punishment  of  pools,  trusts 
and  conspiracies  to  control  prices,  and  as  to  evidenc-1  aud  pros- 
eclition  in  such  cases,”  approved  April  2, 1891,  by  repealing  the 
first,  third,  sixth,  seventh,  ninth  and  tenth  sections  or  said  act, 
and  enacting  new  sections  in  lieu  thereof. 

Be  it  enacted  by  the  General  Assembly  of  the  State  of  Missouri 
as  follows: 

Section  1.  That  sections  one,  three,  six,  seven,  nine  and  ten  of 
“An  act  providing  for  the  punishment  of  pools,  trusts  and  con- 
spiracies to  control  prices,  and  as  to  evidence  and  prosecution 
in  such  cases,”  approved  April  2, 1891,  be  and  the  same  are  hereby 
repealed,  and  the  following  sections  are  enacted  in  lieu  thereof : 

Section  1.  Any  corporation  organized  under  the  laws  of  this 
or  any  other  state  or  country  for  transacting  or  conducting  any 
kind  of  business  in  this  state,  or  any  partnership  or  individual, 
or  other  association  of  persons  whatsoever,  who  shall  create,  en- 
ter into,  become  a member  of,  or  a party  to  any  pool,  trust,  agree- 
ment, combination,  confederation,  or  understanding  with  any 
other  corporation,  partnership,  individual,  or  any  other  person 
or  association  of  persons,  to  regulate  or  fix  the  price  of  any  ar- 
ticle of  manufacture,  mechanism,  merchandise,  commodity,  con- 
venience, repair,  any  product  of  mining,  or  any  article  or  thing 
whatsoever,  or  the  price  or  premium  to  be  paid  for  insuring  prop- 
erty against  loss  or  damage  by  fire,  lightning  or  storm,  or  to 


No.  40.] 


1183 


maintain  said  price  when  so  regulated  or  fixed,  or  shall  enter  into, 
become  a member  or  a party  to  any  pool,  agreement,  contract, 
combination  or  confederation  to  fix  or  limit  the  amount  or  quan- 
tity of  any  article  of  manufacture,  mechanism,  merchandise,  com- 
modity, convenience,  repair,  any  product  of  mining,  or  any  article 
or  thing  whatsoever,  or  the  price  or  premium  to  be  paid  for  insur- 
ing property  against  loss  or  damage  by  fire,  lightning  or  storms, 
shall  be  deemed  and  adjudged  guilty  of  a conspiracy  to  defraud, 
and  be  subject  to  penalties  as  provided  in  this  act:  Provided, 
however,  that  the  provisions  of  this  section  shall  not  apply  to 
agreements  of  fire  insurance  companies,  or  their  agents,  or  boards 
of  fire  underwriters,  to  regulate  the  price  or  premium  to  be  paid 
for  insuring  property  against  loss  or  damage  by  fire,  lightning, 
or  storm  in  cities  in  this  state  which  now  have,  or  which  may 
hereafter  acquire  a population  of  one  hundred  thousand  inhabi- 
tants or  more;  and  provided  further,  that  if  such  insurance  com- 
panies or  their  agents,  or  the  board  of  fire  underwriters  doing 
business  in  any  such  city,  shall  combine  in  such  city,  either 
directly  or  indirectly,  or  agree  or  attempt  to  agree,  directly  or  in- 
directly, to  fix  or  regulate  the  price  or  premium  to  be  paid  for 
insuring  property  located  wholly  outside  of  such  city  against  loss 
or  damage  by  fire,  lightning  or  storm,  such  company  so  violating 
the  provisions  of  this  act,  either  by  itself,  its  agents,  or  by  any 
such  board  of  underwriters,  shall  be  taken  and  deemed  to  have 
forfeited  its  right  to  do  business  in  this  state,  and  shall  become 
liable  to  all  the  penalties  and  forfeitures  provided  for  by  the  pro- 
visions of  this  act. 

§ 2.  It  shall  not  be  lawful  for  any  corporation  to  issue  or  to 
own  trust  certificates,  or  for  any  corporation,  agent,  officer,  or 
employe,  or  the  directors  or  stockholders  of  any  corporation,  to 


1184 


[Senate. 


enter  into  any  combination,  contract  or  agreement  with  any  per- 
son or  persons,  corporation  or  corporations,  or  with  any  stock- 
holder or  director  thereof,  the  purpose  and  effect  of  which  com- 
bination, contract  or  agreement  shall  be  to  place  the  management 
or  control  of  such  combination  or  combinations,  or  the  manufac- 
tured product  thereof,  in  the  hands  of  any  trustee  or  trustees, 
with  the  intent  to  limit  or  fix  the  price  or  lessen  the  production 
and  sale  of  any  article  of  commerce,  use  or  consumption,  or  to 
prevent,  restrict  or  diminish  the  manufacture  or  output  of  any 
such  article. 

§ 3.  Any  corporation  or  company,  individual,  firm  or  associa- 
tion violating  any  of  the  provisions  of  this  act,  shall  forfeit  not 
less  than  five  dollars  nor  moire  than  one  hundred  dollars  for  each 
day  it  shall  continue  to  do  so,  to  be  recovered  by  an  action  in  the 
name  of  the  state,  at  the  relation  of  the  attorney-general,  circuit 
or  prosecuting  attorney — moneys  thus  recovered  to-  go  into  the 
county  school  fund  of  the  county  in  which  the  cause  accrues,  and 
in  the  city  of  St.  Louis  into  the  school  fund  of  said  city . 

§ 4.  Any  contract  or  agreement  in  violation  of  any  provision  of 
the  preceding  sections  of  this  act  shall  be  absolutely  void. 

§ 5.  Any  purchaser  of  any  article  or  commodity  from  any  indi- 
vidual, company  or  corporation  transacting  business  contrary  to 
any  provision  of  the  preceding  sections  of  this  act  shall  not  be 
liable  for  the  price  or  payment  of  such  article  or  commodity,  and 
may  plead  this  act  as  a defense  to  any  suit  for  such  price  or 
payment. 

§ 6.  Any  corporation  created  or  organized  by  or  under  the 
laws  of  this  state,  which  shall  violate  any  provisions  of  the  pre- 
ceding sections  of  this  act,  shall  thereby  forfeit  its  corporate 
rights  and  franchises;  and  its  corporate  existence  shall,  upon 


iXo.  40.] 


1185 


proper  proof  being  made  thereof  in  any  court  of  competent  juris- 
diction in  this  state,  be  by  the  court  declared  forfeited,  void  and 
of  non-effect,  and  shall  thereupon  cease  and  determine;  and  any 
corporation  created  or  organized  by  or  under  the  laws  of  any 
other  state  or  country,  which  shall  violate  any  provisions  of  the 
preceding  sections  of  this  act,  shall  thereby  forfeit  its  right  and 
privilege  thereafter  to  do  any  business  in  this  state,  and  upon 
proper  proof  being  made  thereof  in  any  court  of  competent  juris- 
diction in  this  state,  its  rights  and  privileges  to  do  business  in 
this  state  shall  be  declared  forfeited;  and  in  all  proceedings  to 
have  such  forfeiture  declared,  proof  that  any  person  who  has 
been  acting  as  the  agent  of  such  foreign  corporation  in  transact- 
ing its  business  in  this  state,  has  been,  while  acting  as  such  agent 
and  in  the  name,  behalf  or  interest  of  such  corporation,  violating 
any  provision  of  the  preceding  sections  of  this  act,  shall  be  re- 
ceived as  prima  facie  proof  of  the  act  of  the  corporation  itself; 
and  it  shall  be  the  duty  of  the  clerk  of  said  court  to  certify  the 
decree  thereof  to  the  secretary  of  state,  and  if  it  be  an  insurance 
company,  also  to  the  superintendent  of  the  insurance  department, 
who  shall  take  notice  and  be  governed  thereby  as  to  the  corporate 
powers  and  rights  of  said  corporation. 

§ 7.  It  shall  be  the  duty  of  the  secretary  of  state,  on  or  about 
the  first  day  of  July  of  each  year,  to  address  to  the  president,  sec- 
retary or  treasurer  of  each  incorporated  company  doing  business 
in  this  state,  a letter  of  inquiry  as  to  whether  the  said  corpora- 
tion has  all  or  any  part  of  its  business  or  interest  in  or  with  any 
trust,  combination  or  association  of  persons  or  stockholders,  as 
named  in  the  preceding  provisions  of  this  act,  and  to  require  an 
answer,  under  oath,  of  the  president,  secretary  or  treasurer  or 
75, 


1186 


[Senate, 


any  director  of  said  company;  a form  of  affidavit  shall  be  en- 
closed in  said  letter  of  inquiry,  as  follows: 

AFFIDAVIT. 

STATE  OF  MISSOURI,  \ 

County  of | ss' ' 

I, , do  solemnly  swear,  that  I am  the 

(president,  secretary,  treasurer  or  director)  of  the  corporation 

known  and  styled , duly  incorporated  under  the  laws 

of  , on  the day  of , 18...., 

and  now  transacting  or  conducting  business  in  the  state  of  Mis- 
souri, and  that  I am  duly  authorized  to  represent  said  corporation 
in  the  making  of  this  affidavit;  and  I do  further  solemnly  swear 

that  the  said , known  and  styled  as  aforesaid,  has 

not,  since  the day  of (naming  the  day  upon 

which  this  act  takes  effect),  created,  entered  into  or  become  a 

member  of  or  a party  to,  and  was  not,  on  the day  of 

, nor  at  at  day  since  that  date,  and  is  not  now,  a 

member  of  or  a party  to  any  pool,  trust,  agreement,  combination, 
confederation  or  understanding  with  any  other  corporation,  part- 
nership, individual,  or  any  other  person  or  association  of  persons, 
to  regulate  or  fix  the  price  of  any  article  of  manufacture,  mech- 
anism, merchandise,  commodity,  convenience,  repair,  or  any  pro- 
duct or  mining,  or  any  article  or  thing  whatsoever,  or  the  price 
or  premium  to  be  paid  for  insuring  property  against  loss  or  dam- 
age by  fire,  lightning  or  storm;  and  that  it  has  not  entered  into 
or  become  a member  of  or  a party  to  any  pool,  trust,  agreement, 
contract,  combination  or  confederation  to  fix  or  limit  the  amount 
or  quantity  of  any  article  of  manufacture,  mechanism,  merchan- 
dise, commodity,  convenience,  repair,  any  product  of  mining,  or 


No.  40.] 


1187 


any  article  or  thing  whatsoever,  or  the  price  or  premium  to  be 
paid  for  insuring  property  against  loss  or  damage  by  fire,  light- 
ning, or  storm;  and  that  it  has  not  issued  and  does  not  own  any 
trust  certificates,  and  for  any  corporation,  agent,  officer  or  em- 
ploye, or  for  the  directors  or  stockholders  of  any  corporation,  has 
not  entered  into  and  is  not  now  in  any  combination,  contract  or 
agreement  with  any  person  or  persons,  corporation  or  corpora- 
tions, or  with  any  stockholder  or  director  thereof,  the  purpose 
and  effect  of  which  said  combination,  contract  or  agreement 
would  be  to  place  the  management  or  control  of  such  combina- 
tion or  combinations,  or  the  manufactured  product  thereof,  in  the 
hands  of  any  trustee  or  trustees,  with  the  intent  to  limit  or  fix 
the  price  or  lessen  the  production  and  sale  of  any  article  of  com- 
merce, use  or  consumption,  or  to  prevent,  restrict  or  diminish  the 
manufacture  or  output  of  any  such  article. 

✓ 

(President,  secretary,  treasurer  or  director.) 
Subscribed  and  sworn  to  before  me, 


a , within  and  for  the 

county  of , this 

day  of , 18.  . . . 


[Seal.] 

And  on  refusal  to  make  oath  in  answer  to  said  inquiry,  or  on 
failure  to  do  so  within  thirty  days  from  the  mailing  thereof,  the 
secretary  of  state  shall  certify  said  fact  to  the  prosecuting  attor- 
ney of  the  county  (the  circuit  attorney  in  the  city  of  St.  Louis) 
wherein  said  corporation  is  located,  and  it  shall  be  the  duty  of 
such  prosecuting  or  circuit  attorney,  at  the  earliest  practicable 
moment,  in  the  name  of  the  state,  and  at  the  relation  of  said 
prosecuting  or  circuit  attorney,  to  proceed  against  such  corpora- 


1188 


[Hex  ate, 


tion  for  the  recovery  of  the  money  forfeit  provided  for  in  this 
act,  and  also  for  the  forfeiture  of  its  charter  or  certificate  of  in- 
corporation. 

§ 8.  It  shall  be  the  duty  of  the  secretary  of  state,  at  any  time, 
upon  satisfactory  evidence  that  any  company  or  association  of 
persons  duly  incorporated  under  the  laws  of  this  or  any  other 
state,  doing  business  in  this  state,  has  entered  into  any  trust, 
combination  or  association,  in  violation  of  the  preceding  sections 
of  this  act,  to  demand  that  it  shall  make  the  affidavit  as  above 
set  forth  in  this  act  as  to  the  conduct  of  its  business.  In  case  of 
failure  of  compliance  on  the  part  of  the  corporation,  then  the 
same  procedure  shall  ensue  as  is  provided  in  section  seven  of 
this  act;  provided,  that  no  corporation,  firm,  association  or  indi- 
vidual shall  be  subject  to  any  criminal  prosecution  by  reason  of 
anything  truthfully  disclosed  by  the  affidavit  required  by  this 
act,  or  truthfully  disclosed  in  any  testimony  elicited  in  the  exe- 
cution thereof. 

§ 9.  It  shall  be  the  duty  of  the  attorney-general,  the  circuit 
attorney  of  the  city  of  St.  Louis,  and  the  prosecuting  attorney  of 
each  county,  respectively,  to  enforce  the  provisions  of  this  act. 
The  attorney-general,  the  circuit  or  prosecuting  attorneys  shall 
institute  and  conduct  all  suits  begun  in  the  circuit  courts,  and 
upon  appeal,  the  attorney-general  shall  prosecute  said  suits  in 
the  supreme  court  and  courts  of  appeals.  As  compensation  for 
his  services  in  this  behalf,  the  attorney-general  shall  be  entitled 
to  his  actual  expenses  incurred  in  the  prosecution  of  such  suits, 
to  be  paid  by  the  defendant  or  defendants  when  judgment  is  ren- 
dered for  the  state.  The  circuit  and  prosecuting  attorneys  shall 
receive  for  their  compensation  one-fourth  of  the  penalty  collected. 

§ 10.  In  all  suits  instituted  under  this  act  to  forfeit  the  charter 


No.  40.] 


1189 


of  corporations,  or  to  forfeit  the  right  of  a corporation  to  do  busi- 
ness in  this  state,  where  a judgment  of  forfeiture  is  obtained  and 
the  cause  is  not  appealed  to  the  supreme  court  or  courts  of  ap- 
peals, the  circuit  court  rendering  such  judgment  shall  allow  the 
circuit  or  prosecuting  attorney  a fee  of  not  less  than  twenty-five 
dollars  nor  more  than  five  hundred  dollars,  to  be  paid  out  of  the 
assets  of  said  corporation;  and  when  the  attorney-general  takes 
part  in  said  prosecution,  he  shall  be  entitled  to  his  actual  ex- 
penses, to  be  paid  in  like  manner. 

§ 11.  It  is  hereby  made  the  duty  of  all  county  officers  in  the 
state  to  furnish  to  the  secretary  of  state  any  information  which  he 
may  request  of  them,  to  enable  him  the  more  fully  to  execute  the 
duties  imposed  upon  him  by  this  act,  and  for  such  services  the 
said  county  officers  shall  be  paid  by  their  respective  counties, 
upon  allowance  by  the  county  court,  such  fees  as  would  accrue 
for  like  services  for  the  county. 

§ 12.  Chapter  one  hundred  twenty-eight,  Revised  Statutes  1889^ 
entitled  “ Pools  and  trusts,”  is  hereby  repealed. 


MONTANA. 


The  laws  on  this  subject  in  the  state  of  Montana  are  found  in 
volume  four  of  the  Montana  statutes,  chapter  8,  entitled  “ Con- 
spiracy.” Section  321  thereof  reads  as  follows:  “ Every  person, 
corporation  stock  company  or  association  of  persons  in  this  state 
who  directly  or  indirectly  combine  or  form  what  is  known  as  a 
trust  or  make  any  contract  with  any  person  or  persons,  corpora- 
tions or  stock  companies,  foreign  or  domestic  through  their  stock- 


1190 


[Senate, 


holders,  directors,  officers  or  in  any  manner  whatever  for  the  pur- 
pose of  fixing  the  price  or  regulating  the  production  of  any  article 
of  commerce  or  the  product  of  the  soil  for  consumption  of  the 
people  or  to  create  or  carry  out  any  restriction  in  trade  to  limit 
productions  or  increase  the  rates  and  price  of  merchandise  or 
commodities  or  to  produce  competition  in  merchandise  or  com- 
modities or  to  fix  the  standard  of  prices  whereby  the  price  of  any 
article  of  merchandise,  commerce  or  produce  intended  for  sale, 
use  or  consumption  will  be  in  any  way  controlled  or  to  create  a 
monopoly  of  the  manufacture,  sale  or  transportation  of  any  such 
article  or  to  enter  into  an  obligation  by  which  they  shall  bind 
others  or  themselves  not  to  manufacture,  sell  or  transport  any 
such  article  below  a common  standard  or  figure;  or  by  which  they 
agree  to  keep  such  article  or  transportation  at  a fixed  or  grad- 
uated figure,  or  by  which  they  settle  the  price  of  such  article  so 
as  to  preclude  unrestricted  competition,  is  punishable  by  im- 
prisonment in  the  state  prison  not  exceeding  five  years  or  by  a 
fine  not  exceeding  tpn  thousand  dollars  or  both.  Every  corpora- 
tion violating  the  provisions  of  this  section  forfeits  to  the  state 
all  its  property  and  franchises,  and  in  case  of  a foreign  corpora- 
tion it  is  prohibited  from  carrying  on  business  in  the  state. 

Below,  Section  325.  The  provisions  of  this  chapter  do  not  apply 
to  any  arrangement,  agreement  or  combination  between  laborers 
made  with  the  object  of  lessening  the  number  of  hours  of  labor 
or  increasing  wages  nor  to  persons  engaged  in  horticulture,  or 
agriculture  with  the  view  of  enhancing  the  price  of  their  pro- 
ducts. 


No.  40.] 


1191 


NEBRASKA. 


CHAPTER  52.— TRUSTS. 

Sections  4442  to  4449.  “ An  act  to  prohibit  persons,  partnerships, 
companies,  associations,  or  corporations  engaged  as  manufac- 
turers or  dealers  from  entering  into  any  understanding,  con- 
tract, combination,  pool,  or  trust  for  any  purpose  whatever,  and 
to  provide  punishment  for  violations  of  the  same,  and  provid- 
ing means  for  the  suppression  of  such  evils  and  remedies  for 
persons  injured  thereby.”  (18S9,  p.  51G.) 

(In  force  June  30.) 

§ 4442.  (Combinations  in  restraint  of  trade.) — It  shall  be  unlaw- 
ful for  any  person  or  persons,  partnership,  company,  association, 
or  corporation  organized  for  any  purpose  whatever  or  engaged  in 
the  manufacture  or  sale  of  any  article  of  commerce  or  consump- 
tion, or  for  any  such  person  or  persons,  partnership,  company, 
association,  or  corporation  dealing  in  any  natural  product 
to  enter  into  any  contract,  agreement,  or  combination  with  any 
other  person  or  persons,  partnership,  company,  association,  or 
corporation  organized  and  doing  business  in  this  state,  or  in  any 
other  state  or  territory  and  doing  business  in  this  state,  engaged 
in  the  manufacturing,  selling,  or  dealing  in  the  same,  or  any  like 
manufactured  or  natural  product  whereby  a common  price  shall 
be  fixed  for  any  such  article  or  product,  or  whereby  the  manufac- 
ture or  sale  thereof  shall  be  limited  or  the  amount,  extent,  or 
number  of  such  product  to  be  sold  or  manufactured  shall  be  de- 
termined. or  whereby  any  one  or  more  of  the  combining  or  con- 
tracting parties  shall  suspend  or  cease  the  sale  or  manufacture 


1192> 


[Senate, 


of  such  products,  or  whereby  the  products  or  profits  of  such  man- 
ufacture or  sale  shall  be  made  a common  fund  to  be  divided 
among  the  respective  persons,  partnerships,  companies,  associa- 
tion, or  corporation  so  entering  into  such  contract,  agreement,  or 
combination. 

Section  29,  ch.  701  (46  N.  W.,  155). 

§ 4443.  Pooling  between  persons,  partnerships,  companies,  as- 
sociations or  corporations,  engaged  in  the  same  or  like  business 
for  any  purpose  whatever,  and  the  formation  of  combinations  or 
common  understanding  between  two  or  more  persons,  companies, 
partnerships,  associations,  or  corporations  in  the  nature  of  what 
are  commonly  called  trusts,  for  any  purpose  whatever,  or  the 
continuance  of  the  same  after  the  taking  effect  of  this  act,  are 
hereby  prohibited  and  declared  to  be  unlawful,  and  each  day  of 
the  continuance  of  any  such  pool  or  trusts  shall  constitute  a 
separate  offense. 

§ 4444.  That  in  any  case  any  person,  persons,  company,  partner- 
ship, association,  or  corporation  shall  do,  cause  to  be  done,  or 
permit  to  be  done,  any  act,  matter  or  thing  in  this  act  prohibited 
or  declared  to  be  unlawful,  such  person,  persons,  partnerships, 
company,  or  corporation  shall  be  liable  to  the  person,  persons, 
partnership,  company,  association,  or  corporation  injured  there- 
by. for  the  full  amount  of  damages  sustained  in  consequence  of 
any  such  violations  of  the  provisions  of  this  act,  together  with  a 
reasonable  counsel  or  attorney  fee  to  be  fixed  by  the  court  in 
every  case  of  recovery,  which  attorney's  fee  shall  be  taxed  and 
collected  as  part  of  the  costs  in  the  case,  and  the  property  of  any 
person  who  may  be  a member  or  interested  in  any  partnership, 
association,  company  or  corporation  violating  the  provisions  of 
this  act  shall  be  liable  for  the  full  amount  of  such  judgment  and 
may  be  levied  upon  and  sold  to  satisfy  the  same. 


So.  40.] 


1193 


§ 4443.  Any  association  of  persons  doing  business  in  this  state 
in  a firm,  partnership,  or  corporate  name,  and  not  incorporated 
under  the  laws  of  the  state  who  shall  violate  the  provisions  of 
this  act,  in  addition  to  the  other  penalties  and  liabilities  herein 
provided,  shall  forfeit  its  right  to  do  business  in  such  firm,  part- 
nership, or  corporate  name;  and  if  any  such  person  shall  there- 
after continue  to  do  business  in  such  firm,  partnership,  or  corpor- 
ate name,  they  shall  incur  the  penalties  provided  in  section  three 
of  the  act,  entitled  ‘‘An  act  providing  for  the  recording  of  the 
names  of  all  members  of  associations  doing  business  under  a firm, 
partnership,-  or  corporate  name.” 

See  § 3230,  ch.  40. 

§ 4446.  Any  corporation  violating  any  of  the  provisions  of  this 
act,  in  addition  to  the  other  penalties  and  liabilities  herein  pro- 
vided, shall  surrender  and  forfeit  its  right  and  privileges  as  a 
corporation,  and  it  shall  be  the  duty  of  the  prosecuting  attorney 
of  the  proper  county  to  institute  proceedings  against  said  cor- 
poration or  the  person  constituting  the  same  for  the  purpose  of 
having  the  same  dissolved,  and  the  same  proceedings  shall  be 
and  the  same  judgment  may  be  rendered  as  is  provided  in  title 
23,  entitled  “ Information,”  of  the  Code  of  Civil  Procedure. 

§ 4447.  Any  person,  partnership,  company,  association,  or  cor- 
poration subject  to  the  provisions  of  this  act,  or  any  director, 
officer,  receiver,  trustee,  clerk,  lessee,  agent,  or  person  acting  for 
or  employed  by  them  or  either  of  them  who  shall  violate  any  of 
the  provisions  of  section  one  or  two  of  this  act  shall  be  declared 
guilty  of  a misdemeanor,  and  shall  upon  conviction  thereof  be 
fined  in  any  sum  not  exceeding  one  thousand  dollars,  or  im- 
prisoned in  the  jail  of  the  county  for  a period  not  exceeding  six 
months,  or  both,  in  the  discretion  of  the  court. 


1194 


[Senate. 


§ 4448.  In  any  action  brought  under  any  of  the  provisions  of 
this  act  the  court  before  who,  the  same  shall  be  pending  may 
compel  any  person,  or  persons,  partnership,  company,  associa- 
tion, or  corporation  so  proceeded  against,  or  any  of  the  members 
of  any  such  partnership  or  corporation,  or  any  director,  officer, 
receiver,  trustee,  agent,  employe,  or  clerk  of  them,  or  either  of 
them,  to  attend,  appear,  and  testify  in  such  suit  or  proceeding, 
and  may  compel  the  production  of  the  books  and  papers  of  any 
such  person,  persons,  partnership,  company,  association,  or  cor- 
poration party  to  any  such  proceeding. 

§ 4449.  Nothing  herein  contained  shall  prevent  any  assemblies 
or  associations  of  laboring  men  from  passing  and  adopting  such 
regulations  as  they  may  think  proper,  in  reference  to  wages  and 
the  compensation  of  labor,  and  such  assemblies  and  associations 
shall  retain — and  there  is  hereby  reserved  to  them— all  the  rights 
and  privileges  now  accorded  to  them  by  law,  anything  herein  con- 
tained to  the  contrary  notwithstanding. 


NEW  HAMPSHIRE. 


Your  committee  is  informed  that  a bill  is  now  pending  in  the 
New  Hampshire  Legislature  against  combinations  in  restraint  of 
trade. 


No.  40.] 


1195 


NORTH  CAROLINA. 


(LAWS  OF  1889,  CHAPTER  374). 

AN  ACT 

To  prohibit  trusts  in  the  State  of  North  Carolina,  and  to  provide 
for  the  punishment  of  persons  connected  with  them. 

The  General  Assembly  of  North  Carolina  do  enact: 

Section  1.  That  all  combinations  and  trusts,  as  defined  by  this 
act,  are  unlawful  and  dangerous  to  the  liberty  of  the  people,  and 
are  hereby  forbidden  to  be  formed  or  carried  on  in  this  State. 

§ 2.  That  a trust,  arrangement,  understanding  or  agreement, 
either  private  or  public,  entered  into  by  two  or  more  persons  or 
corporations,  for  the  purposes  of  increasing  or  reducing  the  price 
of  the  shares  of  stock  of  ary  company  or  corporation,  or  of  any 
class  of  products,  materials  or  manufactured  articles  beyond  the 
price  that  would  be  fixed  by  the  natural  demand  for  or  the  sup- 
ply of  such  shares,  products,  materials  or  manufactured  articles, 
and  any  attempt  to  carry  out  such  purpose  shall  be  evidence  that 
such  arrangement,  understanding  or  agreement  exists. 

§ 3.  That  any  persons,  company  or  corporation  who  shall  form 
or  attempt  to  form  a trust  in  this  State,  or  the  agent  or  the  repre- 
sentative of  any  trust  in  any  State  or  county  who  shall  attempt  to 
carry  on  operations  in  this  State,  shall  be  guilty  of  a misde- 
meanor, and  upon  conviction  may  be  fined  not  more  than  $10,000 
and  may  be  imprisoned  not  more  than  ten  years  for  each  offense. 

§ 4.  That  any  person,  company  or  corporation  who  enter  into 
an  arrangement,  understanding  or  agreement,  not  to  mine,  manu- 
facture, buy,  sell  or  transport  more  than  a certain  specific  amount 


1196 


[Senate. 


of  any  goods,  products  or  commodities  tlmn  specified,  it  will  have 
violated  section  three  of  this  act,  and  will  be  liable  to  indictment 
thereunder ; and  any  person,  company  or  corporation  that  gives  a 
bond  or  makes  a forfeit  of  any  kind  not  to  break  such  arrange- 
ment, understanding  oir  agreement,  shall  be  guilty  of  a misde- 
meanor, and  on  conviction  thereof  shall  be  fined  or  imprisoned,  or 
both,  in  the  discretion  of  the  court. 

§ 5.  That  any  merchant,  broker,  manufacturer  or  dealers  in  raw 
materials  of  any  kind,  or  the  agent  of  such  officers,  who  shall  sell 
any  particular  class  of  goods,  raw  materials  or  manufactured  ar- 
ticles for  less  than  actual  cost,  for  the  purpose  of  breaking  down 
competitors,  shall  be  guilty  of  a misdemeanor  and  upon  con- 
viction, may  be  fined  or  imprisoned,  or  both,  in  the  discretion  of 
the  court;  provided,  that  nothing  contained  in  this  act  shall  op- 
erate or  be  construed  so  as  to1  forbid  or  prevent  any  person  or 
persons  who  desire  and  intend  to  purchase  any  article  or  com- 
modity for  his  or  their  own  use  or  consumption  from  combining 
or  otherwise  lawfully  acting,  so  as  to  protect  or  keep  themselves 
from  imposition  in  the  cost  or  purchase  price  of  such  articles  or 
commodities  as  they  or  either  of  them  may  design  or  intend  to 
use  the  same. 

§ 6.  That  this  act  shall  be  in  full  force  and  effect  from  and  after 
the  first  day  of  May,  of  the  year  one  thousand  eight  hundred  and 
eighty-nine. 


No.  40.] 


1197 


OHIO. 


(NO  STATUTE.) 

The  Secretary  of  State  of  Ohio1  writes  that  combinations  in  re- 
straint of  trade  under  the  common  law  have  been  held  by  courts 
of  that  State  to  be  contrary  to  public  policy. 


SOUTH  CAROLINA. 


In  this  State  the  law  has  been  proposed,  but  not  yet  enacted, 
prohibiting  any  combination  which  lessens  or  tends  to  lessen  com- 
petition or  which  affects  or  tends  to  affect  prices.  All  corpora- 
tions, domestic  or  foreign,  the  law  forfeits  their  charter  privileges. 
Violations  are  to  be  punished  by  a fine  of  not  less  than  five  thou- 
sand dollars,  and  imprisonment  in  the  penitentiary  of  not  less 
than  six  months  and  not  more  than  ten  years.  Persons  who  may 
be  damaged  by  such  combinations  may  recover  at  law  the  entire 
amount  paid  the  combination.  Agricultural  produce  or  live- 
stock while  in  the  hands  of  the  produced:  are  exempt  from  the 
“operation  of  the  proposed  law. 


1198 


[Senate, 


SOUTH  DAKOTA. 


(1890,  chap.  154.  1893,  chap.  171.) 

PROPOSED  AMENDMENT  TO  THE  CONSTITUTION  OF  THE 
STATE  OF  SOUTH  DAKOTA. 

To  the  people  of  the  State  of  South  Dakota: 

The  Fourth  Legislature  of  the  said  State  of  South  Dakota,  at 
the  session  thereof  begun  and  held  at  Pierre,  the  capital,  on  Jan- 
uary 8, 1895,  and  concluded  March  8,  1895.  proposed  the  following 
amendment  to  the  constitution  of  the  State,  viz: 

A Joint  Resolution  proposing  an  amendment  to  the  constitution 
relating  to  monopolies  and  trusts. 

Be  it  resolved  by  the  Senate  of  the  Legislature  of  the  State  of 
South  Dakota,  the  House  of  Representatives  concurring 
therein : 

Section  1.  (Amendment.)  That  the  following  proposition  is 
made  an  amendment  to  the  constitution  of  the  State  of  South  Da- 
kota, which  is  hereby  submitted  to  a vote  of  the  electors  at  the 
next  general  election,  viz: 

Article  17  of  the  constitution  to  be  amended  by  adding  at  the 
end  thereof  the  following: 

§ 20.  Monopolies  and  trusts  shall  never  be  allowed  in  this  State 
and  no  incorporated  company,  co-partnership  or  association  of 
persons  in  this  State  shall  directly  or  indirectly  combine  or  make 
any  contract  with  any  incorporated  company,  foreign  or  domestic; 
through  their  stockholders  or  the  trustees  or  assigns  of  such 
stockholders,  or  with  any  co-partnership  or  association  of  persons, 
or  in  any  manner  whatever  to  fix  the  prices,  limit  the  production 
or  regulate  the  transportation  of  any  product  or  commodity  so  as 


No.  40.] 


1199 


to  prevent  competition  in  such  prices,  production  or  transporta- 
tion or  to  establish  excessive  prices  therefor. 

The  Legislature  shall  pass  laws  for  the  enforcement  of  this 
section  by  adequate  penalties  and  in  the  case  of  incorporated 
companies,  if  necessary  for  that  purpose  may,  as  a penalty,  de- 
clare a forfeiture  of  their  franchises. 

§ 2.  (Submission.)  The  foregoing  proposed  amendment  shall 
if  agreed  to  by  a majority  of  the  members  of  each  house  of  the 
Legislature,  be  submitted  to  a vote  of  the  people  at  the. next  gen- 
eral election. 

The  above  proposed  amendment  will  be  voted  upon  by  the 
people  at  the  general  election  to  be  held  in  the  State  on  the  3rd 
day  of  November,  A.  D.  1S96. 

The  proposed  amendment  will  be  printed  upon  each  ballot,  fol- 
lowed by  the  words.:  “Shall  the  above  amendment  to  the  con- 
stitution be  approved  and  ratified?”  Immediately  to  the  left  of 
which  shall  be  printed  the  words  “Yes”  and  “No,”  each  preceded 
by  a square  in  which  the  elector  can  place  a.  cross  to  indicate  his 
vote.  Electors  desiring  to  vote  “Yes”  will  place  a cross  before 
the  word  “Yes,”  and  those  desiring  to  vote  “No”  will  place  a cross 
before  the  word  “No.” 

Dated  at  Pierre,  the  capital  of  South  Dakota,  this  3rd  day  of 
August,  1896.  THOMAS  THORSON, 

Secretary  of  State. 

Adopted  November  3rd,  1896.  . 


Section  1.  Defining  Which  Trusts  Are  Unlawful. — That  any 
combination,  agreement  or  trust,  made,  entered  into  or  formed 
between  persons,  co-partnerships  or  corporations  in  this  state, 
or  by  or  between  any  persons,  co-partnerships  or  corporations, 


1200-  [Senate, 

within  this  state,  with  any  person,  co-partnership  or  corporation 
without  this  state  with  the  intent  and  which  shall  in  any  manner 
tend  to  prevent  a free  and  fair  and  full  competition  and  produc- 
tion and  manufacture,  or  sale  of  any  article  or  commodity  of 
domestic  growth,  use  or  manufacture,  or  that  tends  to  advance 
the  price  to  the  user  or  consumer  of  any  article  or  commodity  of 
domestic  growth,  use,  production  or  manufacture  beyond  the  rea- 
sonable cost  of  the  production  or  manufacture  thereof  or  that 
tends  to  advance  the  price  to  the  user,  purchaser  or  consumer  of 
farm  machinery,  implements,  tools,  supplies  and  lumber,  wood 
and  coal  imported  into  this  state  from  any  other  state,  territory 
or  county  beyond  the  reasonable  cost  of  production  and  sale  or 
manufacture  and  sale  of  the  same,  or  which  tends  to  and  does 
induce  and  accomplish  a sale  of  wheat,  corn,  oats,  barley,  flax,  or 
cattle,  sheep,  horses,  or  other  farm  or  agricultural  products  for 
less  than  such  farm  or  agricultural  products  are  really  worth  at 
the  time  of  sale  or  for  a less  price  than  such  farm  or  agricultural 
products  would  sell  for  in  open  market  if  such  combination, 
agreement  or  trust  did  not  exist,  or  tends  to,  or  shall  increase, 
and  enhance  or  maintain,  rates  of  interest  on  loans  of 
money  for  forbearance  of  payment  any  sum  of  money 
or  debt,  or  prevents  fair  competition  for  a low  rate  of 
interest  on  loans,  or  for  forbearance  of  payment  of  any 
debt  or  obligation,  is  hereby  declared  to  be  against  pub- 
lic policy  and  unlawful  and  Void;  any  person  or  persons  who 
shall  be  a party  to  any  such  unlawful  combination,  agreement  or 
trust,  or  who  shall  in  any  way  assist,  aid  or  abet  any  such  combi- 
nation, agreement  or  trust,  either  as  principal,  agent,  attorney, 
employee  or  otherwise,  shall  be  deemed  guilty  of  a felony,  and 
upon  conviction  thereof  shall  be  punished  by  a fine  not  exceeding 


Xo.  40.] 


1201 


one  thousand  dollars  or  imprisonment  in  the  state’s  prison  not 
exceeding  three  years,  or  both  such  fine  and  imprisonment,  at  the 
discretion  of  the  court. 

§ 2.  Unlawful  sale  of  articles  or  goods. — Any  person  or 
persons  who  shall  agree  and  undertake,  as  agent,  to  sell,  and  shall 
sell  in  this  state  any  of  the  articles,  commodities,  products  or  ma- 
chinery, implements,  tools,  supplies  or  goods,  wares  and  merchan- 
dise mentioned  in  section  1 of  this  act  for  a non-resident 
manufacturer  of  or  wholesale  dealer  in  such  articles,  commodi- 
ties, products,  machinery,  implements,  tools,  supplies  or  goods, 
wares  and  merchandise,  while  at  the  same  time  such  non-resident, 
manufacturer  or  wholesale  dealer,  refuse  to  sell  at  wholesale  or 
manufacturer’s  prices  such  farm  implements,  tools  or  supplies,  as 
are  furnished  to  such  agent  for  sale  in  this  state  to  responsible 
and  reputable  wholesale  or  retail  dealers  in  this  state,  shall  be 
deemed  to  have  unlawfully  combined  within  the  meaning  of 
section  one  of  this  act,  with  such  non-resident  manufacturer,  or 
wholesale  dealer,  with  intent  to  prevent,  full,  free  and  fair  com- 
petition in  the  sale  in  this  state  of  any  such  farm  machinery, 
implements,  tools  or  supplies,  furnished  to  such  agent  as  afore- 
said, and  refuse  to  be  sold  to  wholesale  or  retail  dealers  in  this 
state  as  aforesaid,  and  with  intent  to  advance  the  price  to  the 
user  and  purchaser  and  consumer  beyond  the  reasonable  cost  of 
manufacture  and  sale,  whose  production  and  sale  of  such  farm 
machinery,  farm  tools,  farm  implements  and  supplies,  refuse  to 
be  sold  as  aforesaid  to  dealers  in  this  state  as  aforesaid,  such 
agent  or  agents  upon  conviction  thereof  shall  be  punished  by  a 
fine  of  not  more  than  one  thousand  dollars  or  imprisonment  in 
state’s  prison  for  not  more  than  five  years  or  both  such  fines  and 
imprisonments  at  the  discretion  of  the  court. 

76 


1202 


[Senate. 


§ 3.  Non-resident  corporations;  liability  of.  — Any  non-resi- 
dent corporation,  co-partnership  or  company,  or  person,  who  shall 
ship  or  bring  into  this  state  for  sale  any  of  the  commodities,  pro- 
ducts or  goods,  wares  or  merchandise,  machinery,  tools  or  imple- 
ments mentioned  in  section  one  of  this  act  to  be  sold  only  and 
exclusively  by  an  agent  or  agents  or  person  or  persons  selected 
appointed  and  controlled  in  the  sale  of  such  goods  by  such  non- 
resident corporations,  co-partnership,  company  or  person,  in 
violation  of  the  spirit,  intent  and  purpose  of  this  act  may  be  re- 
strained by  an  order  of  injunction  from  any  court  of  competent 
jurisdiction  in  this  state  from  selling  or  disposing  of  any  such 
commodities,  goods,  wares  or  merchandise,  machinery,  tools  or 
implements,  or  having  the  same  sold  in  this  state  until  the  de- 
fendant in  such  order  offers  the  same  for  sale  or  to  be  sold,  on 
like  and  regular  terms,  and  without  restriction,  except  as  to 
price  and  terms  of  payment,  to  reputable  and  responsible  whole- 
sale or  retail  dealers  of  this  state,  without  regard  to  location, 
that  may  desire  to  purchase  the  same  or  any  portion  thereof. 
The  order  of  injunction  mentioned  in  this  section  may  be,  upon 
evidence  which  shall  show  to  the  satisfaction  of  the  court  or 
judge  thereof,  to  whom  application  is  made,  that  person  or  per- 
sons, or  co-partnership  or  corporation  named  as  defendant  in  the 
application  and  affidavit  for  an  order  of  injunction  has  violated 
some  provision  of  this  act,  the  order  of  injunction  issued  upon 
such  affidavits  may  be  served  in  the  manner  now  provided  by 
law  for  the  service  of  such  orders,  and  in  the  absence  of  the 
defendant  therein,  or  his  agent  or  attorney,  such  order  of  in- 
junction may  be  served  on  any  and  all  persons  in  this  state 
having  in  possession  and  for  sale,  or  in  his  possession  for  the 
use,  or  subject  to  the  order  or  direction  of  the  defendant  or 


No.  40.] 


1203 


defendants  in  such  proceeding,  any  of  the  several  articles  or 
commodities  or  goods,  wares  and  merchandise  mentioned  in  sec- 
tion one  O'f  this  act,  the  sale  of  which  is  restrained  by  this  order. 
On  the  final  hearing  by  the  court,  if  such  application  for  injunc- 
tion be  sustained  by  the  court,  the  court  shall  render  judgment 
against  the  defendant  in  such  proceedings,  and  in  favor  of  the 
plaintiff  therein,  for  all  the  costs  incurred  by  the  plaintiff 
therein,  including  such  attorney’s  fee  allowed  by  the  court 
therein.  Any  judge  of  a circuit  court  or  of  a supreme  court  may, 
in  like  manner,  enjoin  and  restrain  any  manufacturing  or  whole- 
sale or  retail  business,  being  conducted  or  carried  on  in  violation 
of  any  provision  or  the  spirit  and  intent  of  this  act,  from  con- 
tinuing such  manufacture  or  wholesale  or  retail  business  in  this 
state,  and  all  official  restraining  orders  may  be  perpetual  or  for 
such  period  and  upon  such  terms  and  conditions  as  the  court 
or  judge  thereof  shall  determine.  All  laws,  rules  and  regula- 
tions now  in  force  relating  to  applications  for  and  granting  or- 
ders of  injunction  in  this  state  shall  apply  to  proceedings  under 
the  provision  of  this  act  so  far  as  the  same  are  not  different 
from  or  in  conflict  with  the  provisions  of  this  act. 

§ 4.  Duty  of  state’s  attorney. — It  shall  be  made  the  special 
duty  of  each  and  every  state’s  attorney  of  each  and  every  county 
in  this  state,  who  shall  have  good  reason  to  believe  that  any 
of  the  provisions  of  section  one  of  this  act  are  being  violated 
by  any  person  or  persons  in  his'  county,  or  upon  affidavit  of  two 
or  more  reputable  persons  made  and  delivered  to  him,  showing 
or  stating  affirmatively  that  any  person  or  persons  in  his  county 
have  violated  any  of  the  provisions  of  section  one  of  this  act, 
to  make  complaint  and  cause  the  arrest  of  such  person  or  per- 
sons and  to  prosecute  him  or  them  diligently  to  conviction  if 


1204  [Senate, 

proved  to  be  guilty,  and  also,  at  the  request  of  any  citizen  of 
his  county,  and  for  good  cause  shown,  apply  for  an  injunction 
or  restraining  order  as  provided  in  this  act:  Provided,  that  the 
provisions  of  this  section  shall  not  be  construed  to  prevent  any 
person  from  making  complaint  to  any  court  of  competent  juris- 
diction of  any  violation  of  the  provisions  of  this  act,  and  in  such 
case  the  court  shall  issue  a warrant  and  proceed  with  same  as 
though  the  state’s  attorneys  had  made  the  complaint;  and  the 
court  may  also  permit  any  attorney  whom  the  plaintiff  may  em- 
ploy to  appear  and  prosecute  such  action  at  any  stage  of  the 
proceedings  therein,  and  such  attorney’s  fee,  in  any  such  case, 
shall  be  deemed  part  of  the  costs  or  prosecution  as  mentioned  in 
section  one  of  this  act. 

§ 5.  The  duty  of  secretary  of  state. — It  shall  be  the  duty  of 
the  secretary  of  this  state,  on  the  application  for  a charter  to  es- 
tablish any  corporation,  to  require  two  applicants  thereof  to  make 
oath  or  affirmation  that  such  corporation  is  not  being  formed 
for  the  purpose  of  enabling  several  corporations  to  avoid  the 
provisions  of  this  act,  and  if  such  oath  or  affirmation  is  not  sat- 
isfactory,  the  secretary  is  authorized  to  withhold  such  charter. 

The  above  act  was  amended  by  chapter  171  of  the  Laws  of  1893 
by  adding  to  section  4 of  said  chapter  the  following: 

And  provided  further,  that  any  person  or  persons,  who  may 
suffer  damage  by  reason  of  the  operation  of  any  such  pool,  trust 
or  combination  defined  in  section  one  of  this  act,  or  any  pool, 
trust  or  combination  formed  without,  but  holding  property  within 
the  state  may  maintain  an  action  therefor  and  may  recover  the 
amount  of  damage  sustained;  and  any  person  or  persons  who  in 
good  faith  may  have  contributed  any  funds  or  property,  as  a 
donation  or  otherwise  for  location,  building  or  carrying  on  of  any 
milling  or  manufacturing  or  other  industry  in  this  state,  or  any 


No.  40.] 


1205 


stockholder  in  any  corporation  or  company  formed  for  the  pur- 
pose of  carrying  on  and  operating  in  such  industry,  which  milling,, 
manufacturing  or  other  industry  may  thereafter  become  the  prop- 
erty of,  or  controlled  by  any  such  pool,  trust  or  combination, 
without  the  consent  of  such  person  or  stockholder,  may  maintain 
an  action  and  recover  from  such  pool,  trust  or  combination  or 
individual  composing  the  same,  a judgment  for  tne  amount  so 
contributed  or  invested  in  stock  as  the  case  may  be,  and  the  prop- 
erty, including  the  plant  and  all  buildings,  machinery  and  other 
property  so  owned  or  controlled  by  such  trusts  or  combinations, 
shall  be  liable  to1  attachment  and  execution  in  such  action  and 
may  be  sold  to  satisfy  any  judgment  therein,  and  the  court  in 
which  such  case  is  pending  may  appoint  a receiver  to  take  charge 
of  such  property  and  receive  all  rents,  issued  and  profits  there- 
from, in  addition  to  such  other  powers  as  are  now  conferred  by 
law  upon  receivers,  and  immediately  after  the  sale  of  such  prop- 
erty and  confirmation  thereof  by  the  court,  the  purchaser  shall 
be  let  into  possession  of  such  property;  and  in  case  of  a surplus, 
after  satisfying  such  judgment  or  judgments,  the  same  shall  be 
paid  over  to  the  clerk  of  the  court  in  which  such  action  is  pend- 
ing, and  shall  be  liable  thereafter  to  the  same  extent  as  property 
sold  is  liable,  and  if  such  surplus  shall  remain  in  the  hands  of 
such  clerk,  and  no  proceedings  instituted  to  recover  the  same, 
or  any  portion  thereof,  for  three  years  thereafter,  the  same,  or 
such  portion  thereof  then  remaining  in  the  hands  of  said  clerk, 
shall  be  paid  over  to  the  county  treasurer  of  the  county  where 
such  property  shall  be  held  or  located  and  be  credited  to  the 
school  fund  of  the  district  or  township  in  which  such  property  is 
held  or  located  and  shall  be  paid  out  by  such  county  treasurer  in 
like  manner  as  other  funds  belonging  to  such  district  or  township. 

Approved  March  6,  1893. 


1206 


[Senate, 


TENNESSEE 

Chapter  3 of  title  13  of  the  Code  of  Tennessee  reads  as  follows: 

" OF  COMBINATIONS  IN  RESTRAINT  OF  TRADE.” 

Pools,  combinations,  etc-.,  unlawful. — All  trusts,  pools,  con- 
tracts, arrangements  or  combinations  made  with  a view  or 
which  tend  to  prevent  full  and  free  competition  in  the  pro- 
duction, manufacture  or  sale  of  any  article  of  domestic 
growth,  production  or  manufacture;  or  in  the  importa- 
tion or  sale  of  any  article  of  domestic  growth,  production  or 
manufacture;  or  in  the  importation  or  sale  of  any  article  grown, 
produced  or  manufactured  in  any  other  state  or  country;  or 
which  are  designated  (designed)  or  tend  to  fix,  regulate,  limit  or 
reduce  the  price  of  any  article  of  growth,  production  or  manu- 
facture; or  which  are  designed  or.  tend  in  a (any)  way  to  create 
a monopoly  are  hereby  declared  to  be  unlawful,  against  public 
policy  and  void.  (Laws  of  1891,  chap.  218,  § 1.) 

Section  3186.  Felony,  entering  or  continuing  any  such  pool,  et 
cetera. — All  persons  entering  into  or  continuing  in  any  trust,  pool, 
contract,  arrangement,  agreement  or  combination,  either  in  his 
own  account  or  as  agent  or  attorney  for  another,  or  as  an 
officer,  agent  or  stockholder  of  any  corporation  or  in  any  capacity 
whatever,  shall  be  deemed  guilty  of  a felony,  and  on  conviction 
thereof  shall  be  punished  by  a fine  of  not  less  than  five  hundred 
dollars  nor  more  (than)  five  thousand  dollars  and  imprisoned 
in  the  penitentiary  not  less  than  one  year  nor  more  than  five 
years.  (Code  of  Tennessee,  1896,  p.  739.) 

§ 3187.  Debts,  joint  and  several,  liability  for. — 2.  All  persons 
and  corporations  and  the  officers  and  stockholders  of  all  cor- 


No.  40.] 


1207 


porations  that  shall  become  or  continue  to  be  members  of,  or  in 
any  way  connected  with  or  concerned  in,  such  trust,  contract, 
agreement  or  combination,  shall  be  jointly  and  severally  liable 
to  pay  all  the  debts,  obligations  and  liabilities  of  each  and  every 
person  and  corporation  that  may  become  or  continue  a member 
thereof,  or  concerned  therein  as  fully  as  if  all  were  partners  in 
the  collection  of  such  debts,  obligations  and  liabilities. 

§ 31SS.  Charter  forfeited;  duty  of  attorney-general.— If  any 
corporation  organized  under  the  laws  of  this  state,  or  any  officer 
or  stockholder  thereof,  as  such,  shall  become  or  continue  to  be  a 
member  of  any  such  trust,  pool,  contract,  agreement,  arrange- 
ment or  combination,  its  charter  shall  become  and  be  thereby 
forfeited;  and  it  shall  be  the  duty  of  the  attorney-general  of  the 
county  where  the  same  is  located,  or  having  its  principal  office, 
to  bring  suit  against  such  corporation  in  the  circuit  court  of 
such  county,  to  have  its  said  charter  declared  forfeited  for  that 
reason  and  to  wind  up  the  same  under  the  order  of  such  courts. 

§ 3189.  May  be  pleaded  in  abatement  or  bar  of  suits. — When 
any  action  at  lawr  or  suit  in  equity  shall  be  commenced  in  any 
court  of  this  state,  it  shall  be  lawful,  in  the  defense  thereof,  to 
plead  in  bar  or  abatement  of  the  action  that  the  plaintiff,  or  any 
other  person  or  corporation  interested  in  the  prosecution  of  the 
action,  is  a member  or  connected  with,  and  the  cause  of  action 
grows  out  of  some  business  or  transaction  with  such  trust,  pool, 
contract,  agreement,  arrangement  or  combination,  as  described 
in  section  thirty-one  hundred  and  eighty-five. 

§ 3190.  Injured  party  may  recover  double  damages. — Any  per- 
son or  corporation  injured  or  damaged  by  any  such  trust,  pool, 
contract,  agreement,  arrangement  or  combination,  may  sue  and 


120S 


[Senate, 


recover  fines  in  any  court  of  competent  jurisdiction,  double  the, 
amount  of  damages  suffered  by  said  person  or  corporation. 

§ 3191.  Witnesses,  who  may  be;  matters  criminating. — Upon 
the  trial  of  any  civil  action  against  any  corporation,  person  or 
copartnership  for  a violation  of  any  section  in  this  chapter,  by 
officers,  stockholders  and  other  agents  of  such  corporation,  per- 
son or  copartnership  shall  be  competent  witnesses  against  the 
defendant  as  such  on  trial;  and  such  officers,  stockholders  and 
agents  may  be  compelled  to  testify  against  such  defendant,  and 
produce  the  book  and  papers  in  their  custody  or  control  pertinent 
to  the  issues  in  such  cases  at  or  before  the  time  of  trial,  and 
shall  not  be  excused  from  producing  any  books  or  papers  because 
the  same  might  tend  to  criminate  such  witnesses;  but  nothing 
which  such  witness  shall  testify  to,  and  any  books  or  papers  pro- 
duced by  him,  shall  in  no  manner  be  used  against  him  in  any 
criminal  action  to  which  he  is  a party. 


TEXAS. 


TRUSTS. 

(H.  B.  No.  404,  chap.  83.) 

An  Act  to  define  trusts,  provide  for  penalties  and  punishment 
of  corporations,  persons,  firms  and  associations  of  persons  con- 
nected with  them,  and  to  promote  free  competition  in  the  state 
of  Texas,  and  to  repeal  all  laws  and  parts  of  laws  in  conflict 
with  this  act. 

Section  1.  Be  it  enacted  by  the  legislature  of  the  state  of 
Texas,  That  an  act  entitled  “ An  act  to  define  trusts  and  to  pro- 


So.  40.] 


1209 


vide  for  penalties  and  punishment  of  corporations,  persons,  firms 
and  associations  of  persons  connected  with  them,  and  to  promote 
free  competition  in  the  state  of  Texas,”  approved  March  thirty, 
eighteen  hundred  and  eighty-nine,  be  so  amended  as  to  here- 
after read  as  follows: 

§ 1.  That  a trust  is  a combination  of  capital,  skill  or  acts  by 
two  or  more  persons,  firms,  corporations  or  associations  of  per- 
sons, or  either  two  or  more  of  them,  for  either,  any  or  all  of  the 
following  purposes : 

1.  To  create  or  carry  out  restrictions  in  trade  or  commerce  or 
aids  to  commerce,  or  to  create  or  carry  out  restrictions  in  the  full 
and  free  pursuit  of  any  business  authorized  or  permitted  by  the 
laws  of  this  state. 

2.  To  increase  or  reduce  the  price  of  merchandise,  produce  or 
commodities. 

3.  To  prevent  competition  in  manufacture,  making,  transpor- 
tation, sale  or  purchase  of  merchandise,  produce  or  commodities, 
or  to  prevent  competition  in  aids  to  commerce. 

4.  To  fix  at  any  standard  or  figure,  whereby  its  price  to  the 
public  shall  be  in  any  manner  controlled  or  established,  any 
article  or  commodity  of  merchandise,  produce  or  commerce  in- 
tended for  sale,  use  or  consumption  in  this  state. 

5.  To  make  or  enter  into  or  execute  or  carry  out  any  contract, 
obligation  or  agreement  of  any  kind  or  description  by  which 
they  shall  bind  or  have  bound  themselves  not  to  sell,  dispose 
of  or  transport  any  article  or  commodity,  or  article  of  trade,  use, 
merchandise,  commerce  or  consumption  below7  a common  stand- 
ard figure,  or  by  which  they  shall  agree  in  any  manner  to  keep 
the  price  of  such  article,  commodity  or  transportation  at  a fixed 
or  graded  figure,  or  by  which  they  shall  in  any  manner  establish 


1210 


[Senate,. 


oi*  settle  the  price  of  any  article  or  commodity  or  transportation 
between  them  or  themselves  and  others  to  preclude  a free  and 
unrestricted  competition  among  themselves  or  others  in  the  sale 
or  transportation  of  any  such  article  or  commodity,  or  by  which 
they  shall  agree  to  pool,  combine  or  unite  any  interest  they  may 
have  in  connection  with  the  sale  or  transportation  of  any  such 
article  or  commodity  that  its  price  might  in  any  manner  be 
affected. 

§ 2.  That  any  corporation  holding  a charter  under  the  laws  of 
the  state  of  Texas  which  shall  violate  any  of  the  provisions  of 
this  act  shall  thereby  forfeit  its  charter  and  franchise,  and  its 
corporate  existence  shall  cease  and  determine. 

§ 3.  For  a violation  of  any  of  the  provisions  of  this  act  by  any 
corporation  mentioned  herein,  it  shall  be  the  duty  of  the  attorney- 
general  or  district  or  county  attorney,  or  either  of  them,  upon 
his  own  motion,  and  without  leave  or  order  of  any  court  or 
judge,  to  institute  suit  or  quo  warranto  proceedings  in  Travis 
county,  at  Austin,  or  at  the  county  seat  of  any  county  in  the 
state  where  such  corporation  exists,  does  business  or  may  have 
a domicile,  for  the  forfeiture  of  its  charter  rights  and  franchise 
and  the  dissolution  of  its  corporate  existence. 

§ 4.  Every  foreign  corporation  violating  any  of  the  provisions 
of  this  act  is  hereby  denied  the  right  and  prohibited  from  doing 
any  business  within  this  state,  and  it  shall  be  the  duty  of  the 
attorney-general  to  enforce  this  provision,  by  injunction  or  other 
proper  proceedings,  in  the  district  court  of  Travis  county  in  the 
name  of  the  state  of  Texas. 

§ 5.  That  the  provisions  of  chapter  forty-eight,  general  laws 
of  this  state,  approved  July  nine,  eighteen  hundred  and  seventy- 
nine,  to  prescribe  the  remedy  and  regulate  the  proceedings  by 


Xo.  40.] 


1211 


quo  warranto,  et  cetera,  shall,  except  in  so  far  as  they  may  con- 
flict herewith,  govern  and  control  the  proceedings  when  insti- 
tuted to  forfeit  any  charter  under  this  act. 

§ 6.  If  any  person  shall  be  or  may  become  engaged  in  any  com- 
bination of  capital,  skill  or  acts  by  which  two  or  more  persons, 
firms,  corporations  or  associations  of  persons,  or  of  either  of 
them,  combine  for  either,  any  or  all  of  the  following  purposes: 

1.  To  create  or  carry  out  restrictions  in  trade  or  commerce  or 
aids  to  commerce,  or  to  create  or  carry  out  restrictions  in  the 
full  and  free  pursuit  of  any  business  authorized  or  permitted 
by  the  laws  of  this  state. 

2.  To  increase  or  reduce  the  price  of  merchandise,  produce  or 
commodities. 

3.  To  prevent  competition  in  manufacture,  making,  transporta- 
tion, sale  or  purchase  of  merchandise,  produce  or  commodities, 
or  to  prevent  competition  in  aids  to  commerce. 

4.  To  fix  at  any  standard  or  figure  whereby  its  price  to  the 
public  shall  be  in  any  manner  controlled  or  established,  any 
article  or  commodity  of  merchandise,  produce  or  commerce  in- 
tended for  sale,  use  or  consumption  in  this  state. 

5.  To  make  or  enter  into  or  execute  or  carry  out  any  contract, 
obligation  or  agreement  of  any  kind  or  description  by  which  they 
shall  bind  or  have  bound  themselves  not  to  sell,  dispose  of  or 
transport  any  article  or  commodity,  or  article  of  trade,  use,  mer- 
chandise, commerce  or  consumption  below  a common  standard 
figure,  or  by  which  they  shall  agree  in  any  manner  to  keep  the 
price  of  such  article,  commodity  or  transportation  at  a fixed 
or  graduated  figure,  or  by  which  they  shall  in  any  manner  estab- 
lish or  settle  the  price  of  any  article  or  commodity  or  transporta- 
tion between  them  or  themselves  and  others,  to  preclude  a free 


1212 


[Senate, 


and  unrestricted  competition  among  themselves  and  others  in 
the  sale  or  transportation  of  any  such  article  or  commodity,  or 
by  which  thej^  shall  agree  to  pool,  combine  or  unite  any  interest 
they  may  have  in  connection  with  the  sale  or  transportation  of 
any  such  article  or  commodity  that  its  prices  may  in  any  manner 
be  affected,  or  aid  or  advise  in  the  creation  or  carrying  out  of 
any  such  combination,  or  who  shall,  as  principal,  manager,  di- 
rector. agent,  servant  or  employe,  or  in  any  other  capacity,  know- 
ingly carry  out  any  of  the  stipulations,  purposes,  prices,  rates, 
directions,  conditions  or  orders  of  such  combinations  shall  be 
punished  by  fine  of  not  less  than  fifty  nor  more  than  five  thou- 
sand dollars,  and  by  imprisonment  in  the  penitentiary  not  less 
than  one  nor  more  than  ten  years,  or  by  either  such  fine  or  im- 
prisonment. Each  day  during  a violation  of  this  provision  shall 
constitute  a separate  offense. 

§ 7.  In  any  indictment  for  an  offense  named  in  this  act  it  is 
sufficient  to  state  the  effects  or  purposes  of  the  trust  or  combi- 
nation, and  that  the  accused  was  a member  of,  acted  with 
or  in  pursuance  of  it,  without  giving  its  name  or  description,  or 
how,  when  or  where  it  was  created. 

'•■V 

§ 8.  In  prosecutions  under  this  act  it  shall  be  sufficient  to  prove 
that  a trust  or  combination,  as  defined  herein,  exists,  and  that 
the  defendant  belonged  to  it  or  acted  for  or  in  connection  with 
it,  without  proving  all  the  members  belonging  to  it  or  proving 
or  producing  any  article  of  agreement  or  any  written  instrument 
on  which  it  may  have  been  based,  or  that  it  was  evidenced  by  any 
written  instrument  at  all.  The  character  of  the  trust  or  combi- 
nation alleged  may  be  established  by  proof  of  its  general  repu- 
tation as  such. 

§ 9.  Persons  out  of  the  state  may  commit  and  be  liable  to  in- 
dictment and  conviction  for  committing  any  of  the  offenses  enu- 


No.  40.] 


1213 


merated  in  this  act,  which  do  not,  in  their  commission,  necessa- 
rily require  a personal  presence  in  this  state,  the  object  being 
to  reach  and  punish  all  persons  offending  against  its  provisions, 
whether  within  or  without  the  state. 

§ 10.  Each  and  every  firm,  person,  corporation  or  association 
of  persons  who  shall  in  any  manner  violate  any  of  the  provisions 
of  this  act  shall,  for  each  and  every  day  that  such  violations  shall 
be  committed  or  continued,  forfeit  and  pay  the  sum  of  fifty  dol- 
lars, which  may  be  recovered  in  the  name  of  the  state  of  Texas 
in  any  county  where  the  offense  was  committed,  or  where  either 
of  the  offenders  reside,  or  in  Travis  county';  and  it  shall  be  the 
duty  of  the  attorney-general  or  the  district  or  county  attorney 
to  prosecute  for  and  recover  the  same. 

§ 11.  That  any  contract  or  agreement  in  violation  of  the  pro- 
visions of  this  act  shall  be  absolutely  void  and  not  enforceable 
either  in  law  or  equity. 

§ 12.  That  the  provisions  hereof  shall  be  held  cumulative  of 
each  other  and  of  all  other  law's  in  any  way  affecting  them  now 
in  force  in  this  state:  Provided,  this  act  shall  not  be  held  to 
apply  to  live-stock  and  agricultural  products  in  the  hands  of  the 
producer  or  raiser,  nor  shall  it  be  understood  or  construed  to 
prevent  the  organization  of  laborers  for  the  purpose  of  maintain- 
ing any  standard  of  wages. 

§ 13.  That  nothing  in  this  act  shall  be  held  or  construed  to 
affect  or  destroy  any  rights  which  may  have  accrued,  or  to  affect 
the  right  of  the  state  to  recover  penalties,  or  to  affect  the  right 
of  the  state  to  forfeit  charters  of  domestic  corporations  and  pro- 
hibit foreign  corporations  from  doing  business  in  this  state,  or 
affect  the  right  of  the  state  to  maintain  prosecutions  for  viola- 
tions thereof  under  any  law  of  this  state  relating  to  trusts  for 
acts  heretofore  done. 


1214  [Senate, 

§ 14.  Any  court,  officer  or  tribunal  having  jurisdiction  of  the 
offense  defined  in  this  act,  or  any  district  or  county  attorney  or 
grand  jury  may  subpoena  persons  and  compel  their  attendance 
as  witnesses  to  testify  as  to  the  violation  of  any  of  the  provis- 
ions of  the  foregoing  sections.  Any  person  so  summoned  and 
examined  shall  not  be  liable  to  prosecution  for  any  violation  of 
said  sections  about  which  he  may  testify  fully  and  without  res- 
ervation. 

§ 15.  All  laws  or  parts  of  laws  in  conflict  with  this  act  are 
hereby  repealed. 

§ 16.  Whereas,  the  people  of  this  state  are  without  an  adequate 
remedy  against  trusts,  therefore  an  emergency  and  imperative 
public  necessity  exists  requiring  that  the  constitutional  rule 
which  requires  that  all  bills  shall  be  read  on  three  several  days 
be  suspended,  and  it  is  so>  enacted. 

Approved,  April  thirty,  eighteen  hundred  and  ninety-five. 


UTAH. 


CHAPTER  XXXIX. 

TO  PREVENT  POOLS  AND  TRUSTS. 

An  act  prohibiting  and  providing  for  the  punishment  of  per- 
sons, copartnerships,  associations  and  corporations  forming 
pools,  trusts,  combinations  or  conspiracies,  to  affect  or  control 
the  price  of  professional  services  or  to  affect  or  control 
the  price,  or  limit  or  lessen  the  production,  manufacture,  con- 
sumption, use  or  sale  of  any  article  of  commerce,  manufacture 
or  product  of  the  soil,  means  for  the  suppression  of  such  evils, 
and  remedies  for  persons  injured  thereby. 


*”0.  40.] 


1215 


Be  it  enacted  by  the  legislature  of  the  state  of  Utah: 

Section  1.  Any  combination  by  persons  having  for  its  object 
or  effect  the  controlling  of  the  prices  of  any  professional  services, 
any  products  of  the  soil,  or  of  any  article  of  manufacture  or  com- 
merce or  the  cost  of  exchange  or  transportation,  is  prohibited 
and  hereby  declared  unlawful.  Any  person  who  shall  violate  the 
foregoing  provisions  shall  be  subject  to  prosecution  and  punish- 
ment as  hereinafter  provided. 

§ 2.  If  any  person  or  association  of  persons  shall  create,  enter 
into,  become  a member  of.  or  a party  to,  any  pool,  trust,  agree- 
ment, combination,  confederation  or  understanding  with  any 
other  person  or  persons,  to  regulate  or  fix  the  price  of  any  article 
of  merchandise  of,  or  a party  to,  any  pool,  trust,  agreement,  con- 
tract, combination  or  confederation  to  fix  or  limit  the  amount  or 
quantity  of  any  article,  commodity  or  merchandise  to  be  manu- 
fectured,  mined,  produced  or  sold  in  this  state,  such  person  or 
persons,  shall  be  deemed  and  adjudged  guilty  of  a conspiracy 
to  defraud,  and  be  subject  to  punishment  as  hereinafter  provided. 

§ 3.  It  shall  not  be  lawful  for  any  corporation  to  issue  or  to 
own  trust  certificates,  or  for  any  corporation,  agent,  officer  or 
employe,  or  the  directors  or  stockholders  of  any  corporation,  to 
enter  into  any  combination,  contract  or  agreement  with  any  per- 
son or  persons,  the  purpose  and  effect  of  which  combination, 
contract  or  agreement  shall  be  to  place  the  management  or  con- 
trol of  such  combination  or  combinations,  or  the  manufactured 
product  thereof,  in  the  hand  of  any  trustee  or  trustees,  with  the 
intent  to  limit  or  fix  the  price,  or  lessen  the  production  and  sale 
of  any  article  of  commerce,  use  or  consumption,  or  to  prevent, 
restrict  or  diminish  the  manufacture  or  output  of  any  such  arti- 
cle, or  to  monopolize  any  part  of  the  trade  or  commerce  within 
this  state. 


1216  [Senate, 

§4.  If  a corporation,  a company,  a firm  or  association,  shall  be 
found  guilty  of  a violation  of  this  act,  it  shall  be  punished  by  a 
fine  in  any  sum  not  less  than  one  hundred  dollars  nor  more  than 
two  thousand  dollars  for  the  first  offense;  and  for  the  second 
offense  not  less  than  five  hundred  dollars  nor  more  than  five 
thousand  dollars;  and  for  the  third  offense,  not  less  than  five 
thousand  dollars  nor  more  than  ten  thousand  dollars;  and  for 
every  subsequent  offense  shall  be  liable  to  a fine  of  fifteen  thou- 
sand dollars.  ( 

§ 5.  Any  president,  manager,  director  or  other  officer,  agent  or 
receiver  of  any  corporation,  company,  firm  or  association,  or  any 
member  of  any  company,  firm  or  association,  or  any  individual 
found  guilty  of  a violation  of  this  act,  may  be  punished  by  a fine 
of  not  less  than  one  hundred  dollars,  nor  to  exceed  one  thousand 
dollars,  or  by  confinement  in  the  county  jail  not  to  exceed  one 
year,  or  both,  in  the  discretion  of  the  court  before  which  such 
conviction  may  be  had. 

§ 6.  Any  contract  or  agreement  in  violation  of  any  provision 
of  the  preceding  sections  of  this  act  shall  be  absolutely  void. 

§ 7.  Any  corporation  created  or  organized  by  or  under  the  laws 
of  this  state  which  shall  violate  any  of  the  provisions  of  the 
preceding  sections  of  this  act,  shall  thereby  forfeit  its  corporate 
right  and  franchise,  and  its  corporate  existence  shall  thereupon 
cease  and  determine. 

§ 8.  It  shall  be  the  duty  of  the  secretary  of  state,  upon  satis- 
factory evidence  that  any  corporation  or  association  of  persons, 
incorporated  or  operating  under  the  laws  of  this  state,  have  en- 
tered into  any  trust,  combination  or  association,  as  provided  in 
the  preceding  provisions  of  this  act,  to  give  notice  to  such  cor- 
porations that  unless  they  withdraw  from  and  sever  all  business 


Xo.  40.] 


1217 


connections  with  said  trust,  combination  or  association,  their 
corporate  right  and  franchise  will  be  revoked  at  the  expiration  of 
thirty  days  from  the  date  of  such  notice. 

§ 9.  At  the  expiration  of  the  thirty  days  mentioned  in  the  last 
preceding  section,  the  secretary  of  state,  shall  cause  a certified 
statement  of  the  facts  to  be  filed  in  the  office  of  the  attorney- 
general  of  the  state,  who  shall  proceed,  or  direct  such  proceedings 
by  any  county  attorney  in  the  state,  to  commence  an  action  in 
the  district  court  of  any  county  in  the  state  of  competent  juris- 
diction, to  forfeit  and  revoke  the  corporate  right  and  franchise 
of  such  corporation.  When  said  proceedings  are  instituted,  they 
shall  be  conducted  as  ordinary  law  actions,  triable  by  court  or 
jury.  On  the  final  decision  of  the  same,  should  the  defendant  be 
found  guilty  of  a violation  of  any  of  the  provisions  of  this  act, 
said  court  shall  render  a judgment  and  order  a revocation  of  the 
charter,  corporate  rights  and  franchises  of  said  corporation  as  a 
penalty  for  the  violation  or  violations  of  which  the  said  corpora- 
tion shall  be  found  guilty,  and  the  secretary  of  state  shall  there- 
upon make  publication  of  such  revocation  in  four  (4)  newspapers 
in  general  circulation  in  four  of  the  largest  cities  of  the  state. 

§ 10.  In  case  any  person  or  persons  shall  do,  cause  to  be  done, 
or  permit  to  be  done,  any  act,  matter  or  thing  in  this  act,  pro- 
hibited or  declared  to  be  unlawful,  such  person  or  persons  shall 
be  liable  to  the  person  or  persons  injured  thereby  for  treble  the 
amount  of  damages  sustained  in  consequence  of  any  such  viola- 
tion of  the  provisions  of  this  act. 

§ 11.  The  words  “ person  ” or  “ persons,”  wherever  used  in  this 
act  shall  be  deemed  to  include  corporations,  companies  and  asso- 

77 


1218  [Senate, 

ciations  existing  under  or  authorized  by  the  laws  of  either  the 

United  States  or  any  of  the  territories,  any  state  or  any  foreign 

« 

country. 

Approved  March  9,  1896. 


VIRGINIA. 


NO  STATUTE. 

The  secretary  of  the  commonwealth,  in  reply  to  a letter  ad- 
dressed to  him  on  this  subject,  stated  that  no  laws  had  been 
passed  by  the  legislature  of  Virginia  in  respect  of  combinations 
of  capital  popularly  known  as  trusts.  That  a.  bill  for  that  pur- 
pose was  introduced  at  the  last  session  of  the  general  assembly 
of  that  state  and  failed  of  passage. 


WASHINGTON. 


Section  twenty-two  of  the  constitution  of  the  state  of  Washing- 
ton provides  as  follows:  “Monopolies  and  trusts  shall  never  be 
allowed  in  this  state,  and  no  incorporated  company,  copartner- 
ship or  association  of  persons  in  this  state  shall  directly  or  indi- 
rectly combine  or  make  any  contract  with  any  other  incorporated 
company,  foreign  or  domestic,  through  their  stockholders  or  the 
trustees  or  associates  of  said  stockholders,  or  with  any  copart- 
nership or  association  of  persons  or  in  any  manner  whatever,  for 
the  purpose  of  fixing  the  price  or  limiting  the  production  or 


Ho.  40.] 


1219 


regulating  the  production  of  any  product  or  commodity.  The 
legislature  shall  pass  laws  for  the  enforcement  of  these  acts  by 
adequate  penalties,  and  in  case  of  incorporated  companies’  of- 
fenses for  that  purpose  may  declare  the  forfeit  of  their  charters. 
The  state  law  prohibits  any  combination  for  artificially  raising 
or  depressing  the  market  price  of  any  foreign  dairy  produce  or 
growing  products  or  for  excluding  from  the  market  the  produce 
of  any  particular  locality,  grown  or  manufactured  by  any  person. 


WISCONSIN. 


CHAPTER  219. 

An  Act  to  protect  trade  and  commerce  against  unlawful  trusts 

and  monopolies. 

The  People  of  the  State  of  Wisconsin,  represented  in  Senate 
and  Assembly,  do  enact  as  follows: 

Section  1.  Every  contract  or  combination,  in  the  nature  of  a 
trust  or  conspiracy  in  restraint  of  trade  or  commerce,  is  hereby 
declared  illegal. 

§ 2.  Every  person  wrho  shall  monopolize,  or  attempt  to  monopo- 
lize, or  combine  or  conspire  with  any  other  person  or  persons  to 
monopolize  any  part  of  the  trade  or  commerce  in  this  state,  shall 
be  deemed  guilty  of  violating  the  provisions  of  this  act,  and  upon 
conviction  thereof  shall  forfeit  for  each  such  violation  not  less 
than  fifty  dollars,  nor  more  than  three  thousand  dollars,  together 
with  the  cost  of  prosecuting  such  forfeiture;  -such  forfeiture  and 
costs  to  be  collected  as  is  now  provided  by  statute  for  the  collec- 
tion of  forfeitures. 


1220 


[Senate,. 


§ 3.  Jurisdiction  is  hereby  conferred  on  the  several  circuit 
courts  of  this  state  to  prevent  and  restrain,  by  injunction  or 
otherwise,  any  violations  of  the  provisions  of  this  act;  and  it  shall 
be  the  duty  of  the  several  district  attorneys  of  the  several  coun- 
ties in  this  state,  upon  the  advice  of  the  attorney-general,  who 
may  appear  as  counsel  in  such  case,  to  institute  such  actions  or 
proceedings  as  the  attorney-general  may  or  shall  deem  necessary 
to  prevent  or  restrain  any  violation  of  this  act.  Such  proceed- 
ings shall  be  by  way  of  information  or  complaint,  as  in  ordinary 
actions,  setting  forth  the  case  and  grounds  for  the  interference  of 
the  court,  and  praying  that  such  violations,  whether  continuing 
or  intended,  shall  be  enjoined  or  otherwise  prohibited.  When  the 
parties  complained  of  or  informed  against  shall  have  been  duly 
notified  of  and  cited  to  answer  such  information  or  complaint, 
the  court  shall  proceed  as  soon  as  may  be,  in  accordance  with  its 
rules  and  practice,  to  the  hearing  and  determination  of  the  casls; 
and  pending  such  information  or  complaint,  and  before  final 
judgment,  the  court  may  at  any  time,  upon  proper  notice,  make 
such  temporary  restraining  order,  injunction  or  prohibition  as 
shall  be  just  in  the  premises. 

§ 4.  Whenever  it  shall  appear  to  the  court  before  which  any 
examination  under  section  three  of  this  act  may  be  pending,  that 
the  ends  of  justice  require  that  other  parties  should  be  brought 
before  the  court,  the  court  may  cause  them  to  be  summoned  in 
such  manner  as  the  court  shall  direct. 

§ 5.  Any  person  transacting  or  doing  business  within  this 
state  who  shall  be  injured  in  his  business  or  property,  by  any 
other  person  or  corporation,  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful  by  this  act,  may  recover  the  damages 
by  him  sustained  and  costs  of  suit. 

( ; : 


No.  40.] 


1221 


§ G.  The  examination  of  any  party,  or  in  case  a corporation  be 
the  party,  the  examination  of  the  president,  secretary  or  other 
proper  officer  or  general  managing  agent  of  such  corporation,  or 
any  person  acting  for  another  or  acting  for  such  corporation  or 
partnership,  otherwise  than  as  a witness  on  a trial,  may  be  taken 
by  deposition  at  the  instance  of  the  state  of  Wisconsin,  in  any 
action  or  proceeding  under  this  act,  at  any  time  after  the  com- 
mencement thereof,  and  before  final  judgment.  Such  deposition 
shall  be  taken  before  a judge,  at  chambers,  on  a previous  notice 
to  such  party  and  any  other  adverse  party,  or  their  respective 

attorneys,  of  at  least  five  days,  or  it  may  be  taken  without  the 

• 

state,  upon  commission,  in  the  manner  provided  for  taking  other 
depositions.  The  attendance  of  the  party  to  be  examined  may 
be  compelled,  upon  subpoena,  without  payment  of  witness  fees, 
and  such  examination  shall  be  subject  to  the  same  rules  as  that 
of  any  other  witness;  but  he  shall  not  be  compelled  to  disclose 
anything  not  relevant  to  the  controversy.  If  such  examination 
shall  be  taken  before  issue  joined,  the  notice  of  taking  the  same 
shall  be  accompanied  by  the  affidavit  of  the  district  attorney, 
the  attorn ey-gen oral  or  some  other  party,  stating  the  general 
nature  and  object  of  the  action,  that  discovery  is  sought  to  enable 
the  party  to  plead  the  points  upon  which  such  discovery  is  de- 
sired, and  such  examination  shall  be  limited  to  discovery  of  the 
facts  relevant  to  the  points  so  stated  unless  the  court,  or  the 
presiding  judge  thereof,  on  motion  and  one  day’s  notice,  shall, 
before  the  examination  is  begun,  by  order,  further  limit  the  sub- 
jects to  which  such  examination  shall  extend;  but  such  examina- 
tion shall  not  preclude  the  right  to  another  examination  after 
issue  joined  upon  all  the  issues  in  the  case,  and  the  party  ex- 
amining shall,  in  all  cases,  be  allowed  to  examine  upon  inter- 


/ 


1222 


[Senate, 


rogatories.  Suela  examination  shall  not  be  compelled  in  any 
other  county  than  that  in  which  the  party  to  be  examined  re- 
sides: Provided,  that  whenever  plaintiff  or  defendant  is  a non- 
resident of  the  state,  his  deposition  may  be  taken,  under  the 
provisions  of  this  section,  in  the  county  in  which  the  action  is 
pending,  if  he  can  be  personally  served  with  notice  and  sub- 
poena in  such  county.  In  any  examination  under  the  provisions 
of  this  section,  the  judge  or  commissioner  before  whom  the  same 
is  had,  shall  have  power  and  authority  to  compel  the  party  ex- 
amined to  answer  all  questions  relevant  to  the  issues  involved, 
and  shall,  upon  the  application  of  the  attorney-general,  compel 
the  production  by  the  party  examined  of  all  books,  papers  and 
records  relevant  and  pertinent  to  the  issues,  and  may  enforce 
such  orders  and  the  production  of  such  books,  papers  and  records 
by  contempt  proceedings. 

§ 7.  If  any  defendant  or  his  agent  lawfully  required  to  appear 
and  testify,  as  provided  in  this  act,  either  within  or  without  the 
state,  shall  neglect  or  refuse  to  do  so,  he  may  be  punished  as 
for  contempt,  and  the  pleading  of  such  defendant  may,  in  the  dis- 
cretion of  the  court,  be  stricken  out,  and  judgment  given  against 
him,  according  to  the  prayer  of  the  complaint  of  the  state. 

§ 8.  The  word  “ person  ” or  “ persons,”  wherever  used  in  this 
act,  shall  be  deemed  to  include  corporations,  partnerships,  indi- 
viduals and  associations  existing  under  or  authorized  by  the  laws 
of  the  United  States,  the  laws  of  any  of  the  territories,  the  laws 
of  this  or  any  other  state  or  the  laws  of  any  foreign  country. 

§ 9.  This  act  shall  not  be  construed  to  affect  or  in  any  manner 
refer  to  or  interfere  with  labor  unions  or  any  other  associations 
of  laborers  organized  for  the  purpose  of  promoting  the  welfare 
of  labor,  nor  shall  it  interfere  with  or  suppress  associations  or 


No.  40.] 


1223 


organizations  intended  to  legitimately  promote  the  interests  of 
trade,  commerce  or  manufacture  in  this  state. 

§ 10.  All  acts  and  parts  of  acts  inconsistent  with  this  act  are 
hereby  repealed. 

§ 11.  This  act  shall  take  effect  and  be  in  force  from  and  after 
its  passage  and  publication. 

Approved,  April  seventeen,  eighteen  hundred  and  ninety-three. 


List  of  States  in  which  no  law  against  trusts,  or  combinations 
of  capital,  individuals  or  corporations,  in  restraint  of  trade,  have 
been  enacted: 

Arkansas,  California,  Colorado,  Florida,  Nevada,  New  Jersey, 
North  Dakota,  Oregon,  Pennsylvania,  Rhode  Island,  Vermont, 
Virginia.  West  Virginia,  Wyoming. 


I 


’ 


I 


INDEX  TO  WITNESSES 


Havemeyer,  Theodore  A, 
Havemeyer,  Henry  O.. . 

Arbuckle,  John 

Jar  vie,  James  M 

Parsons,  John  E 

Randall,  Samuel  H 

M oiler,  George  R 

Callahan,  Michael 

Connele,  James  S 

Beardsley,  E.  S 

Post,  James  H 

Searles,  John  E 

Fuller,  Lawson  N 

Bergin,  John 

Duggan,  Edward  J 

Flint,  Charles  R 

Walker,  William  I 

Dwight,  John  E 

Pope,  Charles  F 

Burn,  Henry 

Ford,  James  B 

Smith,  G.  Waldo 

Duke,  James  B 

Browne,  Josiah 

Thurber,  F.  B 


PAGE. 

65 

98,  162,  652 

127,  131,  139,  145,  193 

134,  148 

143,  264,  431,  589,  664 

266 

267 

289 

293 

302 

309 

. . . . 196,  346,  372,  420 

270,  443 

189 

279 

451,  475,  590,  709,  736 

537 

578 

581 

677,  689 

765 

806 

860,  884 

909 

626,  978 


PAGE. 

Harris,  William  R 983 

Whelan,  George  G 988 

Schulte,  Anthony 995 

Sloan,  Samuel 998 

Thomas,  E.  B 1011 

Gibbons,  Frederick  H 1023 

Walker,  Charles  A 1025 

Holden,  Edwin  R 1035 

Williams,  Richard  H 1027 

Krenning,  Francis  H 1057 

Wisner,  Clinton  W 1080 

Dixon,  Joseph  B 1088 

Heilner,  P.  B 1097 


INDEX  TO  EXHIBITS. 


PAGE. 

American  Sugar  Refining  Company : 

Factors'  agreement 128 

Factors’  affidavit 129 

Application  for  permission  to  act  as  factor 130 

Deed  incorporating  American  Sugar  Kefining  Co 168 

Contract  for  purchase  of  Franklin  Refinery 179 

Contract  for  purchase  of  Knight  & Co.  Refinery 184 

Contract  for  purchase  of  Delaware  Refinery 185 

Option  for  purchase  of  Franklin  Refinery 672 

Resolution  authorizing  issue  of  stock  for  purchase  of 

Philadelphia  refineries 671 

Statement  of  amount  of  taxes  paid  State  of  New  York.  672 

Uniform  code  of  rules  for  sale  of  sugar 856,  1124 

Instructions  to  salesmen 1076 

Howell,  Sons  & Co.: 

Equality  rate  book 410 

Factors’  agreement 412 

Dwight  & Co.:  } 

Factors’  agreement 542,  543 

Church  & Co.: 

Factors' agreement 545 

United  States  Rubber  Company: 

Simmons  report 638 


1228 


Index. 


PAGE 


United  States  Rubber  Company  — Continued. 

Factors’ agreement G46 

Supplementary  factors’  agreement G51 

Agreement,  C.  R.  Flint  and  H.  B.  Hollins  & Co S02 

Certificate  of  organization 1119 

National  Wall  Paper  Company: 

Factors’  agreement 804 

Agreement  with  Hobbs  & Co 1099 

American  Tobacco'  Company: 

Factors’  agreement 878 

List  of  consignees  whose  agreements  were  revoked.  . . . 913 

List  of  consignees  not  allowed  to  sell  competing  goods,  918 
Statistics  from  Bureau  of  Labor  Statistics  in  re  sugar 1128 


INDEX  TO  LAWS 


Anti-trust  Laws  and  Laws  to  Prevent  Combinations,  in  respect 
to  trade,  enacted  by: 

PAGE. 

United  States  Congress 1135 

Alabama 1139 

Connecticut 1141 

Delaware 1141 

Georgia 1141 

Illinois  1144 

Indiana 1151 

Iowa 1155 

Kansas 1159 

Kentucky 1103 

Louisiana 1166 

Maine 1171 

Maryland 1173 

Massachusetts 1174 

Michigan  1175 

Minnesota  1178 

Missouri 1182 

Montana 1189 

Nebraska 1191 

New  Hampshire 1194 

North  Carolina 1195 

Ohio 1197 

South  Carolina 1197 


1230 


Index. 


PAGE. 

South  Dakota 1198 

Tennessee 1206 

Texas 1208 

Utah  1214 

Virginia 1218 

Washington 1218 

Wisconsin  1219 


